Anguilla
This report analyses the implementation of the AEOI Standard in Anguilla 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
Anguilla’s legal framework implementing the AEOI Standard is in place and is consistent with the requirements of the AEOI Terms of Reference. This includes Anguilla’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 Anguilla’s Interested Appropriate Partners (CR2).
Effectiveness of AEOI in practice
Anguilla’s implementation of the AEOI Standard is partially compliant with the requirements of the AEOI Terms of Reference to ensure the effectiveness of the AEOI Standard in practice. While Anguilla is on track with respect to exchanging the information in an effective and timely manner (CR2), there are significant 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: Partially Compliant
General context
Anguilla commenced exchanges under the AEOI Standard on a non-reciprocal basis (i.e. it sends but does not receive information) in 2017 (the first exchanges were made in 2018 with respect to 2016 and 2017 reporting periods).
In order to provide for Reporting Financial Institutions to collect and report the information to be exchanged, Anguilla:
enacted the Tax Information Exchange (International Cooperation) Act;
introduced the International Tax Compliance (CRS) Regulations; and
issued further guidance (referred to as Guidance Notes), which is not legally binding.
Under this framework Reporting Financial Institutions were required to commence the due diligence procedures in relation to New Accounts from 1 July 2016. With respect to Preexisting Accounts, Reporting Financial Institutions were required to complete the due diligence procedures on High Value Individual Accounts by 31 December 2016 and on Lower Value Individual Accounts and Entity Accounts by 31 December 2017.
With respect to the exchange of information under the AEOI Standard, Anguilla:
has the Convention on Mutual Administrative Assistance in Tax Matters in place1 and activated the associated CRS Multilateral Competent Authority Agreement in time for exchanges in 2018; and
put in place three bilateral agreements.2
Table 1 sets out the number of Financial Institutions in Anguilla that reported information on Financial Accounts in 2021 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). It also sets out the number of Financial Accounts that they reported in 2021. In this regard, it should be noted that Anguilla requires the reporting of Financial Accounts held by all non-residents and some accounts may be required to be reported more than once (e.g. jointly held accounts or accounts with multiple related Controlling Persons), which is reflected in the figures below. These figures provide key contextual information to the development and implementation of Anguilla’s administrative compliance strategy, which is analysed in the subsequent sections of this report.
Table 2 sets out the number of exchange partners to which information was successfully sent by Anguilla in the past few years (including where the necessary frameworks were in place but no relevant Reportable Accounts were identified). These figures provide key contextual information in relation to Anguilla’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 Anguilla:
the Inland Revenue Department (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 Anguilla’s exchange partners;
technical solutions necessary to receive and validate the information reported by Reporting Financial Institutions were put in place by the National Tax Agency, which ensure the validation of the data reported by Financial Institutions before it is exchanged with Anguilla’s exchange partners; 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 Anguilla’s legal frameworks implementing the AEOI Standard concluded with the determination that Anguilla’s domestic and international legal frameworks are In Place. This has been taken into account when reviewing the effectiveness of Anguilla’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 Anguilla are below, organised per Core Requirement (CR) and 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.
Anguilla’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.
Anguilla 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.
Anguilla 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.
Anguilla 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.
Anguilla has 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.
Anguilla’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 Anguilla’s Interested Appropriate Partners (i.e. all jurisdictions that are interested in receiving information from Anguilla 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.
Anguilla 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.
Anguilla 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.
Anguilla’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 Anguilla 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.
Anguilla’s implementation of the AEOI Standard is partially compliant with respect to ensuring that Reporting Financial Institutions are correctly conducting the due diligence and reporting procedures. More specifically, while Anguilla is meeting expectations with respect to collaboration with its exchange partners to ensure effectiveness (SR 1.6), there are significant issues with respect to ensuring effectiveness in a domestic context, such as through having an effective administrative compliance framework and related procedures (SR 1.5). Anguilla 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, Anguilla implemented some of the requirements in accordance with expectations. However, significant issues were identified. The key findings were as follows:
Anguilla commenced implementing a strategy aimed at ensuring compliance with the AEOI Standard and pursued communication and outreach activities, such as offering training to Financial Institutions, holding workshops with the industry associations and relevant stakeholders and providing guidance on exchange of information on a dedicated website.
Anguilla has worked effectively to understand its population of Financial Institutions, utilising various relevant information sources, such as the list of regulated financial entities provided by the Anguilla Financial Services Commission (the financial regulator), the Foreign Financial Institution list for FATCA purposes and questionnaires sent to trust companies regarding any unregulated investment entities they may have identified in their portfolios. Anguilla has also taken action to ensure that Reporting Financial Institutions are classifying themselves correctly under its domestic rules and reporting information as required. Anguilla intends to keep its understanding of its Financial Institution population up to date on a routine basis.
The institution responsible for implementing Anguilla’s compliance strategy appears to have the necessary powers to discharge its functions, although the adequacy of its resourcing to monitor and ensure compliance by Reporting Financial Institutions is unclear.
Anguilla has carried out some desk-based checks to verify whether the information being reported is complete and accurate, but it has not yet conducted in-depth reviews, including the inspection of records of Reporting Financial Institutions, nor has it yet identified any cases of non-compliance or carried out any enforcement activities. This includes not yet verifying that self-certifications are being collected as required and that it is followed up on undocumented accounts. Anguilla has therefore not yet demonstrated how it effectively addresses non-compliance by Reporting Financial Institutions, including through the application of dissuasive penalties and sanctions for non-compliance.
