Think Your Finances are Private?
25 September 2015
When people think of protection of their privacy rights it is often in the context of keeping pictures of their children off the internet or the location of their residential properties private. Traditionally, private financial information such as how much you hold in your bank account, where that bank account is located and the structure in which you choose to hold your wealth was not at risk of being disseminated to the public. This is primarily because that information was difficult to get hold of and secondly it was not of interest to the public. However, the post 2008 era has seen the subject of tax avoidance became a public interest story; filling the pages of newspapers and incurring the wrath of policy makers who in turn have sought to implement far reaching fiscal transparency provisions. As a result, protecting the privacy of financial information has become increasingly difficult yet ever more important.
The reactions of global policy makers to depleting reserves and the increased public engagement with issues such as tax avoidance has been to introduce polices which demand fiscal transparency and cross border sharing of personal and corporate information. These policies will culminate in January 2016 with the implementation of the Common Reporting Standard through which there will be automatic exchange of information relevant to individual and corporate tax liability between multiple countries and institutions. In the same year we will also see the introduction in the UK of the public corporate register which the government has declared will be a public record detailing “who really owns and controls UK companies.”
Such wide reaching global polices attack the very core of the principle of private financial information as that information becomes far more accessible to third parties; whether they be other governments, the media or criminals. In this fiscal environment, clients need to be aware of the risk the new transparency regime poses to the privacy of their financial information and to protect themselves as far as they can from it.
Looking forward, the disclosure profile of corporate and family assets will become of critical importance when advising families and businesses. Sensible financial planning for wealthy families or businesses should always be done with one eye on the risks it may pose to their financial privacy.Receive our monthly newsletter