FATCA and CRS Reporting: When Your Bank Talks to the IRS Before You Do

Once upon a time, moving your money overseas meant it could quietly stay overseas.

In 2025? Your bank is practically CC’ing the IRS—and its international cousins—before you’ve even filed your own taxes.

Thanks to FATCA (the Foreign Account Tax Compliance Act) and the Common Reporting Standard (CRS), global banking transparency isn’t optional anymore.

Banks, investment firms, and even insurance companies are now required to report account details to government tax agencies—and yes, that includes the IRS, even if you’re living halfway around the world.

If you have foreign accounts or investments, FATCA and CRS reporting can feel like a giant game of “Who’s Telling on Me Now?” But once you understand the rules (and file smartly), it’s easier to stay compliant—and sleep better at night.

FATCA: What it means for U.S. taxpayers

Passed in 2010 and enforced by the Internal Revenue Service, FATCA was designed with one clear mission: make it harder for U.S. taxpayers to hide money abroad.

Here’s how it works today:

• FATCA reporting targets U.S. persons—including citizens, green card holders, and resident aliens—who hold reportable accounts with foreign banks, investment firms, or insurance companies.
• Foreign financial institutions (FFIs) and non-financial foreign entities (NFFEs) are legally required to perform extra due diligence during onboarding, verifying the citizenship and tax residency of all account holders.
• If your bank identifies you as a U.S. person, they’ll collect self-certification forms, obtain identification numbers like your Social Security Number, and report your financial assets directly to the IRS under local intergovernmental agreements (IGAs).
• Miss a filing—or have your institution classify you as non-compliant—and you could face a 30% withholding tax on certain U.S. source income.

Even if you’re a non-U.S. resident living abroad, FATCA still follows your bank accounts. It’s part of a global shift toward automatic information reporting and tighter scrutiny around income tax compliance.

CRS: A global reporting framework

While FATCA is all about U.S. taxpayers, the Common Reporting Standard (CRS) takes things global.

Created by the Organization for Economic Co-operation and Development (OECD), CRS sets up an automatic exchange of financial account information (AEOI) between countries.

In simple terms: if you’re a non-resident in a country where you hold an account, your bank may report your details to your home country’s tax authority—no permission slip required.

Here’s how CRS works:

• Financial institutions perform strict KYC (Know-Your-Customer) checks to identify controlling persons and account holders based on tax residence, not citizenship.
• Banks and investment entities must validate your signatory status and report qualifying accounts to local tax authorities, who then share the data internationally.
• Unlike FATCA, which targets only U.S. persons, CRS applies to anyone who’s a tax resident outside the jurisdiction where the account is held—making its reporting requirements even broader.

In short: whether you’re investing through a financial services platform in Paris or holding savings in Singapore, if you’re a non-resident there, someone’s flagging it.

FATCA vs. CRS: Key differences

At first glance, FATCA and CRS look like two versions of the same global tax crackdown. But dig a little deeper, and the differences matter—a lot.

Here’s the quick breakdown:

• Jurisdictional reach: FATCA is U.S.-specific, while CRS is a global standard adopted by over 100 countries.
• Regulatory requirements: FATCA requires individuals to file Form 8938 with the IRS; CRS relies solely on financial institutions for reporting—no direct filing by taxpayers.
• Scope and enforcement: FATCA focuses on citizenship and hits hard with penalties like 30% withholding; CRS applies based on tax residence and is enforced through local tax authorities and CRS compliance audits.

How banks collect FATCA and CRS information

Opening a bank account used to be simple: passport, signature, done. Today? It’s a full tax questionnaire before they even hand over a pen.

Under FATCA and CRS reporting regimes, financial institutions (FIs) must collect tax information from new customers to meet compliance rules—and that process starts the minute you open an account.

Here’s what’s happening behind the scenes:

• Banks use self-certification forms, due diligence checks, and automated systems to flag customers who may have FATCA or CRS reporting obligations.
• Certain details—like a U.S. mailing address, an existing account tied to the U.S., or providing a U.S. identification number (like a Social Security Number)—can trigger mandatory reporting.
• If flagged, your account details may be shared with tax authorities automatically—even before you’ve filed your first return.

What gets reported under FATCA and CRS

If you’re thinking it’s just bank accounts getting flagged—think again. FATCA and CRS cast a wide net when it comes to reportable accounts and financial details.

Here’s what typically gets scooped up and sent along to tax authorities:

• Account balances at year-end, plus activity on financial instruments like stocks, mutual funds, and retirement accounts.
• Ownership or control of foreign partnerships, foreign trusts, and foreign corporations—especially if you’re listed as a beneficial owner or controlling person.
• Personal tax information like your country of residence, tax identification number (TIN), and entity classification (individual, corporation, trust, etc.).

In some cases, banks may also ask about additional roles—like if you have power of attorney over someone else’s account—which could trigger extra reporting obligations.

Are there any exemptions?

Good news: not every account ends up in the FATCA and CRS spotlight. Both systems carve out exemptions for certain low-risk institutions and account types to avoid clogging the pipeline with unnecessary reporting.

Here’s where exemptions usually show up:

• Under FATCA, Annex II of Intergovernmental Agreements (IGAs) exempts certain local banks, retirement accounts, and government funds—especially when they have limited cross-border activity.
• Under CRS, low-risk financial institutions like government retirement plans and certain nonprofit organizations often qualify for exempt status.
• Some non-financial foreign entities (NFFEs) are exempt if they meet specific criteria, such as being publicly traded or having primarily non-financial activities.

An exemption from FATCA or CRS reporting doesn’t automatically exempt you from IRS disclosure. Always double-check your U.S. filing requirements to stay fully covered.

Proactive compliance is your best defense

FATCA and CRS aren’t going anywhere—and neither is the IRS.

Your bank already knows where you live, what you earn, and (probably) how often you splurge on flights home. The only real surprise left is whether you’ve filed correctly.

If you’ve never taken a close look at your global reporting obligations, this is your sign.

The rules are complicated. The consequences are real. And your best move? Getting ahead of all of it—before your inbox lights up with tax letters from three countries.

Bright!Tax helps U.S. expats file globally with confidence—no stress, no crossed wires, no panicked Googling at midnight.

Get in touch and let’s make this the year your global finances stop feeling like a guessing game.

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