Notes on open data and transparency

Beneficial ownership, corporate disclosure, tax justice, supply chains, policy and history

Andres Knobel, Unequal Exchange: Automatic Exchange of Information

Notes from webinar on Automatic Exchange of Information (AEOI), hosted by Tax Justie Network, Centre for Budget and Governance Accountability India and Financial Transparency Coalition.

Presentation by Andres Knobel, TJN. Slides

CBGA India Primer

Knobel, Andres. “Unequal Exchange.” August 29, 2018. Webinar.

Automatic Exchange of Information (AEOI) important because illicit financial flows (IFF) operate globally. Any IFF likely to involve accounts, legal structures etc from multiple countries.

A country cannot ask individual countries or institutions in other countries for information on potential IFF. Needs a treaty.

  • International treaty that allows exchange of information. May be:
  • A double taxation agreement
  • A tax information agreeemnet
  • Mulitilateral tax convention

Tax information agreement is prefered to DTA. DTA involves probable revenue loss alongside information gain. MTCs even better because they obviate the need to sign bilateral treaties.

This is the legal basis. But also requires:

The source country to collect the information and to exchange the information in a timely manner.

Ways to exchange:

  1. On request. No fishing expeditions allowed - requires evidence. Mostly about confirming information. May tip off the client.
  2. Spontaneous. A country finds out some information and decides that it might be useful for another country. However there is no enforcement or transparency in this process.
  3. Automatic. Exchange of information on residents. Requires the receiving country to send information itself (NGOs have been protesting against this requirement because tax havens and financial are much more important recipients of IFF).

These methods complement each other (but automatic exchange makes the others more valuable).

Automatic exchange of bank account information

Precursor: FATCA IGAs in the US. Foreign banks had to give information to US banks or face a withholding tax on payments. G5/G20 also decided they wanted information and endorsed AEOI using CRS. US will not implement AEOI; others think that FATCA not good enough.

AEOI is great for confidential information. But it is not great for information that should be public (like BO information and tax rulings). Nonetheless, OECD is trying to use AE for many things.

Responsibility for identifying clients (and in some cases BOs) lies with the bank - there is no room for a competent authority to stand in the way of exchange of information.

Why don’t developing countries implement?

  1. Need a treaty that allows exchange of info.
  2. A treaty that determines how to implement the CRS (a Competent Authority Agreement).
  3. Reciprocity agreement.

Legal bases to implement:

Legal basis treaty Implementation treaty
Bilateral DTA / ITEA Bilateral CAA
Multilateral Multilateral tax convention Multilateral Competent Authority Agreement

After signing MCAA, you then need to convince other signatory countries to choose your country as an exchange partner(!).

Implementers need to be:

  • Compliant with confidentiality provisions
  • Compliant with legal framework


  • USA: no exchange of BO-information
  • Switzerland: AEOI with developing countries only with close political ties (pro-financial industry; tax amnesties for tax evaders - Indonesia had to do this).
  • Originally Bermuda, Hong Kong, Panama only signed bilateral treaties.

OECD publishes CRS relationships.

Loopholes in CRS

Excludes: real assets held in freeports, director’s fees, real estate. BOs not always reported (“passive” entity).

Golden visas for tax havens change residency Data exchange should be implemented on the best-practice assumption that residency can, or could be, an array though? Check on if/how assumptions built into CRS etc.

Exclusions - accounts held before date; account limits (so larger accounts can be split to get below the threshold) Here it seems like if persistent and unique personal identifiers were required and reliable beneficial ownership declarations of reportable accounts were required, the argument could be made for all accounts to be passed to responsible agency, aggregation done at that level and then reportable accounts passed on (though then the vulnerability is accounts split between jurisdictions). .

No sanctions for non-compliance.


  1. Global Forum Pilot Programs
  2. Aggregate statistics of CRS data - TJN think this is the best solution. e.g., total $ held by Indian residents in US banks even if India can’t join the CRS yet. Australia has committed to this. US publishes liabilities to foreigners.
  3. Sanctions against other USA and other tax havens