FATCA and CRS Reporting for Cook Islands Trusts

The Foreign Account Tax Compliance Act (FATCA) is the U.S. law that requires foreign banks and trustee companies to identify accounts owned by U.S. persons and report them to the IRS. The Common Reporting Standard (CRS) is the version the rest of the world uses: more than 100 jurisdictions automatically exchange account information with each other every year. The United States does not participate in CRS.

For a U.S. person with a Cook Islands trust, FATCA is the regime that applies. Cook Islands banks and trustee companies report the trust’s accounts to the IRS, and the settlor discloses the same assets on Form 8938. CRS duties fall on the trustee, and they rarely produce any report about a settlor who lives in the United States.

How FATCA Applies to a Cook Islands Trust

FATCA reaches a Cook Islands trust through the financial institutions that hold its accounts. Congress passed FATCA in 2010 and backed it with a blunt penalty: a foreign financial institution that refuses to identify and report its U.S. account holders faces 30 percent withholding on its U.S.-source payments. Nearly every bank and trustee company that wants access to U.S. markets complies.

Most countries implement FATCA through an intergovernmental agreement, under which local institutions report to their own government and the government forwards the data to the IRS. The Cook Islands never signed one. Cook Islands banks and trustee companies instead register directly with the IRS as participating institutions and file their reports straight to the agency. The reporting outcome is the same; the channel is more direct than in most offshore jurisdictions.

The trust itself usually counts as a financial institution under FATCA rather than as a customer of one. A trust whose assets are managed by a professional trustee company is classified as an investment entity, and the trustee company typically registers and reports for the trusts it administers as their sponsoring entity. The reports identify the U.S. owner by name, address, and taxpayer identification number, along with account numbers, balances, and income.

In our experience, FATCA and CRS surprise settlors most at account opening. The offshore bank’s onboarding package asks for the same three facts—citizenship, tax residency, and taxpayer identification number—two or three times in different formats: an IRS Form W-9 for FATCA, a self-certification for CRS, and the bank’s own due diligence forms. The repetition is normal: the two regimes run in parallel, and each requires its own certification.

FATCA is also only one piece of the trust’s transparency to U.S. authorities. A Cook Islands trust grantor has four categories of annual federal reporting, and each category runs independently of the others.

What Is the Common Reporting Standard?

The Common Reporting Standard is a global system in which more than 100 countries automatically send each other information about financial accounts held by one another’s tax residents. The OECD created it in 2014, and participants include every major banking center outside the United States: Switzerland, Singapore, the United Kingdom, the Cayman Islands, and the Cook Islands among them.

The mechanics run through banks rather than taxpayers. A financial institution in a participating country must determine each account holder’s country of tax residence, usually through a self-certification form signed at account opening. Once a year, the institution reports foreign-resident accounts to its own tax authority, which forwards the data to each account holder’s home country.

The exchanged data includes the account holder’s name, address, taxpayer identification number, and date of birth, plus the account number, year-end balance, and the year’s interest, dividends, and gross proceeds. A French resident with a Singapore brokerage account is reported to France. An Australian with a London bank account is reported to Australia.

Is the United States a CRS Country?

No—the United States has never joined the Common Reporting Standard and instead relies on FATCA, which predates CRS and was the model for it. The exchange is lopsided: the IRS receives detailed FATCA reports from institutions worldwide but sends much less information back to other governments.

U.S. non-participation has a practical consequence for account holders. CRS reports cover people who are tax residents of participating jurisdictions. A person whose only tax residence is the United States is generally not a reportable person under CRS, so the trustee’s CRS review of a U.S. settlor typically ends with a file note rather than a report.

How CRS Applies to a Cook Islands Trust

The Cook Islands adopted the Common Reporting Standard through legislation passed in 2016 and began exchanging account information with other participating countries in September 2018. Cook Islands financial institutions file their CRS reports with the Cook Islands government, which forwards them to each reportable person’s home jurisdiction.

A professionally managed trust is itself a financial institution under CRS, just as under FATCA. The trustee company carries out the due diligence: it identifies the settlor, the beneficiaries, and any protector, collects self-certifications of tax residence from each, and reports those who are residents of participating countries.

Residence, not citizenship, controls CRS reporting, which produces an asymmetry inside many trusts. A settlor who lives in the United States is not reported under CRS because the United States is not a participating jurisdiction; FATCA covers that settlor instead. A beneficiary living in a CRS country is reported to that country’s tax authority.

A question we get during trust design is whether a beneficiary living outside the United States changes anything. It does: a settlor’s adult daughter working in London makes the trust a CRS-reportable arrangement for the United Kingdom, and she may face home-country tax questions about a foreign trust interest she never knew she had. The answer changes nothing about the trust’s protection; it changes who should expect a report.

