News and Commentary

Multinational Families Can Preserve Privacy in Heightened Regulatory Environment by Oscar Castellanos, WMS, AAMS®

As countries across the globe step-up regulatory efforts to combat tax avoidance, multinational families are finding it more difficult than ever to structure their wealth in a manner that protects their confidentiality. However, because there is a lack of one universal reporting standard for all countries, taxpayers may have an opportunity to meet their tax reporting obligations without sacrificing their privacy or their families’ security.

The U.S.’s Foreign Account Tax Compliance Act (FACTA) generally requires that foreign financial institutions share with the Internal Revenue Service (IRS) information about financial accounts they hold in which a U.S. taxpayer has an ownership interest. This applies to U.S. citizens, businesses, tax resident aliens (i.e. persons who have a green card or who spend the requisite substantial number of days in the U.S.), and non-resident aliens who elect to be treated as U.S. tax resident aliens. It also applies to U.S. persons who are beneficial owners of trusts, partnerships and corporations that are formed in a foreign jurisdiction. While many foreign countries have entered into Intergovernmental Agreements (IGAs) to comply with FATCA, the U.S. is significantly less forthcoming in sharing with its FATCA partners details about financial accounts in the U.S. that are owned by residents of those countries.

In 2014, the Organization for Economic Cooperation and Development (OECD) introduced the Standard for Automatic Exchange of Financial Information in Tax Matters, also known as the Common Reporting Standard (CRS), as its version of a global standard for member countries to exchange information about their citizens’ offshore financial accounts. Because the U.S. has declined to participate in CRS while limiting its FATCA reciprocity with foreign countries, taxpayers may have a unique opportunity to leverage the differences between the two regimes and comply with international tax reporting regulations while preserving their financial privacy.

CRS reporting requires far more detail about the owners of foreign financial accounts and the balances in those accounts than FATCA. In addition, CRS focuses its attention on identifying financial accounts held by all non-residents of a particular jurisdiction, unlike FATCA, which only focuses on accounts owned by individuals who may be considered U.S. taxpayers. Moreover, since the U.S. does not participate in CRS, financial institutions in the U.S. generally are not required to report the existence of foreign-owned financial accounts or their beneficial owners, even when foreign individuals or entities are residents of a FATCA-partner country.

With this in mind, non-U.S. persons may be able to preserve their privacy and reduce their compliance burdens when they engage in advance planning to structure assets in a U.S. financial institution, either directly, through a business entity or within a trust. This can help high-net-worth families comply with international tax laws while protecting their personal information and shielding their assets and their families’ security from risks of potential kidnappings, briberies and other illicit activities.

It is critical to remember that exploiting the differences between FATCA and CRS in order to evade taxes is both inappropriate and illegal. However, there is no law that prevents international families from using appropriate structures and U.S. financial institutions to safeguard secrecy while meeting their countries’ requirements for transparency. It is advisable that multinational families consult with U.S. financial advisors and tax professionals to ensure the structures they select meet their specific needs and goals while maintaining tax efficiency and preserving wealth for future generations.

About the Author: Oscar Castellanos, WMS, AAMS®, is a financial planner with Provenance Wealth Advisors, an Independent Registered Investment advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants and a registered representative with Raymond James Financial Services. He can be reached at the firm’s Miami office at (305) 379-8888 or via email at

Oscar Castellanos is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

Updated March 1, 2023