Determination: Not In Place
Ecuador’s domestic legislative framework is not in place as required as it does not contain several key aspects of the CRS and the Commentary. Significant deficiencies have been identified in relation to the framework to enforce the requirements (SR 1.4). Moreover, there are deficiencies in relation to the scope of Financial Accounts required to be reported (SR 1.2). Most significantly, Ecuador’s domestic legislative framework does not incorporate a framework for enforcement to address all possible non-compliance by Reporting Financial Institutions, does not include strong measures to ensure that valid self-certifications are always obtained for New Accounts and has provided for a category of jurisdiction-specific Excluded Accounts that does not meet the requirements.
SR 1.1 Jurisdictions should define the scope of Reporting Financial Institutions consistently with the CRS.
Ecuador has defined the scope of Reporting Financial Institutions in its domestic legislative framework in accordance with the CRS and its Commentary.
Recommendations:
No recommendations made.
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.
Ecuador has defined the scope of 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, a deficiency has been identified. More specifically, Ecuador has provided for a category of jurisdiction-specific Excluded Accounts that is not in accordance with the requirements.
The scope of Financial Accounts, including the provision of Excluded Accounts is material to the proper functioning of the AEOI Standard.
Recommendations:
Ecuador should amend its domestic legislative framework to remove Dormant Accounts from its jurisdiction-specific list of Excluded Accounts as these have been defined in a manner that does not meet the requirements of the AEOI Standard.
SR 1.3 Jurisdictions should incorporate the reporting requirements contained in Section I of the CRS into their domestic legislative framework.
Ecuador 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.
Ecuador does not have a legislative framework in place to enforce the requirements in a manner that is consistent with the CRS and its Commentary as significant deficiencies have been identified. More specifically, Ecuador’s domestic legislative framework:
does not include rules to prevent all Financial Institutions, persons or intermediaries from adopting practices intended to circumvent the reporting and due diligence procedures as required;
does not impose sanctions for the provision of a false self certification by Account Holders and Controlling Persons; and
does not provide for sanctions on Reporting Financial Institutions for failing to apply the due diligence procedures as required and for failing to keep records.
These are key elements of the required enforcement framework and are therefore material to the proper functioning of the AEOI Standard
Recommendations:
Ecuador should amend its domestic legislative framework to include rules to prevent all Financial Institutions, persons and intermediaries from adopting practices intended to circumvent the due diligence and reporting procedures, rather than just those on whom the AEOI Standard imposes an obligation.
Ecuador should amend its domestic legislative framework to include sanctions on Account Holders and Controlling Persons for the provision of a false self-certification.
Ecuador should amend its domestic legislative framework to include sanctions for failure to apply the due diligence procedures.
Ecuador should amend its domestic legislative framework to include sanctions for failing to keep records in accordance with the AEOI Standard.