Anguilla appears ready to take effective action to address the circumvention of the requirements and will monitor the application of its one category of jurisdiction-specific Excluded Account (dormant accounts) as part of its more general monitoring activities (it does not have a jurisdiction-specific list of Non-Reporting Financial Institutions).
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
Anguilla 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. Anguilla 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.
Furthermore, four exchange partners highlighted issues with respect to the information received, such as missing or invalid Tax Identification Numbers and missing dates of birth. Follow-up discussions confirmed that Anguilla is aware of these issues and is seeking to improve the situation. More generally, the exchange partner that received a significant number of records from Anguilla indicated that it achieved a success rate when matching the information received from Anguilla with its taxpayer database that was broadly equivalent to, or better than, what it usually achieves.
Based on these findings it was concluded that Anguilla is partially 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, but there is still room for improvement. More specifically, significant issues have been identified, including with respect to Anguilla’s enforcement strategy, the activities to verify that the information reported is complete and accurate, including with respect to self-certifications, Tax Identification Numbers, dates of birth and undocumented accounts, and circumvention of the requirements. Anguilla should therefore continue its implementation process accordingly, including by addressing the recommendations made.
Anguilla should commence the implementation of in-depth reviews, and implement its framework to address non-compliance by Reporting Financial Institutions, taking enforcement activities where non-compliance is identified.
Anguilla 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.
Anguilla should implement its policy to follow up with Reporting Financial Institutions that report undocumented accounts to ensure that the requirements are being complied with.
Anguilla should commence its planned activities to follow up with Reporting Financial Institutions reporting undocumented accounts, including to understand the reason for it and to ensure they are correctly applying the definition.
Anguilla should continue to address the issues raised by its exchange partners.
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.
It should be noted that, as Anguilla exchanges information on a non-reciprocal basis and does not therefore receive information, it is not required to have in place procedures to notify its exchange partners. SR 1.6 b) has therefore not been assessed in this case.
In order to collaborate on compliance and enforcement, it appears that Anguilla implemented all of the requirements in relation to issues notified to them (i.e. under Section 4 of the MCAA or equivalent) in accordance with expectations. While no such notifications have yet been received, it appears that Anguilla has the necessary systems and procedures to process them as required.
Based on these findings it was concluded that Anguilla is fully meeting expectations in relation to collaborating with its exchange partners to ensure that Reporting Financial Institutions correctly conduct the due diligence and reporting procedures. Anguilla is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
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.
Anguilla’s implementation of the AEOI Standard is on track with respect to exchanging the information effectively in practice, including in relation to sorting, preparing and validating the information (SR 2.4), correctly transmitting the information (SRs 2.5 - 2.7) and providing corrections, amendments or additions to the information (SR 2.9), although improvements are needed to exchange the information in a timely manner. The requirements in relation to the receipt of the information (SR 2.8) have not been assessed as Anguilla exchanges information non-reciprocally, so does not receive information. Anguilla has shown improvement over time and is encouraged to continue its implementation process accordingly, to ensure its ongoing effectiveness.
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).
Two exchange partners highlighted particular issues with respect to preparation and format of the information sent by Anguilla (representing 3% of its partners). These generally related to verifying and sorting data. More generally, two (or 3%) of Anguilla’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 Anguilla has still not yet addressed all of the issues.
Based on these findings it was concluded that, overall, Anguilla is meeting expectations in relation to sorting, preparing and validating the information. It was also noted that there is room for improvement with respect to addressing issues raised by the exchange partners. Anguilla is therefore encouraged to continue its implementation process accordingly, including in relation to the area highlighted.
Anguilla 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, Anguilla linked to the CTS.
Based on these findings it was concluded that Anguilla is fully meeting expectations in relation to agreeing and using appropriate transmission methods with each of its partners. Anguilla 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 Anguilla (representing 8% of its partners). This represents a relatively high proportion of exchange partners, although it has improved over time. Furthermore, two partners stated that the information has still not been received.
Based on these findings it was concluded that Anguilla 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 exchanges.
Anguilla should ensure 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 Anguilla’s exchange partners did not raise any concerns with respect to Anguilla’s use of the agreed transmission methods and therefore with Anguilla’s implementation of this requirement.
Based on these findings it was concluded that Anguilla is fully meeting expectations in relation to sending the information in accordance with the agreed transmission methods and encryption standards. Anguilla 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.
It should be noted that, as Anguilla exchanges information on a non-reciprocal basis and does not therefore receive information, it is not required to have in place systems to receive the information and provide status messages. SR 2.8 has therefore not been assessed in this case.
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.
Feedback from Anguilla’s exchange partners did not raise any concerns with respect to Anguilla’s response to notifications or provision of corrected, amended or additional information and therefore with respect to Anguilla’s implementation of these requirements.
Based on these findings it was concluded that Anguilla appears to be fully meeting expectations in relation to responding to notifications from exchange partners and the sending of corrected, amended or additional information. Anguilla is encouraged to continue to ensure the ongoing effectiveness of its implementation.