CARF Onboarding Remediation Requirements: What Crypto Firms Need to Know
The Crypto-Asset Reporting Framework (CARF) is no longer just a concept, it’s a regulatory reality. With implementation dates fast approaching, firms operating in the crypto space must now prepare for a new wave of compliance obligations. This includes onboarding requirements that were previously outside their scope, and highlights the need for a thoughtful remediation effort before missing the deadline leads to costly penalties.
CARF vs CRS: A Quick Recap
CARF, developed by the OECD, is designed to close the transparency gap left by the Common Reporting Standard (CRS). While CRS focuses on traditional financial accounts, CARF targets crypto-asset transactions, which have historically operated in a regulatory grey zone. The goal is to prevent tax evasion and ensure that crypto doesn’t stay as a loophole for hiding wealth.
Unlike CRS, CARF applies to Crypto-Asset Service Providers (CASPs) which is a newly defined category that includes exchanges, brokers, wallet providers, and even certain Decentralized Financial Institution platforms. These entities must now collect, verify, and report user and transaction data to tax authorities, starting with 2026 activity to be reportable in 2027.
Why Remediation Matters
Remediation is the process of reviewing and updating existing customer data to ensure it meets the new CARF standards. It’s a critical step for firms that onboarded users before CARF came into effect and who didn’t collect tax residency information or valid self-certifications. Remediation ensures that firms are not just compliant going forward, but also that their historical data aligns with CARF’s transparency goals.
As outlined in the original CRS framework and reinforced by CARF, remediation is essential because:
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Pre-existing account records may contain incomplete or outdated information required in reporting.
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Tax authorities expect firms to apply CARF due diligence retroactively to all accounts.
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Failure to remediate can result in inaccurate reporting, penalties, and reputational risk.
Deadline for Remediating Pre-Existing Accounts
The OECD has provided vague guidance on when accounts need to have documentation completed, however, all jurisdictions implementing CARF will provide more specifics. For example, HMRC has provided the following:
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Pre-existing accounts (opened before January 1, 2026) must be reviewed and remediated by May 31, 2027.
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This deadline aligns with the first CARF reporting cycle, covering transactions from January 1 to December 31, 2026.
Firms must obtain valid self-certifications, verify tax residency, and apply due diligence procedures before submitting their first CARF report. If an account is closed before remediation, the self-certification must be obtained at the time of closure.
The Self-Certification Shift
Historically, crypto firms were not required to collect self-certification forms during onboarding as the definitions of CRS didn’t capture crypto assets and the brokers. That changes with CARF. As of January 1, 2026, onboarding a new user without a valid self-certification will be considered non-compliant.
A CARF-compliant self-certification must include:
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Full legal name
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Date of birth
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Residential address
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Country of tax residence
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Tax Identification Number (TIN)
For entities, additional details such as business registration numbers and controlling persons may be required.
What Crypto Firms Should Do Now
To prepare for CARF, crypto firms should:
- Conduct a data audit: Identify missing or incomplete user information.
- Implement CARF compliant (CRS) onboarding: Make self-certification mandatory.
- Remediate pre-existing accounts: Complete due diligence before May 31, 2027.
- Update internal systems: Ensure data collection, storage, and reporting mechanisms meet CARF standards.
- Train staff: Equip compliance teams with the knowledge to handle CARF obligations.
- Engage with regulators: Stay informed on jurisdiction-specific guidance and deadlines.
Jurisdictional Guidance: UK, Canada, and Cayman Islands
There are over 67 countries which have signed on to implement CARF. While there are varying times in which CARF reporting is due, each intends to share account data with other participants by 2028. Some examples of jurisdiction focus with new CARF legislation:
United Kingdom (HMRC)
HMRC has published detailed guidance outlining CARF obligations for UK-based CASPs. These include mandatory registration, annual reporting, and penalties for non-compliance. Firms must collect and verify user data, including tax residency and transaction details, and submit reports to HMRC, which will then exchange data with other CARF jurisdictions.
Canada (CRA)
Canada has committed to implementing CARF by 2026, aligning with its existing CRS obligations. The CRA emphasizes the importance of collecting tax residency information and has issued guidance on due diligence procedures similar to those under CRS. Canadian crypto firms will need to ensure onboarding processes include CARF-compliant self-certifications.
Cayman Islands
The Cayman Islands, a key offshore jurisdiction, has also pledged to implement CARF. The Tax Information Authority has updated its compliance frameworks to reflect CARF requirements, including onboarding and reporting obligations for Virtual Asset Service Providers (VASPs). Firms operating in or through Cayman will need to collect and report user data in line with OECD standards.
Final Thoughts
CARF is not just another regulation, it’s a global shift in how crypto assets are treated by tax authorities. For firms that have operated with minimal onboarding requirements, the introduction of mandatory self-certification and remediation marks a significant change. Proactive compliance is essential, and remediation is the first step toward meeting these new standards.
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