In an attempt to bring the issue of the draft legislation now being circulated regarding the Automatic Exchange of Financial Account Information for tax matters we asked an Offshore Banker Friend (OBF) of ours who is involved with a private bank in here in Nassau a few questions.
Here is the gist of our brief interview.
NI: We understand there is some draft legislation being circulated with regard to the automatic exchange of financial information for tax matters. Have you heard of this and do you have any thoughts or concerns about it?
OBF: I have written to the AIBT (Association of International Banks & Trusts) about my concerns on the recent developments relative to the Automatic Exchange of Financial Account Information in Tax Matters which the Government is planning to introduce. Outside the banking world I do not know how much is known about this subject but it is typical bureaucratic garbage promoted by the OECD.
NI: What is you major concern?
OBF: This is a plan that even over-rides the provisions of members of the United Nations, a body, that acknowledges the right to individual privacy! The Bahamas is a member of the United Nations but has shown signs of siding with the OECD.
NI: So if everyone automatically exchanges, what’s the problem with that?
OBF: Well, on one hand the USA which always benefits for the introduction of such plans will very likely ignore the OECD mandate, as they usually do (e.g. they still do not insist on shareholder disclosure of companies and still allow certain States to issue “bearer” shares) but they are sufficiently large and diverse that quite simply they can afford to say they don’t care.
NI: That’s worth being concerned about. Is there anything else that bothers you?
OBF: The draft information that has been released by the Bahamas Government contains oxymorons – e.g.
- “Exchange of Financial Account Information” there is no such thing as far as The Bahamas is concerned – it has been clearly annunciated that any bi-lateral agreements with The Bahamas will NOT be reciprocal i.e. The Bahamas will not receive any benefit from the aforementioned agreements. On the other hand the consequences to The Bahamas if this law is enforced will “kill” the offshore banking industry.
- The Bahamas will collect this information in the name of a body referenced “Competent Authority” – does this esteemed body really have competent people ‘on-board’ that will serve the best interests of the banking industry?
NI: That’s a mouthful. Care to elaborate?
OBF: All this information is to be collected and retained by the “Competent Authority” what is the chance of it being hacked and leaked? Already the Registrar General’s office was hacked whereby a list of companies (IBC’s) was obtained together with lists of Shareholders and Directors & Officers. The Government response to the ‘leak’ of this information was “so what” – it was public information anyway – a rather cavalier response!
Yes, such information can be obtained by the public if you are prepared to pay a fee for a specific search. However, why bother when this information can be obtained free of charge? I am sure that, as in the past, WikiLeaks will be able to “hack” into this data-base without much difficulty.
NI: We understand your concerns quite clearly. Thank you for sharing them with us. Do you have a parting thought?
OBF: This scenario is something that bothers me greatly and I have little confidence in our Government protecting us.
NI: Thanks again and bye for now.
OBF: You are quite welcome. Hope I’m still in business after this is implemented.