Understanding Reportable Users

Not every CASP customer is a Reportable User under CARF. Understanding who must be reported—and why—is fundamental to compliance.

Reportable User Definition

A Reportable User is a Crypto-Asset User who is:

• An individual or entity identified by the CASP through due diligence
• A tax resident of a Reportable Jurisdiction
• In the case of entities, one with controlling persons who are tax resident in a Reportable Jurisdiction

The determination involves both identifying the user and determining their tax residency.

Individual Users

Identification

Individual users must be identified through:

• Name: Full legal name
• Address: Current residence address
• Date of Birth: For identity verification
• Government ID: Passport, national ID, or equivalent

Tax Residency Determination

Tax residency is primarily determined through self-certification. The user declares their jurisdiction(s) of tax residence on a standardized form. CASPs must:

• Obtain self-certification at onboarding
• Confirm reasonableness against other information
• Flag inconsistencies for resolution
• Update upon change of circumstances

Entity Users

Entity Types

Entity users require more complex analysis depending on their type:

Active Non-Financial Entities

Entities primarily engaged in business activities (not holding financial assets). Only the entity itself is reported—not controlling persons.

Passive Non-Financial Entities

Entities where more than 50% of income is passive (dividends, interest, rents, etc.) or more than 50% of assets produce passive income. Both the entity AND controlling persons must be reported.

Financial Institutions

Generally not reportable as users, but may have separate reporting obligations as CASPs themselves.

Controlling Persons

For Passive Non-Financial Entities, CASPs must look through to the Controlling Persons:

Definition

Controlling Persons are natural persons who exercise control over an entity. This includes:

• Individuals owning more than 25% of equity interest
• Individuals controlling more than 25% of voting rights
• Individuals who otherwise exercise control
• Senior managing officials if no other controlling person identified

Reporting Obligations

If any controlling person is tax resident in a Reportable Jurisdiction, the entity is reportable. The report includes:

• Entity information
• Controlling person identification
• Tax residency of controlling persons
• TINs for controlling persons

Excluded Users

Certain users are excluded from reporting:

Governmental Entities

Government bodies and their agencies are excluded.

International Organizations

Recognized international organizations with immunity are excluded.

Central Banks

Central banking institutions are excluded.

Listed Companies

Publicly traded companies with sufficient regulatory reporting are generally excluded.

Non-Reportable Jurisdictions

Users resident only in jurisdictions that haven't implemented CARF are not reportable—though CASPs must still collect their information in case jurisdictions are added.

Practical Considerations

Multiple Residencies

Users may be tax resident in multiple jurisdictions. All residencies must be collected and reported to each applicable jurisdiction.

Indicia Conflicts

When self-certification conflicts with other information (e.g., address in different country), CASPs must seek clarification and additional documentation.

Undocumented Users

Users who refuse to provide self-certification cannot be onboarded. Existing users who refuse may face account restrictions.

Conclusion

Proper classification of users is essential for CARF compliance. CASPs should implement robust due diligence procedures that capture all required information at onboarding and maintain accuracy throughout the relationship.