Grenada
This report analyses the implementation of the AEOI Standard in Grenada with respect to the requirements of the AEOI Terms of Reference. It assesses both the legal frameworks put in place to implement the AEOI Standard and the effectiveness of the implementation of the AEOI Standard in practice.
The methodology used for the peer reviews and that therefore underpins this report is outlined in Chapter 2.
Overall findings
AEOI legal framework
Grenada’s legal framework implementing the AEOI Standard is in place and is consistent with the requirements of the AEOI Terms of Reference. This includes Grenada’s domestic legislative framework requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (CR1) and its international legal framework to exchange the information with all of Grenada’s Interested Appropriate Partners (CR2).
Effectiveness of AEOI in practice
Grenada’s implementation of the AEOI Standard is not compliant with the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. While Grenada is partially compliant with respect to exchanging the information in an effective and timely manner (CR2), there are fundamental issues with respect to ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures (CR1).
Overall rating in relation to the effectiveness in practice: Non-Compliant
General context
Grenada commenced exchanges under the AEOI Standard in 2018.
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Grenada:
enacted the Mutual Exchange of Information on Taxation Matters Act 24, as amended in 2017 and 2022; and
introduced the Mutual Exchange of Information on Tax Matters (Common Reporting Standard) Regulations, as amended in 2022.
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 January 2017. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2017 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2018.
Following the initial Global Forum peer review, Grenada amended its legislative framework to address issues identified, the last of which was effective from 20 May 2022.
With respect to the exchange of information under the AEOI Standard, Grenada is a Party to the Convention on Mutual Administrative Assistance in Tax Matters and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2018.
While it is understood that the number of Financial Institutions in Grenada that reported information on Financial Accounts as defined in the AEOI Standard (essentially because they maintained Financial Accounts for Account Holders, or that were related to Controlling Persons, resident in a Reportable Jurisdiction) was 37 in 2020, as set out in Table 1, the information for 2021 is not available. Neither is the information on the number of Financial Accounts reported.
Table 2 sets out the number of exchange partners to which information was successfully sent by Grenada in the past few years (including where the necessary frameworks were in place containing an obligation on Reporting Financial Institutions to report information, but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to Grenada’s exchanges in practice, which is also analysed in subsequent sections of this report.
In order to provide for the effective implementation of the AEOI Standard, in Grenada:
the Grenada Inland Revenue Division (the tax authority) has the responsibility to ensure the effective implementation of the due diligence and reporting obligations by Reporting Financial Institutions and for exchanging the information with Grenada’s exchange partners;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place by the tax authority; and
the Common Transmission System (CTS) is used for the exchange of the information, along with the associated file preparation and encryption requirements.
It should be noted that the review of Grenada’s legal frameworks implementing the AEOI Standard concluded with the determination that Grenada’s domestic and international legal frameworks are In Place. This has been taken into account when reviewing the effectiveness of Grenada’s implementation of the AEOI Standard in practice.
Findings and conclusions on the legal frameworks
The detailed findings and conclusions on the AEOI legal frameworks for Grenada are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Domestic legal framework: Jurisdictions should have a domestic legislative framework in place that requires all Reporting Financial Institutions to conduct the due diligence and reporting procedures in the CRS, and that provides for the effective implementation of the CRS as set out therein.
Grenada’s domestic legislative framework is in place and contains all of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures (SRs 1.1 – 1.3) It also provides for a framework to enforce the requirements (SR 1.4).
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Grenada has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Grenada has defined the scope of the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in accordance with the CRS and its Commentary.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Grenada has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Grenada does not have a legislative framework in place to enforce the requirements in accordance with the CRS and its Commentary.
CR2 International legal framework: Jurisdictions should have exchange relationships in effect with all Interested Appropriate Partners as committed to and that provide for the exchange of information in accordance with the Model CAA.
Grenada’s international legal framework to exchange the information is in place, is consistent with the Model CAA and its Commentary and provides for exchange with all of Grenada’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Grenada and that meet the required standard in relation to confidentiality and data safeguards) (SRs 2.1 – 2.3).
SR 2.1 Jurisdictions should have exchange agreements in effect with all Interested Appropriate Partners that permit the automatic exchange of CRS information.
Grenada has exchange agreements that permit the automatic exchange of CRS information in effect with all its Interested Appropriate Partners.
