Foreign Account and Tax Compliance Act (FATCA) is a US legislation that aims to combat tax evasion by US persons. In 2010, the US enacted FATCA to increase income tax reporting by the US taxpayers on assets held in offshore accounts and through non-US entities.
FATCA is used by government personnel to detect indicia of US persons and their assets and to enable cross-checking whether assets have been self-reported by individuals. Accordingly, the US Government has entered into bilateral agreements with the governments of several countries for exchange of information.
In addition and similar to FATCA, many countries have agreed to have a similar exchange of information by way of Common Reporting Standards (CRS), a broad reporting regime with the goal to tackle tax evasion. CRS broadly covers three dimensions, i.e., financial information to be reported, financial institutions covered, and account holders that would be subjected to reporting.