Govt moves to enforce global Common Reporting Standard

In a move to ensure greater transparency in financial transactions, the government is set to amend relevant laws to implement the Common Reporting Standard (CRS), an international framework.

To this end, the Financial Institutions Division (FID) under the Ministry of Finance has already formed a 10-member committee, said sources at the coordination wing of the division.

Authorities believe the successful implementation of the standards is expected to enhance economic transparency, facilitate legitimate financial flows, and play a key role in preventing capital flight and illicit fund transfers abroad.

CRS is a global standard for the automatic exchange of financial account information. It requires financial institutions (FIs) in participating countries to collect and share information about account holders with their respective tax authorities, enabling them to track foreign income and combat tax evasion.

Developed by the Organisation for Economic Co-operation and Development (OECD) in 2014, the standard has so far been adopted by over 120 countries.

The decision to move forward with CRS implementation was made at an inter-ministerial meeting held at the FID on 8 July, with Secretary Nazma Mobarek in the chair.

In her opening remarks, the secretary underscored the importance of the initiative as part of the government's time-bound reform agenda.

According to the meeting minutes, recommendations from the Reform Commission were earlier presented at a meeting of the Advisory Council held on 22 May this year. Among the shortlisted recommendations, one related to the Anti-Corruption Commission (ACC) was identified as relevant to the FID.

Stakeholders involved in CRS implementation include the Finance Division, the Internal Resources Division (IRD), the Bangladesh Bank (BB), the National Board of Revenue (NBR), the ACC, and the Bangladesh Financial Intelligence Unit (BFIU).

Speaking at the meeting, Mohammad Salah Uddin, Additional Director of the Banking Regulation and Policy Department (BRPD) of the BB, said that existing income tax and banking laws need to be updated to comply with the CRS.

"Bangladesh must formally join the OECD's CRS framework. The BB, BFIU, and NBR could serve as central authorities for collecting and exchanging financial information," he said.

He also proposed that a high-level committee, led by the FID and comprising representatives from all relevant agencies, be formed to oversee the implementation process. "If necessary, a study tour to a neighbouring CRS-implementing country could be considered," he added.

AKM Nurunnabi, Additional Director at the BFIU, noted that when citizens of one country earn income abroad, their home-country tax authorities often remain unaware of the sources and amounts.

"CRS can close this gap by enabling cross-border sharing of financial account information," he said, suggesting that the NBR take the lead role in the process through necessary amendments to tax laws and regulations.

Md Ekramul Haque, Second Secretary at the NBR, stated that income tax revenue in Bangladesh remains low in comparison to GDP.

"Encouraging the inflow of foreign earnings as legal remittances through banking channels will help boost tax collection and improve reporting," he added.

Md Mokammel Haque, Director General of the ACC, said that CRS will be highly beneficial for the Commission.

"It will strengthen efforts to combat money laundering and help identify Bangladeshi nationals who own assets abroad through illicit transfers. Legal action against them will become much easier," he said.

He also recommended involving the IRD more closely in the CRS implementation process.

The meeting also decided to form a 10-member committee to prepare a roadmap for CRS implementation.

The committee will be headed by the Additional Secretary (Administration) of the FID. Other members will include representatives (not below the rank of joint secretary or equivalent) from the Finance Division, ACC, IRD, BB, BFIU, and the NBR.

The Joint Secretary (Insurance & Capital Market and Reform Focal Point) of the FID will serve as the member secretary.

The committee has been tasked with submitting a report on the required legal reforms for CRS implementation within 30 working days. It will also have the authority to co-opt new members as needed.

Speaking with the FE, Faiz Ahmed, Managing Partner and CEO of F AHMED & CO., Chartered Accountants, said it would be a welcome move to prevent tax evasion and increase the tax-to-GDP ratio.

He said that while auditors do not typically audit CRS compliance directly, they may assess its financial implications. In some jurisdictions, separate specialised audits are required to ensure CRS compliance.

Faiz further explained that an auditor's report and the CRS are distinct tools for promoting financial transparency.

An auditor's report provides an independent opinion on a company's financial statements for stakeholders such as investors, confirming compliance with accounting standards like IFRS or GAAP.

"Both systems, though different in function, contribute to global financial accountability and enjoy broad international acceptance," added Faiz, who is also Managing Director of WealthBridge International LLC, UAE.

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