Financial information reporting

As the Jersey representative on the Global Forum on Transparency and Exchange of Information for Tax Purposes, for three years a vice chair of the Peer Review Group of the Forum (which assesses compliance with the international standards) and now a vice chair of the Forum’s Automatic Exchange of Information Working Group (which has a mandate to put in place a mechanism to monitor and review the implementation of AEOI to the new Common Reporting Standard) I need no convincing of the importance of transparency and information exchange.

Tax evasion and other financial crime will only be tackled effectively if adequate, accurate, and timely information is available to law enforcement and tax authorities on a global basis. This is recognised by the G7, the G20, the OECD and the EU.

Last October in Berlin, Jersey and 50 other members of an Early Adopters Group signed a Multilateral Competent Authority Agreement in support of the implementation of the new Common Reporting Standard on AEOI. All major financial centres have now committed themselves to a concrete timetable of first exchange of information in either 2017 or 2018. The options for tax evaders to hide their wrong from authorities are starting to disappear.

AEOI under the new CRS will provide tax authorities with a comprehensive wide range of information on financial accounts. It will not replace EOI on request. In fact, it will encourage it, because the information received automatically can be expected to trigger requests for further information. As financial institutions in Jersey have already had to contend with US FATCA and the UK IGA, taking the CRS on board is not expected to present too much of an additional burden.

In addition to information on financial accounts, what the authorities are also seeking is adequate, accurate and current information on the beneficial ownership of companies. This is the clear message to emerge from the G20 High Level Principles on Beneficial Ownership Transparency issued at the Brisbane Summit in November last year. It is also embodied in the draft EU 4th AML Directive and the FATF recommendations on AML/CFT.

It has been acknowledged that our approach of a central register plus the regulation of Trust and Company Service Providers (TCSPs) more than equates with the G20 and EU proposals. Not only does it meet the needs of law enforcement and tax authorities for adequate, accurate and timely information on beneficial ownership, but it is at least an equivalent alternative to the UK’s planned public central register.

Our experience shows that appropriate regulation and oversight of the providers of the information will best ensure that the global requirement of adequate, accurate and timely information is met. This is what the international community should be aiming for. Anything less than this will not provide law enforcement and tax authorities with the information they require to be effective in fighting tax evasion and other financial crime.

Colin Powell is Advisor for International Affairs, Chief Minister’s Department, and Government of Jersey.

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