Privacy Post-Panama

In the wake of the unprecedented leak of 11.5m documents from Mossack Fonseca, concerns over privacy continue to occupy the minds of clients and businesses alike in the post-Panama Papers world.

To some extent the immediate outcry for increased or full transparency has quietened and a more balanced argument has ensued; recognising the rights of nations and their tax authorities to due contributions as well as the rights of clients to maintain the confidentiality of their financial affairs.

So, what are the implications for the Isle of Man?

Before the Panama Papers were leaked, Isle of Man privacy legislation underwent some changes.  Late last year Aston International clients were made aware that, under UK and US FATCA, the Isle of Man is subject to requirements which will allow an automatic exchange of information (AEOI).  Aston International made its submissions to the Isle of Man Government for the UK and US FATCA in time for the recent deadline and governments are due to exchange information in September 2016.  It is expected that the first intergovernmental information exchange under the OECD’s common reporting standard (CRS), which will replace UK FATCA but not US FATCA, should take place in September 2017.

In April, after a long period of planning, the Isle of Man Government committed to establishing and maintaining a central electronic register of information that will allow accurate and current information to be provided to UK law enforcement and tax authorities, as quickly as within one hour in urgent cases.

The Island also agreed in April to engage in the G5 initiative on AEOI of beneficial ownership information.  However, at present there is no intention by the Isle of Man Government to introduce a publicly accessible beneficial ownership register.

Although both these items were announced in the wake of the Panama Papers’ leak, the agreements were formalised during many months of negotiations.  While it may appear that new legislation is increasingly encroaching on the privacy rights of the individual, these measures are only intended to apply to the provision of information to international tax and criminal investigation bodies,  and when it comes to requesting additional information the Courts would need substantial and specific legal claims before requiring disclosure of private information.

Aston International was active in responding to the Isle of Man Government’s consultation on beneficial ownership information, with the intention to limit access to that information by legitimate authorities.  We remain committed to protecting the privacy of client information.