Financial institutions will have to expand their customer due diligence procedures significantly if a G20 proposal for the international exchange of non-resident tax information is adopted in Australia.Treasury has issued a discussion paper setting out a proposed reporting standard for the exchange of tax information, which was endorsed by the G20 finance ministers at a meeting in February.The rationale for the scheme is that globalisation and technological change have made it easier for taxpayers to hold investments with financial institutions outside their country of residence."The ability to exchange taxpayer information between tax authorities in different jurisdictions is critical to combating tax evasion at the international level," Treasury said in the discussion paper.More than 60 countries have committed to implement the G20's common reporting standard.Under the CRS regime, Australian financial institutions would have to undertake due diligence procedures to identify non-residents and report their financial account information to the ATO.The standard includes a requirement for financial institutions to "look through" certain entities and report on the controlling person.The standard draws on the due diligence procedures already drawn up in intergovernmental agreements covering the US Foreign Account Tax Compliance Act (FATCA).According to Treasury, the range of institutions required to report under CRS would be greater than under FATCA.Countries seeking agreement to exchange information would have to demonstrate they have the legal framework and administrative capacity to ensure confidentiality. The ATO would have the power to suspend the exchange of information if there was non-compliance.The types of institutions that would have a reporting obligation include deposit takers, custodians, investment entities and insurance companies offering investment-linked life insurance or annuity contracts.Entities that present a low risk of being used to evade tax would be exempt. These would include superannuation and other retirement accounts. The due diligence requirement would vary depending on whether the account was held by an individual or an entity, and whether the account was pre-existing or new.