Core Viewpoint - Since July 1, 2017, financial institutions in China have been implementing due diligence for non-resident financial accounts under the Common Reporting Standard (CRS), with the first reporting completed the following year. Recently, tax authorities have intensified scrutiny of these institutions to ensure compliance with CRS procedures [2][3]. Group 1: CRS Due Diligence Overview - The CRS due diligence process requires financial institutions to identify the tax residency status of account holders and collect relevant tax information for non-resident accounts [3]. - All financial institutions established within the People's Republic of China, including banks, investment firms, and insurance companies, are required to conduct CRS due diligence [4][6]. Group 2: Information Collection Requirements - Financial institutions must collect and report various information, including account holder names, addresses, tax residency countries, taxpayer identification numbers, and account balances [4]. - For accounts controlled by non-residents, additional information about the controlling persons must also be reported [4]. Group 3: Compliance Reporting - Financial institutions must register for CRS and submit data through designated platforms, with banks using a centralized system and non-banks utilizing a multi-lateral tax data service platform [7]. - Even if no non-resident information is identified, institutions are still required to submit a zero report [7]. Group 4: Key Focus Areas for Tax Authority Scrutiny - Tax authorities will examine whether financial institutions have established comprehensive CRS management systems and whether these systems are effectively implemented and regularly updated [8]. - The execution of due diligence processes, including the verification of account holder declarations and ongoing monitoring of accounts, will be critical areas of focus [9][10]. Group 5: Information Reporting Compliance - Institutions must maintain accurate records for non-resident account holders and ensure timely and complete submission of annual CRS reports [11]. - Compliance with data accuracy and retention requirements is essential, including the proper handling of zero reports and the safeguarding of collected information [11][12]. Group 6: Recommendations for Financial Institutions - Financial institutions are advised to transition their CRS compliance efforts from merely meeting requirements to enhancing the quality of their processes [12]. - Regular self-assessments against CRS due diligence execution are recommended to ensure readiness for potential tax authority audits [12].