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EU & US Sign “Umbrella” agreement to protect personal data transferred by law-enforcement authorities for detecting criminal offences, like tax evasion, & terrorism

Posted by William Byrnes on June 9, 2016


The EU-U.S. Ministerial Meeting on Justice and Home Affairs, hosted by the Netherlands Presidency of the Council of the European Union, took place in Amsterdam.  This meeting is EU Commission

Signing of the “Umbrella” agreement represented a major step forward in EU-U.S. relations.  The agreement sets high standards for the protection of personal data transferred by law-enforcement authorities.  It also strengthens legal certainty and enhances the rights of citizens which in turn will facilitate EU-U.S. cooperation to combat crime, including terrorism.  The EU and the U.S. are committed to work together in the implementation of this agreement to ensure that it benefits both citizens and law enforcement cooperation.  The next step will be to seek approval by the European Parliament.

During the ministerial meeting, the delegations focused on ways to address the migration crisis, on their respective visa policies, and on information sharing in the context of security, on counterterrorism policies and terrorist financing, on money laundering, data protection and on practical cooperation to tackle transnational organised crime.  The exchange of views covered issues including the protection of refugees, global resettlement efforts, effective border management and dismantling organised criminal migrant smuggling networks.

The EU and the U.S. first discussed ways to address global migration by developing safe, regular and orderly migration processes whilst ensuring international protection for those who need it.  The discussion focused on opportunities to mutually reinforce and coordinate their actions in this respect while also establishing high security standards.  They agreed that the current migration and refugee challenges require global solutions through increased international cooperation and regional action.  In this respect they reaffirmed their commitment to work together in the lead-up to the upcoming United Nations General Assembly high level meeting addressing large movements of refugees and migrants and to the U.S. hosted Leader-Level Refugee Summit, to be held in September 2016 in New York.

The EU and U.S. exchanged views on visa issues and the respective legal frameworks.  They agreed to maintain their constructive dialogue at all levels to achieve mutually beneficial solutions.

The EU and the U.S. discussed initiatives to improve counterterrorism efforts, including border security, screening of travellers and information sharing, as well as cooperation to better identify terrorist and foreign fighter travel.  They also agreed to reinforce their dialogue on chemical, biological, radioactive and nuclear material and on its possible use by terrorist networks.  They discussed legislative initiatives to improve information sharing, and to streamline efforts to combat terrorist financing and money laundering.

They also discussed a five year review of the 2010 EU-U.S. Mutual Legal Assistance Treaty, a key mechanism for transatlantic criminal justice cooperation.  The EU and the U.S. confirmed that the treaty is working effectively and identified areas for further practical improvement.  The U.S. and the EU committed to implementing those recommendations.  These recommendations include enhancing training and specialisation of practitioners, improving the way joint investigation teams work together, using technology to avoid delays, and making it easier to track criminal proceeds by identifying bank accounts.  Facilitating access to electronic evidence is a particular concern of the review, and the participants committed to improving their practices through which they obtain such evidence.

Following up to the commitment made at the EU–U.S. Summit in March 2014, the EU and the U.S. reiterated their desire to tackle jointly the issue of transnational child sex offenders, acknowledging the operational conclusions of an EU–U.S. expert meeting held in September 2015.  The EU and the U.S. recognized the importance of improving operational cooperation to protect children from transnational sex offenders.

Concluding the discussions, Europol and the U.S. jointly presented the results of a successful EU–U.S. operation that brought together law enforcement authorities from across Europe and the US to dismantle an important drug trafficking network and seize the proceeds of their crimes.

The EU and the U.S. committed to continuing their regular dialogue and to hold another ministerial meeting in the second half of 2016.

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Meeting of G20 Finance Ministers and Central Bank Governors

Posted by William Byrnes on September 23, 2014


Cairns, 20-21 September 2014

OCDE_10cm_4c• Part I – Base Erosion and Profit Shifting, Automatic Exchange of Information and Tax and
Development and Part II – Global Forum on Transparency and Exchange of Information for Tax Purposes, OECD Secretary-General Report to the G20 Finance Ministers and Central Bank Governors, September 2014.

