Investment advisor on non participating assets


Investment Advisors are circumventing the CRS by moving the maintenance of assets to a US Custodian Institution
1. The OECD will deem investment advisors who earn advisory fees on non-participating jurisdiction assets as a Custodial institution. The CRS states that a Custodial Institution earns 8 types of fees that a custodian earns, eg bid-off spreads, etc. However the 7th of the 8 incomes is earn advisory fees on assets maintained or have the potential to maintain the assets. Note, the Custodial Institution does not have to maintain the assets. Therefore the OECD will deem the investment manager earning advisory fees on assets maintained in a non-participating jurisdiction as a Custodial Institution, which is a reporting FI. The account in the USA will be deemed the custodial account.

If the deemed Custodial Institution claims he does not know the beneficial owners, then he must apoint a third party who does, but he will retain the legal responsibilities to report.
2. The OECD will deem investment advisors who earn advisory fees on non-participating jurisdiction assets as a Custodial institution. Some planners structure in a way to avod the OECD CRS amendment by ensuring the Investment Manager is resident in the same jurisdiction as the beneficial owners. The OECD is thus advised that the deemed Custodial Institutions earning advisory fees on non participating assets, also report to their own tax authorities if the beneficial owners are resident in the same jurisdiction.