SR 2.2 Such an exchange agreement should be put in place without undue delay, following the receipt of an expression of interest from an Interested Appropriate Partner.
Grenada put in place its exchange agreements without undue delay.
SR 2.3 Jurisdictions should ensure that the exchange agreements in effect provide for the exchange of information in accordance with the requirements of the Model CAA.
Grenada’s exchange agreements provide for the exchange of information in accordance with the requirements of the Model CAA.
Findings and conclusions in relation to effectiveness in practice
The detailed findings and conclusions in relation to effectiveness in practice of AEOI for Grenada are below, organised per Core Requirement (CR) and then per sub-requirement (SR) as extracted from the AEOI Terms of Reference (see Annex C).
CR1 Effectiveness in practice: Jurisdictions should ensure that in practice Reporting Financial Institutions correctly implement the due diligence and reporting procedures, which includes a requirement for jurisdictions to have in place an administrative framework to ensure the effective implementation of the CRS.
Grenada’s implementation of the AEOI Standard is non-compliant with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures. More specifically, there are fundamental issues in Grenada ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5) and collaborating with its exchange partners to ensure effectiveness (SR 1.6). Grenada should continue its implementation process to ensure its effectiveness, including by addressing the recommendations made.
SR 1.5 Jurisdictions should ensure that in practice Reporting Financial Institutions identify the Financial Accounts they maintain, identify the Reportable Accounts among those Financial Accounts, as well as their Account Holders, and where relevant Controlling Persons, by correctly conducting the due diligence procedures and collect and report the required information with respect to each Reportable Account. This includes having in place:
an effective administrative compliance framework to ensure the effective implementation of, and compliance with, the CRS. This framework should:
be based on a strategy that facilitates compliance by Reporting Financial Institutions and which is informed by a risk assessment in respect of the effective implementation of the CRS that takes into account relevant information sources (including third party sources);
include procedures to ensure that Financial Institutions correctly apply the definitions of Reporting Financial Institutions and Non-Reporting Financial Institutions;
include procedures to periodically verify Reporting Financial Institutions’ compliance, conducted by authorities that have adequate powers with respect to the reviewed Reporting Financial Institutions, with procedures to access the records they maintain; and
effective procedures to ensure that Financial Institutions, persons or intermediaries do not circumvent the due diligence and reporting procedures;
effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions;
strong measures to ensure that valid self-certifications are always obtained for New Accounts;
effective procedures to ensure that each, or each type of, jurisdiction-specific Non-Reporting Financial Institution and Excluded Account continue to present a low risk of being used to evade tax; and
effective procedures to follow up with a Reporting Financial Institution when undocumented accounts are reported in order to establish the reasons why such information is being reported.
In order to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, Grenada implemented some of the requirements in accordance with expectations. However, fundamental issues were identified. The key findings were as follows:
Grenada lacks a clear overarching compliance strategy, based on a risk assessment and informed by a range of information sources, to ensure that Financial Institutions have correctly implemented the requirements under the AEOI Standard in practice. This includes a lack of documented procedures to review and verify compliance. Furthermore, in practice, no dedicated AEOI-related compliance activities have yet been undertaken.
While Grenada cross-checks the lists of regulated entities from other regulatory bodies with the list of Financial Institutions that have reported information to the tax authorities under the AEOI Standard to identify its population of Reporting Financial Institutions, it does not have further procedures to identify its full population of Reporting Financial Institutions. Grenada has also not yet taken actions to ensure that Reporting Financial Institutions have classified themselves correctly and are reporting information as required.
Even though Grenada has drafted a compliance plan, it lacks clarity. Furthermore, there does not appear to be a formalised plan or activity undertaken to ensure that the interaction between Grenada’s AEOI and AML frameworks always results in reporting in accordance with the AEOI Standard. With respect to resourcing, the adequacy of Grenada’s resourcing is unclear.
Furthermore, Grenada has not been able to demonstrate how it verifies compliance by Reporting Financial Institutions and effectively addresses cases of non-compliance. In addition to having not carried out desk-based checks in relation to the completeness and accuracy of the information, it appears that Grenada has not yet finalised the administrative procedures to conduct audits and to access records held by Reporting Financial Institutions. Grenada has also not been able to demonstrate that it has procedures in place to ensure valid self-certifications are obtained.