• G20 Common Reporting Standard Implementation Plan, September 2014.
G20 Response to 2014 Reports on Base Erosion and Profit Shifting and Automatic Exchange of Tax
Information for Developing Economies, G20 Development Working Group, September 2014.
o Two other reports which support our agreement on tax and development can be found at
http://www.g20.org/official_resources.
Financial Action Task Force Progress Report to the G20, September 2014

download for free –> LexisNexis® Guide to FATCA Compliance

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OECD releases Standard for Automatic Exchange of Financial Account Information in Tax Matters

Posted by William Byrnes on July 21, 2014



OCDE_10cm_4c

 

The OECD today released the full version of a new global standard for the exchange of information between jurisdictions.

I have posted Notes on the Common Reporting Standard for Automatic Information Exchange on my new International Financial Professor Law Blog at

http://lawprofessors.typepad.com/intfinlaw/2014/07/the-oecd-today-released-the-full-version-of-a-new-global-standard-for-the-exchange-of-information-between-jurisdictions.html

CRS Due Diligence Standards similar but not identical to FATCA

The CRS contains a reporting and a due diligence standard that underpins the automatic exchange of information, very similar to FATCA.

Due diligence distinguishes between pre-existing accounts and new accounts, individual accounts and entity accounts.

Individual Accounts

Pre-existing accounts do not have a de minimis amount but are divided between low value and high value accounts.

Low Value

Low value accounts have a permanent residency based test based on documentation or, failing that, based upon indicia.  If indicia are found, then either the account holder must provide self-certification or the account must be reported to all jurisdictions to which the indicia attach.

High Value

High value accounts are defined as having an aggregate balance or value of $1 million US dollars by December 31 of a calendar year. High value accounts require a paper based search as well as the test of actual knowledge of the relationship manager.

New Accounts

All new individual accounts (no de minimis) require self-certification, with confirmation of its reasonableness, which can be performed at the time of account onboarding.

Entity Accounts

Preexisting entity accounts

Preexisting entity accounts firstly need to determine if the entity is a reportable person, generally using available AML/KYC information, and if such information is not available, then a self certification will be required from the entity.

However, a preexisting entity account de minimis size of US$250,000 is available at the option of the jurisdiction adopting the CRS.

Passive entity

If the entity is a passive entity then the residency of the controlling members of the entity must be determined.  Passive entity status may be determined by self-certification unless the financial institution has contra-indication information, or information is otherwise publicly available to refute the self-certification.  Controlling members of the entity may be determined based upon the AML/KYC information available.  Control must be interpreted in a manner consistent with the FATF standard.

New entity accounts

For new accounts, the de minimis option is not available because self-certification is easily obtainable at account opening.

See full comments at http://lawprofessors.typepad.com/intfinlaw/2014/07/the-oecd-today-released-the-full-version-of-a-new-global-standard-for-the-exchange-of-information-between-jurisdictions.html

free Lexis FATCA Compliance chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

Over 600 pages of in-depth analysis of the practical compliance aspects of financial service business providing for exchange of information of information about foreign residents with their national competent authority or with the IRS (FATCA).

Posted in FATCA, OECD | Tagged: , , , , , , | Leave a Comment »

66th country signs OECD Convention on Tax Information Exchange

Posted by William Byrnes on July 4, 2014


free chapter download here —> http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671   Number of Pages in PDF File: 58

The OECD announced yesterday that Gabon became the 66th country to sign the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. Gabon is the seventh African country to sign the Convention since it was opened for signature to all countries in June 2011.  (previous article on tax information exchange)

“Already a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes since October 2012, Gabon’s commitment today plays an important role for regional co-operation in tax matters and demonstrates effective action towards greater exchange of information”, said Pascal Saint-Amans. “We hope it will act as an encouragement to other African and developing countries to also join this important area of international co-operation in the fight for a fairer and more transparent international tax system”.

The Convention provides for all forms of mutual assistance: exchange on request, spontaneous exchange, tax examinations abroad, simultaneous tax examinations and assistance in tax collection , while protecting taxpayers’ rights. It also provides the option to undertake automatic exchange, requiring an agreement between the Parties interested in adopting this form of assistance.

Automatic Exchange of Information for Tax Purposes

47 countries and major financial centers on May 6, 2014 committed to automatic exchange of information between their jurisdictions, announced the OECD.  All 34 OECD member countries, as well as Argentina, Brazil, China, Colombia, Costa Rica, India, Indonesia, Latvia, Lithuania, Malaysia, Saudi Arabia, Singapore and South Africa  endorsed the Declaration on Automatic Exchange of Information in Tax Matters that was released at the May 6-7, 2014 Meeting of the OECD at a Ministerial Level.

