Sharing of treaty-exchanged information with relevant law enforcement agencies for non-tax purposes helps to combat illicit financial flows (IFFs), money laundering and corruption. Institutions often face operational challenges in implementing this wider use of the information, such as obtaining the consent of the jurisdiction providing the information.
The Global Forum has prepared for the G20 a report outlining an approach to advancing the wider use of treaty exchanged information between interested jurisdictions. This could involve the implementation of co-operation agreements, such as agreements between competent authorities for the exchange of information for tax purposes, and agreements between tax and non-tax authorities at the domestic level.
The report considers the benefits and the challenges of using the information exchanged through tax treaties for purposes other than tax. The suggested approach could be implemented by countries to streamline and facilitate cooperation on provision of information. The wider use of treaty-exchanged information could be supported by permitting interested jurisdictions to streamline the existing processes and allow greater access to the information for the purpose of enhancing cooperation in the fight against illicit financial flows.
Jurisdictions could move to facilitate the wider use of treaty-exchanged information by setting out the terms and conditions of co-operation. Elements forming the basis of a possible approach to the wider use of treaty-exchanged information could promote enhanced co-operation between jurisdictions through bilateral or multilateral Competent Authority agreements, and by signing co-operation agreements or memoranda of understanding at a domestic level.
Tax authorities could share with non-tax authorities any treaty-exchanged information that has been previously provided for tax purposes and that is also considered to be foreseeably relevant for the supervision and enforcement of non-tax laws and to be used in support of non-tax investigations.
Jurisdictions could define the non-tax purposes for which the information is to be used, based on their priorities and on what their domestic laws permit. The authorised non-tax purposes could include the investigation and prosecution of offences related to anti-money laundering and combating the financing of terrorism (AML/CFT), corruption and customs. Interested jurisdictions could add other non-tax purposes as determined and agreed among the jurisdictions.
Information could be shared with the government agencies or authorities responsible for the non-tax objectives for which the information would be useful, such as financial intelligence units, anti-corruption agencies, customs authorities or public prosecutors. The approach set out in the report would allow interested jurisdictions to comply with their international and domestic obligations. The rights of taxpayers would be respected and the additional information available would enhance the fight against IFFs.
