Hackers Threaten Global Account-Sharing Pacts, Law Firm Warns

Tom Burroughes, Group Editor, 3 June 2020


Noseda said that CRS and FATCA-driven data transfers are like the position of passengers on a train – there is a single entry and departure point, adding to the risks of something going wrong. 

The lawyer said he has spoken to the Paris-based Organisation for Economic Co-operation and Development and the UK’s Information Commissioner’s Office (ICO). The ICO is responsible for enforcing rules such as the recently-enacted General Data Protection Regulation directive of the EU. (WealthBriefing contacted the ICO for comment on the matter, without obtaining a response at the time of going to press. It also emailed the OECD for comment, and may update this article in due course.)

The OECD recently put up a job advert (with a 28 May deadline) seeking a "technical advisor on information security management". The advert said: "The Global Forum is hiring an information security expert to assist jurisdictions participating in the AEOI process." The AEOI acronym refers to Automatic Exchange of Information.

Noseda fears that so much political capital has been sunk into these cross-border data sharing pacts – often in reaction to complaints about tax havens and illicit flows of money – that it is tough for framers of these policies to admit that they have made a mistake.

“I tried to engage with them. This is a huge data protection disaster waiting to happen,” he said, adding: “There has been an unwillingness and inability to engage in discussion about this."

A problem made worse by COVID-19 is that governments are likely to target wealthy people as they try to fill their public coffers. They may not worry about privacy, Noseda said. 

In the past, complaints about FATCA and CRS could be painted as concerns of the super-rich, but a number of cases show that the problem spreads wider. Noseda has worked with an “Accidental American” individual, living in the UK, called “Jenny”, who spent a large chunk of her annual salary on filing US tax returns. Those tax returns confirmed that Jenny does not owe any US tax, because she earns less than the $104,000 'Foreign Earned Income Allowance' for US citizens living and working abroad. In fact she hadn’t worked as an adult in the US. This, and other cases, show that there is a problem, he said. 

Controversy over information-sharing agreements highlights a clash between legitimate financial and data privacy – which is a right – and the desire by governments to catch illicit money flows and criminals. A parallel argument is continuing about the publication of registers of beneficial ownership of companies and trusts. Over a year ago, Crown Dependencies such as Jersey, the Isle of Man and Guernsey started to publish beneficial ownership of companies (but not trusts). 

Critics of “full transparency” over financial matters argue that without privacy, people are at risk of kidnap and robbery, a concern all too real in regions such as South America, Africa, parts of the former Soviet Union and Asia.

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