The Declaration commits countries to implement a new single global standard on automatic exchange of information (“CRS” or “GATCA”).  The OECD stated that it will deliver a detailed Commentary on the new standard, as well as technical solutions to implement the actual information exchanges, during a meeting of G20 finance ministers in September 2014.

Common Reporting and Due Diligence Standards (“CRS”)

February 13 the OECD released the Standard for Automatic Exchange of Financial Account Information Common Reporting Standard.  The Draft Commentaries for the CRS, developed by the Working Party No. 10 on Exchange of Information and Tax Compliance, and discussed at its May 26-28, 2014 meeting, are expected to be released very shortly, in July.

The CRS 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 that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. Part I of the report gives an overview of the standard. Part II contains the text of the Model Competent Authority Agreement (CAA) and the Common Reporting and Due Diligence Standards (CRS) that together make up the standard.

What are the main differences between the CRS (“GATCA”) and FATCA?

The CRS is also informally called “GATCA”, referring to the “globalization” of FATCA.

The CRS consists of a fully reciprocal automatic exchange system from which US specificities have been removed. For instance, it is based on residence and unlike FATCA does not refer to citizenship. Terms, concepts and approaches have been standardized allowing countries to use the system without having to negotiate individual Annexes.

Unlike FATCA the CRS does not provide for thresholds for pre-existing individual accounts, but it includes a residence address test building on the EU savings directive. The CRS also provides for a simplified indicia search for such accounts. Finally, it has special rules dealing with certain investment entities where they are based in jurisdictions that do not participate in the automatic exchange under the standard.

Single Global Standard for Automatic Exchange (“GATCA”)

Under GATCA jurisdictions obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. Part I of this report gives an overview of the standard. Part II contains the text of the Model Competent Authority Agreement (CAA) and the Common Reporting and Due Diligence Standards (CRS) that together make up the standard.

The Report sets out the financial account information to be exchanged, the financial institutions that need to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.

To prevent taxpayers from circumventing the CRS it is specifically designed with a broad scope across three dimensions:

  1. The financial information to be reported with respect to reportable accounts includes all types of investment income (including interest, dividends, income from certain insurance contracts and other similar types of income) but also account balances and sales proceeds from financial assets.
  2. The financial institutions that are required to report under the CRS do not only include banks and custodians but also other financial institutions such as brokers, certain collective investment vehicles and certain insurance companies.
  3. Reportable accounts include accounts held by individuals and entities (which includes trusts and foundations), and the standard includes a requirement to look through passive entities to report on the individuals that ultimately control these entities.

The CRS also describes the due diligence procedures that must be followed by financial institutions to identify reportable accounts.

If CRS and IGAs are Universally Adopted, Then Why is the Multilateral Convention on Mutual Administrative Assistance in Tax Matters Necessary?

Both the CRS model, which is currently being developed by the OECD with G20 countries, and the IGAs are based on the automatic exchange of information from the tax administration of one country to the tax administration of the residence country.  As with other forms of exchange of information, a legal basis is needed to carry out automatic exchange. While bilateral treaties such as those based on Article 26 of the OECD Model Tax Convention would permit such exchanges, it may be more efficient to implement a single global standard through a multilateral instrument.  See OECD Information Brief

Global Forum Peer Reviews and Monitoring Of Automatic Exchange

G20 governments have mandated the OECD-hosted Global Forum on Transparency and Exchange of Information for Tax Purposes to monitor and review implementation of the standard.  More than 60 countries and jurisdictions of the 121 Global Forum members have now committed to early adoption of the standard, and additional members are expected to join this group in the coming months. See the link for Country Peer Reviews and the Global Forum list of ratings chart.

book coverPractical Compliance Aspects of FATCA and GATCA

Over 600 pages of in-depth analysis of the practical compliance aspects of financial service business providing for exchange of information of information about foreign residents with their national competent authority or with the IRS (FATCA), see Lexis Guide to FATCA Compliance, 2nd Edition just published!

34 chapters by 50 experts grouped in three parts: compliance program (Chapters 1–4), analysis of FATCA regulations (Chapters 5–16) and analysis of Intergovernmental Agreements (IGAs) and local law compliance requirements (Chapters 17–34), including  information exchange protocols and systems.

Posted in FATCA, information exchange, OECD | Tagged: , , , , , , , | Leave a Comment »

 
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