Controlling person
The OECD's Common Reporting Standard defines a controlling person and explains how the term relates to account holders and reportable accounts. The term describes a role in CRS due diligence and tax-residence reporting.
Meaning under the standard
The OECD's Common Reporting Standard defines a controlling person as a natural person who exercises control over an entity. For trusts, the definition includes settlors, trustees, protectors when present, beneficiaries or beneficiary classes, and other natural persons with ultimate effective control. For other legal arrangements, it covers people in equivalent or similar positions. The standard says the term is interpreted consistently with the Financial Action Task Force Recommendations.[1]
The St. Kitts and Nevis Inland Revenue Department gives a plain-language example: where the account holder is an entity, financial institutions identify a controlling person and determine that person's tax residence. Its trust examples include a settlor, trustee, protector or beneficiary.
The term is distinct from account holder and reportable person. The entity can be the account holder, while its controlling person is an individual whose tax residence is checked. Under the OECD definition, reportable person refers to a reportable-jurisdiction person with specified exclusions, while a controlling person is identified through control of an entity.[1]
When the term matters for accounts
The CRS uses controlling persons in its treatment of passive non-financial entities, or Passive NFEs. An account held by a Passive NFE can be a reportable account when at least one controlling person is a reportable person, after the account has been identified under the required due diligence procedures. This makes the person's residence relevant even though the individual is not the named account holder.[1]
The OECD standard allows a reporting financial institution to rely on information collected and maintained under its AML/KYC procedures to determine who controls an account holder. For determining a controlling person's residence in a Passive NFE case, the standard also permits reliance on a self-certification from the account holder or the controlling person.
The reporting connection depends on the entity being a Passive NFE and a controlling person meeting the reportable-person condition. The CRS definition also recognizes multiple controlling persons, including a beneficiary class for a trust, so the inquiry is not necessarily limited to one individual.
Questions and answers
Does a controlling person have to be the account holder?
No. Under the CRS the entity can be the account holder, and its controlling persons are identified separately. For a Passive NFE, a controlling person's reportable residence can make the account reportable under the standard.[1]
Who can count as a controlling person of a trust?
The OECD definition includes the settlor, trustee, protector if any, beneficiaries or beneficiary classes, and other natural persons with ultimate effective control. The St. Kitts and Nevis guidance gives settlor, trustee, protector and beneficiary as examples.[1]
When can a Passive NFE account be reportable?
Under the CRS definition, an account held by a Passive NFE qualifies when one or more controlling persons are reportable persons. It also has to be identified through the due diligence procedures described in the standard.[1]
How may an institution identify controlling persons?
The OECD standard permits a reporting financial institution to rely on information it collects and maintains under AML/KYC procedures. For determining residence in a Passive NFE case, it may rely on a self-certification from the account holder or controlling person.[1]
Related terms
- Common Reporting Standard: The Common Reporting Standard sets rules for exchanging financial account information, covering reporting institutions, covered accounts and due diligence.
- Reporting financial institution: The Common Reporting Standard classifies a financial institution as reporting when it falls within the relevant jurisdiction's rules and is not non-reporting.
- Reportable account: The OECD standard defines a reportable account as held by a reportable person or certain passive entities, and identified through due diligence procedures.
Related guides and articles
- The OECD Common Reporting Standard: The Common Reporting Standard sets rules for financial account reporting and the annual exchange of that information between jurisdictions.
- Due diligence and controlling persons of a trust: The CRS describes due diligence as account review by institutions to identify reportable accounts and information, including tests for entity accounts.
- Trust Roles in FATCA and CRS Reporting: FATCA and CRS definitions cover people in named trust roles and others with effective control. Listed beneficiaries count whether or not they control the trust.
Related pages
Sources and data notes
- OECD, Standard for Automatic Exchange of Financial Account Information in Tax Matters, Second Edition (Common Reporting Standard and Commentaries). https://www.oecd.org/content/dam/oecd/en/publications/reports/2017/03/standard-for-automatic-exchange-of-financial-account-information-in-tax-matters-second-edition_g1g73eb6/9789264267992-en.pdf. Retrieved .
- Revenue Jersey, Government of Jersey, Automatic exchange of tax information: the Common Reporting Standard (CRS). https://www.gov.je/taxesmoney/internationaltaxagreements/igas/pages/commonreportingstandard.aspx. Retrieved .
- Inland Revenue Authority of Singapore, CRS Registration and Deregistration. https://www.iras.gov.sg/taxes/international-tax/common-reporting-standard-%28crs%29/crs-registration-and-deregistration. Retrieved .
- St. Kitts and Nevis Inland Revenue Department, CRS. https://www.sknird.com/crs/. Retrieved .
Dates in this block record when each source was read for this page.