Determination: In Place But Needs Improvement
Peru’s domestic legislative framework is in place and contains most of the key aspects of the CRS and its Commentary requiring Reporting Financial Institutions to conduct the due diligence and reporting procedures, but it needs improvement in relation to the scope of Reporting Financial Institutions required to report information (SR 1.1), the scope of Financial Accounts required to be reported (SR 1.2) and the framework to enforce the requirements (SR 1.4). Most significantly, Peru’s legislative framework does not define Financial Institutions in accordance with the AEOI Standard nor does it contain rules to prevent practices intended to circumvent the reporting and due diligence procedures as required.
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Findings:
Peru has defined the scope of Reporting Financial Institutions in its domestic legislative framework in a manner that is largely consistent with the CRS and its Commentary. However, a deficiency has been identified. More specifically, Peru has defined Financial Institutions with reference to entities described in other financial law, which will include entities that are not Financial Institutions under the AEOI Standard. The scope of Reporting Financial Institutions is material to the proper functioning of the AEOI Standard.
Recommendations:
Peru should amend its domestic legislative framework to ensure that the meaning of “Custodial Institution”, “Investment Entity” and “Specified Insurance Company” are defined in line with the AEOI Standard.
SR 1.2 Jurisdictions should define the scope of Financial Accounts and Reportable Accounts consistently with the CRS and incorporate the due diligence procedures to identify them.
Findings:
Peru has defined the Financial Accounts that are required to be reported in its domestic legislative framework and incorporated the due diligence procedures that must be applied to identify them in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. More significantly, Peru’s legislative framework:
does not limit the use of a mailing address when applying the residence address test only to the special circumstances as contemplated in the Commentary; and
does not define annuity contracts in line with the AEOI Standard.
The scope of Financial Accounts and the due diligence procedures are material to the proper functioning of the AEOI Standard.
Recommendations:
Peru should amend its domestic legislative framework to ensure that a mailing address is only permitted to be used in the special circumstances permitted under the AEOI Standard.
Peru should amend its domestic legislative framework to ensure that the exclusion of retirement income contracts from the definition of annuity contract is in line with the AEOI Standard.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Findings:
Peru has incorporated the reporting requirements in its domestic legislative framework in accordance with the CRS and its Commentary.
Recommendations:
No recommendations made.
SR 1.4 Jurisdictions should have a legislative framework in place that allows for the enforcement of the requirements of the CRS in practice.
Findings:
Peru has a legislative framework in place to enforce the requirements in a manner that is largely consistent with the CRS and its Commentary. However, deficiencies have been identified. More specifically, Peru’s legislative framework:
does not include rules to prevent all relevant persons (including Reporting Financial Institutions, other persons and intermediaries) from adopting any practices intended to circumvent the reporting and due diligence procedures as required; and
does not impose sanctions on Account Holders and Controlling Persons for the provision of a false self-certification.
These are the key elements of the required enforcement framework relates to and are therefore material to the proper functioning of the AEOI Standard.
Recommendations:
Peru should amend its domestic legislative framework to introduce rules to prevent Financial Institutions, persons and intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures.
Peru should amend its domestic legislative framework to include sanctions on Account Holders and Controlling Persons for the provision of a false self-certification.