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Monaco Introduces New AI Portal for Financial Institutions to Report Tax Information

In a move to enhance transparency and combat tax evasion, the Government of Monaco has launched an Artificial Intelligence (AI) portal for financial institutions to report tax information. The new platform aims to facilitate the automatic exchange of information between countries and ensure compliance with international standards.

Management Companies and Trusts: Special Cases

Financial institutions managing companies and trusts must comply with specific reporting obligations. Management companies, by virtue of their activities, are considered reportable financial institutions, but they do not have to submit reports since they typically do not hold accounts. Trusts, on the other hand, may fall under various categories depending on their nature and activities.

Reportable Persons and Financial Accounts

Financial institutions must identify reportable persons, including:

  • Settlors
  • Trustees
  • Beneficiaries
  • Individuals holding financial accounts
  • Certain entities holding financial accounts

The Common Reporting Standard (CRS) requires financial institutions to look through passive entities to identify and report on the controlling individuals.

Due Diligence Procedures

Financial institutions must follow strict due diligence procedures to identify reportable accounts. These procedures distinguish between:

  • Accounts held by individuals
  • Entity accounts
  • Pre-existing and new accounts

Financial institutions must verify tax residency through self-certification or documentation.

Reporting Process and Platform

The reporting process takes place annually, with financial institutions required to submit information on a secure IT schema (XML) within nine months of the end of each calendar year. The global reporting process includes:

  • Sending XML reports to partner jurisdictions
  • Compulsory nil reports for countries where no reportable accounts are held

AI Portal and XML Schema

The AI portal uses the latest XML2.0 schema published by the OECD in June 2019. Financial institutions must use this schema to prepare and report information under automatic exchange. A user guide is available for download on the official website of the Government of Monaco.

With the introduction of this new AI portal, financial institutions in Monaco are better equipped to comply with international tax reporting standards, ensuring transparency and cooperation between countries.