Compliance
Compliance Update: New Rules for Reporting Financial Institutions under HMRC’s AEOI Framework
From January 2026, UK financial institutions must comply with tighter registration, due diligence, and reporting rules under updated CRS, FATCA, and CARF regulations.
By NomadicTax Research Team • 5-8 min read • April 14, 2026
## What’s Changing: International Tax Compliance Regulations 2025
HMRC has enacted the **International Tax Compliance (Amendment) Regulations 2025**, which came into force on **24 June 2025** (with many provisions effective from **1 January 2026**). The changes incorporate the OECD’s 2023 updates to the Common Reporting Standard (CRS) and FATCA, and expand the obligations on financial institutions and trustee-documented trusts. ([legislation.gov.uk](https://www.legislation.gov.uk/uksi/2025/740/pdfs/uksi_20250740_en.pdf?utm_source=openai))
Key requirements include:
- **Mandatory registration** with HMRC’s AEOI service for all Reporting Financial Institutions and Trustee-Documented Trusts. Registration deadline: **31 December 2025** (or 31 January following the first relevant calendar year), depending on entity type. ([gov.uk](https://www.gov.uk/hmrc-internal-manuals/international-exchange-of-information/ieim404510?utm_source=openai))
- **Revised due diligence entries**: entities must apply CRS and FATCA rules under the updated OECD-2023 standards, including for crypto assets under CARF, where applicable. ([rsmus.com](https://rsmus.com/insights/tax-alerts/2025/hmrc-mandates-registration-implements-signaling-transparency.html?utm_source=openai))
- **Stronger penalties**: for failures in registration, late or missing reporting, invalid self-certification, or insufficient recordkeeping. Penalty amounts may escalate daily for recurring breaches. ([rsmus.com](https://rsmus.com/insights/tax-alerts/2025/hmrc-mandates-registration-implements-signaling-transparency.html?utm_source=openai))
## Who Needs to Prepare and When
- Financial institutions, banks, investment firms, crypto-asset service providers, and trustee-documented trusts.
- Important deadlines: registration by **31 December 2025** for many entities. Full reporting obligations begin with the CY2026 year.
## Compliance Best Practices
- **Audit existing structures**: ensure trusts or financial entities are correctly classified under Reporting Financial Institutions or Trustee-Documented Trusts.
- **Review due diligence policies**: update internal policies to reference the 2023 OECD CRS and CARF standard.
- **Train staff**: to understand self-certification, AML/KYC procedures, and recording/reporting duties.
- **Set up compliance calendar** keeping track of registration deadlines, report submission dates, and record-retention requirements.
## Examples of Exposure
- A UK crypto exchange not previously registered: failure to register by the deadline could lead to significant penalties per user/customer.
- A trust holding foreign-situs property: must ensure correct categorisation and reporting under new rules; missteps could cause both legal and tax exposure.
## Actionable Insights
- **Register early**, verify that status under HMRC definitions is correct.
- **Document transactions and KYC**, especially cross-border ones.
- **Seek professional advice** if dealing in private trusts or crypto-assets, where mixed compliance and reporting regimes intersect.
Compliance failures here carry reputation and financial risk. Getting ahead ensures that entities meet obligations smoothly and avoid penalties.