Supervisory Authorities Bolster the Importance of Financial Education

Financial education got a boost last month when both the European Commission, and the three European Supervisory Authorities (EBA, ESMA and EIOPA), collectively called the ESAs, published initiatives related to financial competence and financial digitalization education, respectively. On January 11, 2022, the European Commission and the OECD’s International Network on Financial Education published a joint EU/OECD-INFE financial competence framework for adults. This was a continuation of measures that were announced in Action 7 of the 2020 capital markets union action plan. The joint EU/OECD-INFE’s, Financial Competence Framework for Adults in the European Union, “aims to improve individuals' financial skills so that they can make sound decisions regarding their personal finances. It will support the development of public policies, financial literacy programmes and educational materials by Member States, educational institutions and industry. It will also support the exchange of good practices by policy makers and stakeholders in the EU.”

On January 31, 2022 the European Supervisory Authorities (ESAs) published a, Joint ESAs thematic repository of national financial education initiatives on digitalisation - with a specific focus on cybersecurity, scams and fraud, which consists of 127 national initiatives providing consumers with information on how to improve their financial literacy. The repository, focusing on cybersecurity, scams, and fraud, will also be used to prepare a report on financial education that will be published later in 2022. The majority of the initiatives generally pertain to consumers, but also target retail investors, elderly people, students, children/young people, families; or specific groups such as journalists and mass media representatives; as well as social media and influencers “as sources of information and promoters of investment platforms.”

More information on the Financial Competence Framework for Adults can be found here; and information on the Joint ESAs thematic repository can be found here.

OECD, European Banking Authority, European Commission

OECD Gives Update on Common Reporting Standard

The Organisation for Economic Co-operation and Development (OECD) provided an update on the implementation of the Common Reporting Standard (CRS) during its recent "Tax Talks" forum.  The forum is designed to provide updates on important recent and upcoming developments in the OECD's international tax work.

The CRS, was developed in response to the G20 request and approved by the OECD Council and calls on jurisdictions to obtain information from their financial institutions, such as the account balances of non-citizens who are not residents of the jurisdiction, and automatically exchange that information with other jurisdictions on an annual basis, mainly for the purpose of limiting the opportunities for taxpayers to circumvent reporting.

During the forum, OECD reported that 49 jurisdictions commenced their reporting on September 30, 2017, and another 53 jurisdictions are slated to commence reporting in September of 2018.  The United Kingdom and the EU states commenced in 2017, with Canada and Australia scheduled for 2018.  The United States has not chosen to participate in the CRS.  A complete list of the signatories, together with their respective implementation date can be found here


Common Reporting Standards Commencing This Month

The Organisation for Economic Co-operation and Development (OECD) recently announced the commencement of bilateral exchange of financial account information under the Common Reporting Standard (CRS) as well as another series of bilateral exchange relationships established under the the CRS. This brings the number of bilateral relationships for the automatic exchange of financial account balances of non-resident, non-citizens held across the globe to over 2000.

At present, 102 jurisdictions have publicly committed to implement the CRS, with 49 being committed to start exchanges this month and a further 53 slated to take up exchanges in September 2018.

With first exchanges for jurisdictions committed to a 2017 timeline now being only weeks away, all 49 have now activated their exchange relationships under the CRS Multilateral Competent Aurhority Agreement (CRS MCAA) and the network of bilateral exchange relationships now covers over 99% of the total number of possible exchange relationships.

The OECD’s Common Reporting Standard is modeled on the United States’ Foreign Account Tax Compliance Act (FATCA) and is intended to help combat tax-evasion by individuals who are using “offshore” financial accounts, i.e. accounts located in jurisdictions where they do not reside, to hide investment income from their home countries’ tax authorities.  Credit unions subject to the Common Reporting Standard will be required to make annual reports to their jurisdiction’s tax authority about accounts held by members who are not local residents, including those accounts’ balances.

A copy of the OECD press release can be viewed here.