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We’re thrilled to announce that the full transcript for our last webinar on automatic exchange of information, taxation and counter-financial terrorism is now available.

Plenty of exciting topics including CRS, FATCA, DAC6, JMLIT, tax evasion, terrorism financing and more where discussed by our panelists.

A special thank you to Dr. Nicholas Ryder and Samantha Bourton, both academics at UWE Bristol’s School of Law who took the time to talk to us about these pertinent issues.

Please make sure to download the transcript below.

TRANSCRIPT HERE

For now, here are some of the event’s main highlights!

How has the OECD’s CRS helped combat money laundering, tax evasion and other types of illicit financial activities?

Samantha Bourton: “I think when it comes to tax evasion, CRS is regarded as being much more effective than the old system, the exchange of information on request. There is the idea behind it that if you exchange information on an automatic basis, then tax authorities should have access to the information they need in order to work out whether people are complying with their tax obligations. And there is hopefully sort of a deterrent effect in that as well. So research by the IRS has shown that if third-party reporting takes place, so the system doesn't just rely on self-reporting by individuals, there's a 99% probability individuals will report their liabilities correctly. So, in theory, it should be a really good system to combat tax evasion, especially because the OECD has actually managed to and encouraged jurisdictions to actually sign up to this.”

How does the exchange of information work within the United Kingdom's counter terrorist financial legal framework?

Nicholas Ryder: “When JMLIT steps in, that was created by former Prime Minister Theresa May in 2014-2015. And this looks to add more information to create what we call a super SAR. But because it's voluntary, there is no compulsion or there isn't any penalty if the reporting entity doesn't comply with the provisions under the Terrorism Act 2000. The key thing to remember here is that members of JMLIT have access to approximately 90% of all UK bank accounts. Now that, to me, I think is a very important development. And from the information released by JMLIT over the last number of years, it does appear to be shortening the amount of investigation time post-terrorist attack. So I think for FATF in its 2018 mutual evaluation report to say that this is best international practice, and the US have adopted it, I think Singapore, Thailand, Japan, hopefully more jurisdictions will look to extend exchange of information from a money laundering or terrorism financing or even a fraud perspective. But the principle is to add to the financial intelligence submitted via a Suspicious Activity Report.”

How effective has FATCA been? And what are some of the challenges in terms of its effectiveness?

Samantha Bourton: “I think FATCA has really been quite similar to CRS. So the US has seen significant amounts generated by FATCA. But one of the key issues in the US is whether actually the cost of FATCA exceeds its benefits. So, for instance, I think the US have found that FATCA was predicted to raise around $8.7 billion. And the IRS claim it’s managed to recover $10 billion from offshore compliance efforts. So, again, we don't know how much of that is directly attributable to FATCA itself. But it does suggest that quite significant sums are being recovered as a result of it. But one of the key issues here is just how expensive FATCA is. So, for instance, the Swiss Chamber of Commerce actually estimated that if financial institutions worldwide complied with FATCA, it would actually cost them between $500 to 1000 billion worldwide, and the running costs would be around $10 to 30 billion. So, we said, with that in mind, the US is only getting around $1 for every $100 that's spent on FATCA around the world. So from that point of view, it does sort of raise the question, is it worth it? Although we're recovering quite a lot of money, financial institutions are spending huge sums to actually comply with this as well. Of course, the US isn't necessarily spending all this money and maybe this is why the US perhaps view it more as a benefit.”

How can academics and practitioners work together to improve automatic exchange of information protocols?

Nicholas Ryder: “Yeah, I think research is important, but also practitioners are important. We can sit in ivory towers in lock down and view things from an academic perspective. But it's really important I think that the private sector works with academics and academics work with practitioners and key stakeholders to really create some really important groundbreaking public discussion that can improve how we exchange information but also how we can protect right to privacy, right to our data being protected, but also in terms of tackling financial crime.”

Happy reading!