There is a discussion in the following link about whether EMIs are legally obliged to report an EMI account under CRS:
https://www.offshorecorptalk.com/threads/payeer-crs-reporting.30052/post-144428
The short answer seems to be that those EMIs with UK-issued or Maltese-issued EMI licenses are
not obliged to report under CRS (because EMI accounts are not considered "depository" accounts under the rules of CRS).
(read this in particular:
IEIM400750 - International Exchange of Information Manual - HMRC internal manual - GOV.UK).
I haven't checked the situation for Lithuania or every other EMI licence-issuing country in Europe (not being able to read every European language makes that difficult), but the underlying EU Directive for EMIs, and the EU Directive for CRS, are the same for all EU︀ countries. So - in theory - the (pre-Brexit) UK situation should be the same for︁ all EU EMIs, i.e. no EU-licensed EMI's should be obliged to report their EMI accounts︂ under CRS.
And while some EMIs might have dodgy reputations, even the bigger EMIs like︃ TransferWise say on their website that they don't report under CRS. Transferwise stands to lose︄ A LOT by lying about that - including loads of regulatory licences around the world︅ - regardless of how suspicious you are of them.
Some corporate groups might have an︆ EMI licence AND a banking licence (e.g. Revolut), so it might be that if you︇ are using a Revolut bank account, that gets reported under CRS but if it's a︈ Revolut EMI accounts that won't.
The banks who hold the funds on behalf of EMIs︉ might have to report under CRS (if they are in a CRS-reporting country and all︊ the rest of the CRS criteria are met), but the question is whether those banks:︋
a) open just one account, in the name of the EMI, and with the funds︌ of
every EMI customer in that
one account (so that, in effect, they are only︍ reporting
the EMI under CRS, not the EMI customers), or
b) if the bank opens︎ up accounts in the name of every one of those EMI customers.
I don't know️ the answer to that question - maybe someone else here does? But I think it is VERY UNLIKELY the bank opens individual accounts in the name of each individual EMI customers, especially without the bank KYC'ing those customers again. And that wouldn't make sense or seem a very cost effective to do.
Also, how can an EMI actually report under CRS? Do any of them have the CRS-specific reporting software and linked that up to the global CRS automatic exchange network?
On the thin margins that EMIs already operate under, can they afford to buy that software, pay for the installation and systems integration, meet︀ the financial and time cost of staff training, afford the ongoing maintenance, and meet all︁ those CRS compliance costs?
Has anyone who has opened an EMI business account been asked︂ or actually given answers to any of the typical CRS questions that banks ask? e.g.︃
- Has anyone given an EMI details on the active or passive status of their︄ business?
- Have they been specifically asked questions about the company UBO (not the legal︅ shareholders - the actual beneficial owner)?
- Has anyone given details about the UBO (not︆ the shareholders - the actual UBO)?
No, my guess is that if an EMI is︇ telling you it is reporting under CRS, it's probably operating under a banking licence and︈ not an EMI licence. Sometimes the term "EMI" is used loosely around here to include︉ neobanks and other fintechs with banking licences and accounts, as opposed to institutions with an︊ Electronic Money Institution licence who issue you Electronic Money Institution accounts.
Happy to be proven︋ wrong with actual evidence to the contrary on the above though (preferably from some who︌ actually works in a bank or an EMI compliance department who knows what they are︍ talking about from experience). That would certainly clear up the never-ending debate about this topic︎ on this forum, instead of going around in circles on it all the time...
NB. Because AdvCash is registered in Belize / does not have an EU EMI licence, I️ don't think the above applies to AdvCash, but I'm guessing AdvCash accounts aren't considered "depository" accounts under CRS either for the same reason. Same goes for Neat I suppose?
