Automatic information exchange discloses 84 million accounts in a year

Automatic exchange of account information using the OECD's Common Reporting System (CRS) began in 2017 with a group of 49 early adopters in 2017 and a further 51 in 2018. This has since been gradually extended to more than 100 of the Global Forum's 160 members. The system requires financial institutions (FIs) in participating countries to amass information about accounts held by foreign tax residents – or entities under their control – and report it to their domestic tax authorities. The tax authorities then forward that information to the tax authority where the accountholder is resident, to check for tax compliance.

The Forum has now completed and published the first peer-review report of the system to assess how well it is working, taking into account the domestic legislative framework requiring FIs to collect and report the information for exchange, the necessary technical infrastructure, and the expected standards in relation to confidentiality and data safeguards.

Some 88 per cent of the 100 jurisdictions participating in 2017-2018 were deemed to have satisfactory legal frameworks in place. However, 34 of these were assessed to need improvement, including Australia, Canada, Belgium, the Netherlands, the Bahamas, the British Virgin Islands, Panama, Andorra, Monaco, Russia, Japan and India.

Twelve of the 100 jurisdictions had not yet brought their CRS regimes in operation. These included Macao, Hong Kong, Aruba, Belize, Trinidad and Tobago, Sint Maarten, Azerbaijan, Costa Rica, Curacao, Dominica, Grenada, Romania and Israel. Ten of them have now implemented a domestic legislative framework that contains many of the requirements, but includes deficiencies that could undermine the AEOI standard's operation, said the Forum. The other two – Sint Maarten and Trinidad and Tobago – have not yet implemented a domestic legal framework.

A second stage of the monitoring process is now under way. Meanwhile, 105 jurisdictions are due to exchange information in 2020, and the network of exchange relationships has increased to around 7,000.

Sources

• OECD (report, PDF)
• STEP International news 7 October 2019: Switzerland suspends automatic information exchange with Bulgaria following data leak
• STEP International news 10 June 2019: Automatic information exchange has cut IFCs' bank deposits by 25 per cent, says OECD