On 9 November 2022 the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes published a peer review report on the automatic exchange of financial account information. The Global Forum monitors and reviews the implementation of the international standards in relation to the Exchange of Information on Request (EOIR) and the Automatic Exchange of Information (AEOI).

The report sets out the recommendations arising from the peer reviews of the legal frameworks In more than 100 countries that are committed to commencing AEOI, including analysis and recommendations in relation to the AEOI legal framework of each country and the rating of its effectiveness in practice.

AEOI provides for the automatic exchange of a specified set of financial account information between tax authorities each year. The domestic and international legal framework in each country is reviewed to assess its completeness and to look at the effectiveness of the implementation of the standard in practice.

In recent years, the automatic exchange of information has been extended to cover a wider range of financial assets held offshore, in line with the Standard for Automatic Exchange of Financial Account Information in Tax Matters (AEOI Standard). Under this standard the information to be exchanged would cover details of financial accounts held by foreign tax residents, covering in some cases financial accounts held through entities that are controlled by foreign tax residents (controlling persons).

During the implementation process, the Global Forum has monitored the extent to which certain key milestones are being met by each country, and then carried out peer reviews to assess the implementation of the rules. Any issues arising can then be addressed early in the implementation process. The domestic and international legal frameworks for 106 jurisdictions have been reviewed since 2019 and more than 90% of the jurisdictions assessed have legal frameworks for AEOI that are in place or are in place but needing improvement.

The practical operation of the AEOI Standard by countries requires them to ensure that financial institutions are properly implementing the due diligence and reporting rules, and that the exchanges of information are functioning well in practice. The Global Forum has conducted initial peer reviews to identify the jurisdictions that are on schedule in implementing the requirements and to pinpoint those countries that need to do more.

The initial effectiveness reviews indicate that most jurisdictions are implementing administrative compliance frameworks and are enforcing compliance by financial institutions. However, the results also show that many jurisdictions are still in the early stages of developing and implementing their frameworks and that this should be a key area of focus in the coming years, to maximise the effectiveness of the AEOI Standard as a tool to tackle offshore tax evasion.

The Global Forum is putting in place a further peer review framework, involving a more detailed assessment of the effectiveness of each jurisdiction’s administrative compliance framework. The reviews will look at how the reporting financial institutions are applying due diligence procedures in line with the AEOI Standard and at the effectiveness of the exchange of information in practice.