Grenada also does not have procedures to follow up with Reporting Financial Institutions when undocumented accounts. Furthermore, it does not have procedures to address circumvention of the due diligence and reporting procedures by Financial Institutions, persons or intermediaries.
It is noted that Grenada does not have a jurisdiction-specific list of Non-Reporting Financial Institutions or Excluded Accounts.
Table 3 provides a summary of the specific activities undertaken, or that are planned to be undertaken, in relation to each of the key parts of the framework described above.
Grenada was not able to confirm that it collects and monitors information on the proportion of Financial Accounts that are reported that include information on the Tax Identification Numbers and dates of birth with respect to the individuals associated with them. These data points are key to exchange partners to effectively utilise the information and are important to developing an effective compliance strategy to ensure the AEOI Standard is being effectively implemented. Grenada was not able to confirm that it collects and monitors information on the number of undocumented accounts reported by its Reporting Financial Institutions. This information is crucial to implementing the requirement to follow up on undocumented accounts.
More generally, many of the exchange partners that received a significant number of records from Grenada indicated that they achieved a success rate when matching the information received from Grenada with their taxpayer database that was broadly equivalent to, or better than, what they usually achieve.
Based on these findings it was concluded that Grenada is not meeting expectations in ensuring that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures, including by having in place the required administrative compliance framework and related procedures. More specifically, fundamental issues have been identified, including with respect to implementing a comprehensive compliance strategy in order to address issues of non-compliance by Reporting Financial Institutions and carrying out verification and enforcement activities. Grenada should therefore continue its implementation process accordingly, including by addressing the recommendations made.
Grenada should further develop and implement an effective, documented overarching compliance plan, informed by a risk assessment, to underpin its compliance activities.
Grenada should further develop and implement effective procedures to identify its population of Financial Institutions to ensure that they correctly apply the definitions of Reporting Financial Institution and Non-Reporting Financial Institution and report information as required, specifically including non-regulated entities that are Financial Institutions for the purposes of the AEOI Standard.
Grenada should develop and implement procedures to access and review the records held by Reporting Financial Institutions to verify their compliance with the AEOI Standard.
Grenada should develop and implement effective procedures to monitor and verify whether Reporting Financial Institutions are obtaining valid self-certifications as required, including dedicated communication activities, with a particular focus on self-certifications obtained after the opening of a Financial Account.
Grenada should develop and implement effective enforcement mechanisms to address non-compliance by Reporting Financial Institutions, including the application of dissuasive penalties and sanctions as appropriate, and routinely apply them where non-compliance is identified.
Grenada should implement systems to collect and monitor information on the reporting of Tax Identification Numbers, dates of birth and undocumented accounts to inform its compliance strategy.
Grenada should put in place a clearly defined policy that, where circumvention is identified, action is taken to address it.
Grenada should develop and implement a clearly defined policy to follow up where undocumented accounts are reported by the Reporting Financial Institutions.
SR 1.6 Jurisdictions should collaborate on compliance and enforcement. This requires jurisdictions to:
use all appropriate measures available under the jurisdiction’s domestic law to address errors or non-compliance notified to the jurisdiction by an exchange partner; and
have in place effective procedures to notify an exchange partner of errors that may have led to incomplete or incorrect information reporting or non-compliance with the due diligence or reporting procedures by a Reporting Financial Institution in the jurisdiction of the exchange partner.
Grenada has an understanding of its obligation to collaborate on compliance and enforcement in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent). While no such notifications have yet been received, it has not yet developed the necessary systems and procedures to be ready to process them as required. Grenada has also demonstrated an understanding of its obligation to inform exchange partners when it detects possible errors or noncompliance by a Reporting Financial Institution in the exchange partner’s jurisdiction, but does not yet have in place procedures for notifying exchange partners.
Based on these findings it was concluded that Grenada is partially meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. More specifically, significant issues have been identified, including with respect to the lack of a documented procedure in cases where notifications are received from an exchange partner. Grenada should therefore continue its implementation process accordingly, including by addressing the recommendation made.
Grenada should put in place documented procedures to address errors or non-compliance notified by an exchange partner.
CR2 Effectiveness in practice: Jurisdictions should exchange the information effectively in practice, in a timely manner, including by sorting, preparing, validating and transmitting it in accordance with the AEOI Standard.
