Expats in the UK are likely to be concerned about the UK sharing sensitive financial data with emerging markets, a law firm has suggested.
The firm was reacting to OECD consultations aimed at expanding an international anti-tax evasion agreement, the Common Reporting Standard (CRS).
The agreement will apply to new countries from the autumn, while the OECD is also trying to crack down on structures that it fears might allow people to evade CRS.
Under the CRS standard, countries automatically exchange financial information on offshore accounts to the resident country of the account. This autumn, 53 countries are to join the CRS in the autumn in addition to the 49 states that are already signed up to the agreement.
However, lawyers say they are concerned about the data protection standards in some of the countries that will be party to the agreement.
Collyer Bristow said concerns have been raised that potential lax data security could lead to individuals being at a greater risk of being a victim of kidnapping, extortion, or other crime.
William Hancock, partner at Collyer Bristow, added: “Questions have been raised about whether the UK should share highly sensitive financial data with certain countries.
“There are potential worries regarding the impact of releasing financial information in other jurisdictions and its potential misuse, especially considering the current climate of increased awareness around data security and protection.
“It is not uncommon for political reasons for some countries to wrongly accuse expats of being involved in white collar financial crime. Some regimes could potentially use the data to harass alleged dissidents abroad.”
The OECD is also investigating whether Residence By Investment (RBI) schemes are being used to avoid the Common Reporting Standard, warning that they could “offer a backdoor to money-launderers and tax evaders”.
Henley & Partners, residence and citizenship planning advisers in the Channel Islands, said these schemes are not used by their clients to abuse the CRS system, but to promote visa-free travel, greater security and career opportunities.
“We fully support all measures to enhance the effectiveness of the CRS, and in particular measures aimed at deterring the possible abuse - although in our view currently quite limited - of CBI/RBI programs for the purpose circumventing the CRS,” Dr. Juerg Steffen, group chief operating officer at Henley, said, in response to the OECD investigation.