How CRS Expands in 2026 and 2027

Amendments to the Common Reporting Standard took effect January 1, 2026, in early-adopting jurisdictions; the first expanded exchanges are scheduled for 2027. The amendments add electronic money products and central bank digital currencies to the reportable base, and a companion crypto-asset reporting system extends the exchange to cryptocurrency held through exchanges and custodians.

The amendments also require institutions to report each controlling person’s role (settlor, protector, or beneficiary) rather than a bare name. Adoption timelines vary by jurisdiction, and none of the changes alters the basic U.S. position: FATCA, not CRS, remains the regime that reports on U.S. persons.

What a U.S. Settlor Files Under FATCA

A U.S. settlor’s personal FATCA obligation is Form 8938, the Statement of Specified Foreign Financial Assets, filed with the annual income tax return when foreign financial assets exceed the reporting threshold. The thresholds depend on filing status and residence:

• Single filer living in the United States: specified foreign assets exceeding $50,000 at year-end, or $75,000 at any point during the year.
• Married filing jointly, living in the United States: more than $100,000 at year-end, or more than $150,000 at any point during the year.
• Single filer living abroad: more than $200,000 at year-end, or more than $300,000 at any point during the year.
• Married filing jointly, living abroad: more than $400,000 at year-end, or more than $600,000 at any point during the year.

A funded Cook Islands trust almost always puts the settlor over the threshold. One exception softens the paperwork: a settlor who timely files Form 3520, and whose trust timely files Form 3520-A, does not separately report the trust’s assets on Form 8938. Foreign accounts held outside the trust still count toward the threshold and still get reported.

Missing Form 8938 costs $10,000, plus up to $50,000 more after IRS notice. Worse, an unfiled Form 8938 keeps the statute of limitations from starting on the entire tax return, leaving every unfiled year open to audit indefinitely.

FATCA is frequently confused with FBAR, but the two arise under different laws and go to different agencies. FinCEN Form 114 is a Bank Secrecy Act report filed with FinCEN whenever foreign accounts exceed $10,000 in aggregate, and filing Form 8938 does not satisfy it. A CPA experienced with foreign trusts prepares Form 8938 along with the trust information returns; the attorney structures the trust, and the accountant handles the annual filings. If the trust structure includes an LLC, beneficial ownership reporting under the Corporate Transparency Act may apply as well.

FATCA vs. CRS

FATCA identifies U.S. persons and sends their account data to one destination: the IRS. CRS identifies tax residents of more than 100 participating countries and routes account data to each holder’s home tax authority.

	FATCA	CRS
Source	U.S. law, enacted 2010	OECD standard, adopted 2014
Who is identified	U.S. citizens and residents, by citizenship or residence	Tax residents of participating countries, by residence only
Who receives the data	The IRS	The tax authority of each account holder’s residence country
Cook Islands participation	Institutions report directly to the IRS; no intergovernmental agreement	Participant since 2018; reports filed with the Cook Islands government
Personal filing by the account holder	Form 8938 with the U.S. tax return	None; every duty falls on the financial institution
Enforcement	30 percent withholding on noncompliant institutions	Domestic penalties imposed by each participating country

CRS never asks the settlor to file anything, anywhere. FATCA does: Form 8938 is the settlor’s own annual obligation, and it is the one part of the two regimes a U.S. person can get wrong personally.

Does Reporting Under FATCA and CRS Weaken a Cook Islands Trust?

No—FATCA and CRS reporting does not weaken a Cook Islands trust, because the trust’s protection never depended on the government not knowing about it. The IRS has known about every properly reported Cook Islands trust since the trust’s first filing year. The protection comes from Cook Islands courts, which do not enforce U.S. judgments and require a creditor to start over in the Cook Islands under deadlines and proof standards that favor the trust.

Tax authorities and judgment creditors are different audiences. FATCA and CRS data goes to tax agencies for tax administration; a plaintiff suing the settlor has no access to either database. A judgment creditor will learn the trust exists anyway, because the settlor must disclose it under oath in post-judgment discovery. The trust protects assets even when fully disclosed. What an offshore trust offers is privacy from public records and private searches, not concealment from the U.S. government.

Reporting failures are what create risk, because the IRS receives the institution’s side of the ledger whether or not the settlor files. When we see IRS letters about offshore accounts, the trigger is usually a mismatch rather than the account itself: the bank’s FATCA report shows an account that the settlor’s Form 8938 or Schedule B never mentions. Often the settlor changed tax preparers, and the new CPA did not know the trust existed.

That kind of discrepancy is a common path into an IRS examination of a Cook Islands trust. A settlor whose filings match what the IRS already receives rarely hears from the agency.