The Common Reporting Standard (CRS) and Cross-Border Tax Evasion: Stay Faraway so Close

Cross-border tax evasion refers to the illegal practice of avoiding tax obligations by transferring assets or income to more favourable tax jurisdictions, such as tax havens. In response, the OECD, based on the Foreign Account Tax Compliance Act (FATCA), has developed international initiatives, such as the Common Reporting Standard (CRS), to increase tax transparency through the automatic exchange of financial information between countries. However, there are still challenges and gaps that require additional approaches to ensure the full effectiveness of these measures. The presence of companies established in countries traditionally associated with compliant tax jurisdictions, such as the United Kingdom, obscures the vigilance of the authorities, who are more attentive to the warning signs related to tax havens, enabling the existence of mega-fraud and mega-money laundering networks. In this article, we propose a comparative analysis of two cases: a real one with a global reach, known as The Russian Laundromat, and another of a theoretical nature. The aim is to assess the impact of CRS in both cases, providing insights into the effectiveness of this standard in preventing similar events. In addition, we aim to formulate recommendations with a view to eliminating existing gaps and optimising measures to combat tax evasion.