The mandatory system of data transfers from financial institutions to the US (based on the Foreign Account Tax Compliance Act, ‘FATCA’) is a daunting example of the risks of international data exchange. The problems of citizens and organisations being harmed by FATCA (e.g. the ‘accidental Americans’) are still unresolved, and there is insufficient attention to it internationally. Meanwhile, developments continue. Internationally, the US is the only country with its own data exchange law.

Common Reporting Standard
The rest of the world works with a system abbreviated as ‘CRS’, referring to the Common Reporting Standard. The OECD summarises it as follows:

The Common Reporting Standard (CRS), developed in response to the G20 request and approved by the OECD Council on 15 July 2014, calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

Cryptocurrency
Recently cryptocurrency was included in CRS, showing that governments are tapping into a new revenue source with cryptocurrency.

Extending data exchange to other domains
The data exchange for tax purposes is gradually extended to other domains. Read for instance the publicaton of the Global Forum [*]:

Facilitating the Use of Tax-TreatyExchanged Information for Non-Tax Purposes. A Contribution to a Whole-of-Government Approach to Tackling Illicit Financial Flows

According to the subtitle, ‘non-tax purposes’ is about anti-money laundering, but no doubt it will not stop there.

Those decent governments acting adequately…
These exchange systems are based on the premise that all countries in the world are decent states under the rule of law, with reasonable tax laws and adequate legal protection. It is further assumed that such data exchange can take place securely. Unfortunately, the reality is different. International designers deliberately turn a blind eye to this.

[*] Gl0bal Forum on Transparency and Exchange of Information for Tax Purposes, read the introduction on the OECD site. One of the main goals of the Forum is putting an end to bank secrecy.

More information:

CRS

Is introduced on the OECD site. On that site there are pages about:

• Automatic exchange.
• The international framework for the CRS.
• Implementation and assistance.
• The Commitment and monitoring process.

In June the CRS-standards were updated, see International Standards for Automatic Exchange of Information in Tax Matters.Crypto-Asset Reporting Framework and 2023 update to the Common Reporting Standard, 8 June 2023.

The non-tax purposes publication by the Global Forum: Facilitating the Use of Tax-TreatyExchanged Information for Non-Tax Purposes. A Contribution to a Whole-of-Government Approach to Tackling Illicit Financial Flows (pdf), July 2023.

OECD in general

The OECD deals with many other topics than tax and AML, e.g. food security, sustainability and global health.

FATCA

• Introduction to FATCA on this blog (in Dutch).
• Some of my FATCA articles are in English.