The UAE Ministry of Finance will adopt the OECD’s Crypto-Asset Reporting Framework (CARF) alongside CRS 2.0, expanding tax transparency to digital assets. Implementation begins 1 January 2027 with the first cross-border data exchange in 2028. The change impacts Virtual Asset Service Providers (VASPs), custodians, exchanges, and financial institutions operating in or from the UAE.
Key Highlights:
- Global Tax Transparency: UAE aligns with CARF & CRS 2.0 to strengthen Automatic Exchange of Information (AEOI).
- Wider Asset Scope: Reporting covers crypto, e-money, tokenised assets, and CBDCs.
- VASP Readiness: New obligations for KYC/BO data, due diligence, transaction reporting, PoR, and audits.
- Advisory Demand: Heightened need for crypto audit, AML/CFT, and risk & compliance services.
What Are CARF and CRS 2.0?
- CRS 2.0: An enhanced AEOI standard extending beyond traditional accounts to include e-money and tokenised assets.
- CARF: A dedicated framework requiring crypto intermediaries (exchanges, brokers, custodians, wallet providers) to report user holdings and transactions to tax authorities.
UAE Timeline & Impact
- 1 Jan 2027: CARF/CRS 2.0 requirements take effect in the UAE.
- 2028: First international exchange of reportable crypto-asset data.
This positions the UAE among the world’s most compliant, investor-friendly digital-asset jurisdictions.
Who Must Comply?
- VASPs regulated by VARA (Dubai) and firms in ADGM/DIFC where applicable.
- Banks, fintechs, custodians, brokers, OTC desks, and wallet providers serving UAE clients.
Core Compliance Requirements (CARF/CRS 2.0)
- Robust KYC & Beneficial Ownership: Accurate client identity, risk classification, and ongoing review.
- Due Diligence: Enhanced checks for high-risk clients, complex structures, and cross-border activity.
- Transaction Reporting: Standardised data capture for transfers, trades, and balances.
- Funds Segregation & Traceability: Clear separation of client vs. firm funds; auditable trails.
- Controls & Assurance: Proof of Reserves (PoR), internal/external audits, control testing, and governance.
- Policy Suite: AML/CFT, data governance, incident response, and tax transparency policies aligned to OECD/VARA.
VASP Readiness Checklist (Start Now)
- Gap Assessment: Map current systems vs. CARF/CRS 2.0 data and reporting fields.
- Data Architecture: Build structured, immutable, and reconcilable data pipelines for client and transaction records.
- RegTech Integration: Implement tools for KYC/EDD, sanctions screening, and schema-ready reporting exports.
- PoR & Auditability: Establish periodic reserve attestations, log integrity, and evidence packs.
- Training: Board, compliance, ops, and tech teams trained on OECD/VARA requirements.
- Dry Runs: Perform reporting simulations ahead of 2027 to de-risk first filings.
Why This Matters for Investors & Clients
Greater trust, security, and market integrity: verified holdings, auditable flows, and reduced scope for evasion or illicit use.
How Affiniax Partners Can Help
Affiniax delivers end-to-end Crypto Audit & Regulatory Compliance services:
- CARF/CRS 2.0 implementation and reporting design.
- AML/CFT & governance reviews aligned with VARA & OECD standards.
- Proof of Reserves (PoR) audits, data validation, and controls testing.
- Training & change management for compliance and engineering teams.
- Readiness-to-Certification support from gap analysis to live reporting.
Speak to our Crypto Audit & Risk Advisory team to prepare your programme well ahead of 2027.