Grenada’s implementation of the AEOI Standard is partially compliant with respect to exchanging the information effectively in practice and in a timely manner. More specifically, while Grenada is meeting expectations with respect to sorting, preparing and validating the information (SR 2.4) and providing corrections, amendments or additions to the information (SR 2.9), there are significant issues with respect to Grenada correctly transmitting the information and in a timely manner (SRs 2.5 – 2.8). Grenada should continue its implementation process to ensure its effectiveness, including by addressing the recommendations made.
SR 2.4 Jurisdictions should sort, prepare and validate the information in accordance with the CRS XML Schema and the associated requirements in the CRS XML Schema User Guide and the File Error and Correction-related validations in the Status Message User Guide (i.e. the 50000 and 80000 range).
Three exchange partners highlighted particular issues with respect to preparation and format of the information sent by Grenada (representing 4% of its partners). These generally related to either incorrect reporting periods or schema errors. More generally, three (or 4%) of Grenada’s exchange partners reported rejecting more than 50 of the files received due to the technical requirements not being met. This is broadly in line with the general experience of other jurisdictions. It was noted that Grenada has not yet addressed all of the issues.
Based on these findings it was concluded that, overall, Grenada is meeting expectations in relation to sorting, preparing and validating the information. Grenada is therefore encouraged to continue its implementation process accordingly, including in relation to the area highlighted.
Grenada should continue to work with its exchange partners to address the issues raised.
SR 2.5 Jurisdictions should agree and use, with each exchange partner, transmission methods that meet appropriate minimum standards to ensure the confidentiality and integrity of the data throughout the transmission, including its encryption to a minimum secure standard.
In order to put in place an agreed transmission method that meets appropriate minimum standards in confidentiality, integrity of the data and encryption for use with each of its exchange partners, Grenada linked to the CTS.
Based on these findings it was concluded that Grenada is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. Grenada is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.6 Jurisdictions should carry out all exchanges annually within nine months of the end of the calendar year to which the information relates.
Five exchange partners highlighted delays in the sending of information by Grenada (representing 7% of its partners). This represents a very high proportion of exchange partners. Furthermore, three partners stated that the information has still not been received. It was noted that Grenada has still not yet sent all of the status messages due to be sent in 2021.
Based on these findings it was concluded that Grenada is partially meeting expectations in relation to exchanging the information in a timely manner. However, significant issues have been identified, including with respect to the timeliness of the exchanges made. Grenada should continue its implementation process to ensure its effectiveness, including by addressing the recommendation made.
Grenada should ensure that it sends information to all of its exchange partners in a timely manner.
SR 2.7 Jurisdictions should send the information in accordance with the agreed transmission methods and encryption standards.
Feedback from Grenada’s exchange partners did not raise any concerns with respect to Grenada’s use of the agreed transmission methods and therefore with Grenada’s implementation of this requirement.
Based on these findings it was concluded that Grenada is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. Grenada is encouraged to continue to ensure the ongoing effectiveness of its implementation.
SR 2.8 Jurisdictions should have the systems in place to receive information and, once it has been received, should send a status message to the sending jurisdictions in accordance with the CRS Status Message XML Schema and the related User Guide.
Nine of Grenada’s exchange partners (representing 10% of its partners) highlighted delays in the sending of status messages by Grenada. This represents a relatively high proportion of partners. It was noted that five partners stated that the status messages had not yet been received. These issues appear to have not yet been resolved.
Based on these findings it was concluded that Grenada is partially meeting expectations in relation to the receipt of the information. However, significant issues have been identified, including with respect to sending status messages to its exchange partners in a timely manner. Grenada should continue its implementation process to ensure its effectiveness, including by addressing the recommendation made.
Grenada should ensure it sends status messages to all of its exchange partners in a timely manner.
SR 2.9 Jurisdictions should respond to a notification from an exchange partner as referred to in Section 4 of the Model CAA (which may include Status Messages) in accordance with the timelines set out in the Commentary to Section 4 of the Model CAA. In all other cases, jurisdictions should send corrected, amended or additional information received from a Reporting Financial Institution as soon as possible after it has been received.
Grenada appears ready to respond to notifications and to provide corrected, amended or additional information in a timely manner and no such concerns were raised by Grenada’s exchange partners and therefore with respect to Grenada’s implementation of these requirements.
Based on these findings it was concluded that Grenada appears to be meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. Grenada is encouraged to continue to ensure the ongoing effectiveness of its implementation.