CRS 2.0 and CARF - A New Era of Global Tax Transparency for Financial Institutions

CRS 2.0 and CARF - A New Era of Global Tax Transparency for Financial Institutions

As the global financial landscape evolves, so too do the frameworks that govern tax transparency. The OECD’s Common Reporting Standard (CRS) has long served as the backbone of international efforts to combat tax evasion. Now, with the introduction of CRS 2.0 and the Crypto-Asset Reporting Framework (CARF), financial institutions (FIs) must prepare for a new wave of regulatory complexity, digital asset oversight, and enhanced due diligence requirements.

The Evolution of CRS: From 2014 to 2026

Introduced in 2014, CRS enables tax authorities to receive information about financial accounts held by their residents in other jurisdictions. This data is automatically exchanged between governments under bilateral or multilateral agreements, allowing for cross-checking against domestic tax filings, minimizing tax avoidance and fraud.

Over the years, more jurisdictions signed on to this framework in agreement to improve tax transparency. As of 2025, over 120 jurisdictions have adopted CRS, with more countries set to join in the upcoming years.

CRS 2.0: Key Amendments and Objectives

For years that followed the introduction of CRS, jurisdictions followed and enforced the rules at varying levels. However, following the OECDs first comprehensive review, finalized amendments to CRS were announced in 2023, with further refinements published in 2024. These updates aim to:

• Improve operational efficiency and reporting accuracy for FIs
• Address the rise of digital financial products, including crypto-assets to tighten reporting gaps
• Enhance due diligence procedures and audit readiness allowing jurisdiction tax authorities more opportunity to enforce the rules
• Integrate practical guidance from previously issued FAQs
• Align reporting formats with an updated XML schema

CARF: A Parallel Framework for Crypto-Assets

To address the challenges posed by crypto-assets, which often lack centralized oversight, the OECD introduced CARF. This new reporting regime was designed to track crypto transactions. CARF complements CRS by focusing on transactional data of digital assets, while CRS continues to track holdings of traditional financial accounts.

Together, CRS 2.0 and CARF form a dual framework that ensures comprehensive coverage of both traditional and digital financial assets.

Implications for Financial Institutions

Financial institutions must take proactive steps to align with CRS 2.0 and CARF requirements. These include:

Expanded Reporting Requirements

CRS 2.0 introduces new data fields, including:

• Source of self-certification (e.g., investor vs. controlling person)
• Role of controlling persons in investment entities
• Account type and joint ownership status
• Classification of accounts as new or pre-existing
• Holdings in electronic money products and CBDCs

Integration of OECD FAQs

Previously issued FAQs, covering account types, due diligence scenarios, and more, are now integrated into the CRS commentary. Institutions must ensure their compliance frameworks reflect this guidance.

Updated XML Schema

The OECD released a new CRS XML schema in October 2024, incorporating fields for the additional data required under CRS 2.0. FIs must update their reporting systems, or ensure their vendors are updated, to align with this format.

Practical Steps for Financial Institutions

To prepare for the implementation of CRS 2.0 effective in January 2026, institutions should:

1. Conduct a Gap Analysis

Review current CRS processes to identify gaps in data collection, account classification, and reporting capabilities. Assess readiness to capture new data elements, including digital asset holdings.

2. Update Onboarding and Due Diligence

Revise client onboarding forms and procedures to reflect enhanced scrutiny requirements. Train staff to identify high-risk indicators and verify the reliability of existing self-certifications.

3. Upgrade Technology and Reporting Systems

Ensure systems are compatible with the updated XML schema and can handle expanded data requirements. Engage with technology vendors or internal IT teams to implement necessary updates.

4. Evaluate existing accounts for missing data

Review current account data to identify gaps in information that may need to be remediated before reporting in 2027.

5. Engage with Tax Authorities

Monitor local legislative developments and participate in industry briefings to clarify jurisdiction-specific implementation timelines and expectations.

6. Communicate with Clients

Inform clients about the expanded scope of CRS reporting, particularly regarding digital financial products and joint accounts. Provide clear guidance on updated self-certification and reporting requirements.

TAINA’s Role in Supporting CRS 2.0 Compliance

TAINA’s RegTech platform is designed to help financial institutions navigate the complexities of CRS 2.0 and CARF with confidence. Our solution offers:

Form Validation

• Ensures completeness and accuracy of CRS self-certifications
• Cross-verifies customer data against internal records
• Flags inconsistencies and missing fields before submission

Reporting Support

• Delivers clean, validated data in standardized agnostic formats
• Integrates flexibly with downstream reporting systems
• Structures data to meet CRS XML template obligations

Audit Readiness

• Acts as a golden source of truth for tax documentation
• Provides traceable validation logic and audit trails
• Offers insights into form authenticity, metadata, and data integrity

A Strategic Opportunity for Financial Institutions

While the transition to CRS 2.0 and CARF presents challenges, it also offers a strategic opportunity to enhance compliance frameworks, modernize technology, and build stronger relationships with clients and regulators.

For financial institutions operating across borders, the key to success lies in early preparation, technology adoption, and clear communication. With TAINA as your compliance partner, you can stay ahead of regulatory changes and ensure your organization is ready for 2026 and beyond.

We would love to talk to you more about your current documentation validation process and how our award-winning FATCA and CRS Validation platform may add value to your organisation.

For more information on how our fully automated FATCA and CRS Validation platform can add value to your business, get in touch or request a demo to see it in action.