A UK court case brought against
HSBC Private Bank by a former client has highlighted concerns about
legitimate client confidentiality with countries lacking strong
governance.
Zimbabwean authorities froze, then
seized, more than $300m of Jayesh Shah’s assets after they became
aware UK authorities were making anti-money laundering checks on
legitimate transactions from his HSBC Private Bank accounts between
September 2006 and February 2007.
Go deeper with GlobalData
Professional advisers predict a
growing risk of abuse of personal tax data as the Organisation of
Economic Co-operation and Development (OECD) looks to expand the
number of countries accessing detailed tax information through tax
information exchange agreements (TIEAs).
Call for
safeguards
In its report, Making Tax Data
Exchange Secure, the Society of Trust and Estate Practitioners
(STEP) said that without strong and explicit safeguards, the
growing number of countries exchanging data via TIEAs will increase
the danger personal data will be abused.
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By GlobalDataShah claimed for damages against
HSBC Private Bank for failure to comply with his transfer
instructions and for other breaches of duty, but the charges were
dismissed.
The UK Court of Appeal subsequently
ruled that Shah has the right to challenge HSBC for delaying the
transfer of assets. The case remains ongoing. HSBC said it does not
comment on client matters.
Growing data
concern
Data security is a key issue for
private banks battling to preserve client confidentiality and
follows the disclosure of HSBC Private Bank client details in
France, Italy and Spain.
In a worldwide survey, less than
half (45%) of STEP members expressed confidence that legitimate
client confidentiality will be respected in the future.
More than 90 countries have now
joined the OECD Global Forum on transparency and exchange of
information for tax purposes.
STEP chief executive David Harvey
said there is strong political pressure to expand the list of
countries accessing tax data via TIEAs, bringing in countries where
it is harder to be confident that personal tax data will be
secure.
Declining
goverance
STEP said it is clear the quality
of governance in countries exchanging data is likely to decline
sharply unless there are strong new safeguards built into the
system.
“So far there are no clear plans to
ensure minimum standards are in place to protect the public,”
Harvey said. “There is no check to ensure countries receiving data
on taxpayers’ financial affairs protect that data and respect
personal confidentiality.”
STEP has recommended five minimum standards to ensure taxpayer’s
data is protected which include that legitimate rights of
individuals are enforceable if data exchanged under TIEAs is
abused.
