How transparency and data privacy will shape the future of IFCs?
Laws do not always operate in concert and, as they proliferate, confusion is bound to increase. This is said to be especially true for automatic tax information transfers and public registries of beneficial owners, the latest push towards transparency in financial affairs.
The exchange of information among governments has unquestionably led to better compliance, increasing tax revenue worldwide by an estimated 93 billion Euros, according to the OECD. But it also has led to unintended consequences such as misuse of data for political reasons and cyber security issues.
Concerns about data privacy extend well beyond IFCs. Major breaches and data misuse by large technology companies, including Google, Amazon, Facebook, have led to a worldwide backlash against the uncontrolled sharing of personal information.
In response, new laws have sprung up to protect consumer privacy. The EU’s General Data Privacy Regulation (GDPR), which went into effect in May 2018, is the most comprehensive.
Simon explained that the conflict between transparency on the one hand and the individual right to privacy on the other has serious consequences for IFCs. As with any new legislation, the direction that governing bodies eventually decide to take will shake out in court cases where laws are tested.
Transparency and data privacy seem mutually exclusive. As the debate over which agenda governments should follow plays out over the next 10 years, these decisions will have critical importance for IFCs.
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