Jake Hardinge, Group Head of FATCA/CRS, Sovereign Trust (Isle of Man)

In 2024 alone, 171 million financial accounts worth €13 trillion were exchanged under the Common Reporting Standard, the OECD framework built to catch offshore tax evasion. Jake Hardinge has seen that machinery from both sides. Before joining Sovereign as Group FATCA and CRS Manager, he worked within the International Team of the Isle of Man’s Income Tax Division, applying the very rules he now helps clients navigate. 

We asked him what CRS requires, why it matters even for clients who assume it doesn’t apply to them, and what’s changing as CRS 2.0 brings crypto assets into scope.

1. 1.  You’ve worked on both sides, as a regulator and now inside a firm that has to comply. What did the Isle of Man Government job teach you that you still use now?
      My time within the International Team, of the Island’s Income Tax Division (‘ITD’), fostered the foundations of everything I continue to utilise within Automatic Exchange of Information (‘AEOI’) work; technical facets, such as getting to grips with interrogating Extensible Mark-up Language (‘XML’) data files, to understanding the myriad of nuanced classification, due diligence and reporting rules, with their subsequent application in practice across a multitude of sectors, proved invaluable in my transition to the private sector.

      Beyond the technical elements, my time with the ITD allowed me to be exposed to a variety of personalities and Financial Institutions, tasked with filing obligations, that ultimately contributed to the way I carry myself in private client and internal dealings to this day: exercising professional scepticism, acting with integrity, and taking a more conversational outlook in approach, when advising Financial Institutions or private clients alike – quite simply, I wouldn’t be where I am today without the mentorship of the many individuals still within the International Team of the ITD.

   2. For a client who’s never heard the term before, how would you explain what CRS is, in plain terms?
      Often, this has a tendency to result in more questions than answers! However, the Common Reporting Standard (‘CRS’), at its core, is a tax transparency framework, enacted by the Organisation for Economic Co-operation and Development (‘OECD’), at the request of G20 countries to combat offshore tax evasion. This reporting framework functions by obligating Financial Institutions, of Participating Jurisdictions i.e., those that are signatory to the pertinent international agreements, to apply specific due diligence rules, to identify Reportable Accounts, and subsequently report this information to their Competent Authority – typically the tax authority of the jurisdiction in which the Financial Account is maintained, who will automatically exchange this information, by 30 September annually, with the Competent Authority of the home tax jurisdiction(s).

      With that said, in practice, the CRS functions more akin to an annual data reporting exercise for Financial Institutions, which encompasses a wide variety of personal data (full name, residence address, Tax Identification Numbers, or functional equivalents, date and place of birth) and financial data, such as a bank balance and interest paid with respect to the Financial Account. It is once this data is transmitted and exchanged that the ‘tax’ element becomes more prominent, as this data is cross-referenced, within the Competent Authority’s internal systems, to inform potential tax compliance enquiries and ensure offshore accounts, assets, and payments or gross proceeds made with respect to such accounts and assets, are disclosed accordingly.

   3. Why does CRS exist, and why should a client care about it?
      As noted, the CRS exists, predominantly, as a means to combat offshore tax evasion and promote tax transparency on the global stage. In illustrating the global reach of the CRS, the OECD noted, within the December 2025 Peer Review Report that, in 2024 alone, 171 million financial accounts, with a total value of €13 trillion, were exchanged under the CRS framework (Source: OECD, Peer Review of the Automatic Exchange of Financial Account Information 2025 Update, Executive Summary (OECD Publishing, Paris, December 2025)).

      For clients and their structures, Sovereign handles the more technically cumbersome elements of this work, notably: the annual entity classification exercise, due diligence, XML report production and onward submission, where those reporting obligations exist for client and internal entities, such as our pension schemes. Where clients should particularly care about this reporting is in reference to their personal tax disclosures – where disparities exist, between a financial institution’s CRS reporting, and disclosures made on a client’s personal tax return, the technology utilised by Competent Authorities, no doubt augmented by the employment of Artificial Intelligence (‘AI’), is becoming increasingly sophisticated in spotting anomalies, which will form the basis of potential tax compliance enquiries.Given the aforementioned figures, it is highly probable that a client, and the associated Financial Account(s), are being reported in some manner, by either their banking institution, investment provider, or Sovereign directly, where their entity(ies) have qualified for Financial Institution status.

      Ultimately, caring, in conjunction with possessing a basic understanding of the CRS reporting framework, will allow clients to understand ‘how’ and ‘why’ their data is used but, more importantly, how they can also exercise facets, such as their data protection rights, or their rights when inaccurate reports have been made in respect of their Financial Accounts.

   4. What’s the most common misunderstanding you hear from clients about CRS?
      I’ve heard many misconceptions from filers and clients alike during my time with the ITD and Sovereign – however, the most common misconception I encounter is that CRS reporting is only in respect of corporations or High-Net Worth Individuals (‘HNWI’). This is, factually, untrue. While Financial Institutions can elect to apply certain reporting exemptions under the CRS, largely in respect of Entity Accounts, if you hold an offshore bank account for example, and are resident for tax purposes within a Reportable Jurisdiction, your personal data and the financial data of the Financial Account in question, will ultimately be exchanged with your home tax authority.
   5. CRS is expanding to cover crypto assets under what’s being called CRS 2.0. What should clients be paying attention to as that rolls out?
      Clients who have held crypto assets were not subjected to the scope of the CRS traditionally, as crypto assets were not included within the remit of ‘Financial Asset’ under the original CRS framework. With CRS 2.0, which went live on 01 January 2026, for first reporting across 2027, this is now changing, to include not only crypto assets, but a wide array of digital financial products, such as Specified E-Money Products, and Central Bank Digital Currencies (‘CBDCs’). In focusing in on crypto assets, there is an emphasis on ‘indirect’ holdings of crypto assets via traditional financial products, such as a fund or derivative under CRS 2.0. This is due to the fact that those, directly holding ‘Relevant Crypto-Assets,’ will be subjected to reporting under the OECD’s Crypto Asset Reporting Framework (‘CARF’), in which reporting will be undertaken by the Crypto-Asset Service Provider (‘CASP’).

      For clients who hold this asset class indirectly, they should be acutely aware of the implementation timeline for CRS 2.0, the resulting reporting requirements that may arise, and the documentary requests that may be issued by your investment provider, particularly requests for self-certifications, which may look unfamiliar, to confirm various personal and tax data points. Where requests are made for due diligence documentation, notably self-certifications, and if you’re a client that is yet to receive such requests: research the topic, understand how and why your data is used, and engage with your banking and investment providers in good faith. This ultimately ensures your personal and financial data are exchanged with the correct jurisdiction(s) and that your personal tax affairs are in order, should queries from Competent Authorities arise.

      Finally, please remember Sovereign Group’s FATCA/CRS Team are always on hand to assist clients and their structures with ongoing compliance with the CRS.