Riding the Transparency Tidal Wave

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Riding the Transparency Tidal Wave
Richard HaySTIKEMAN ELLIOTT LLPSTEP Caribbean
Conference 5 May 2008 Panama
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Presentation Summary

• offshore wars over financial services why?
• government surveillance programs, post 9/11
• why privacy matters
• privacy victories for OFCs
• what lies ahead
• suggestions for riding the transparency tidal wave

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Offshore Wars Why Fight?

• profit rich countries have oil, or financial
  centres
• power control of mobile capital
• consistency in regulatory standards but can the
  OECD achieve its goals without a level playing
  field?

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Top Global Economies, GDP per person2006
estimate, 000
SOURCE CIA World Factbook
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Government Surveillance Capability, Post 9/11

• financial affairs tracking bank data, credit
  cards, beneficial ownership disclosure
• movements monitored, through blackberry, mobile
  phones, CCTV, satellite surveillance
• communications digitised communications are
  comprehensively monitored (Echelon Project)
• internet searches comprehensively tracked

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Airport Scanners
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Increasing Financial Surveillance Why?

• prevention of terrorism (9/11)
• law enforcement
• tax information exchange
• digitisation the technology leap facilitates
• data collection
• storage, and
• retrieval

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Why Privacy Matters

• surveillance degrades civil society, engendering
  a climate of mutual suspicion
• International Declaration of Human Rights (1948)
• financial data provides a near complete picture
  of a persons habits, religious preferences,
  weaknesses, health etc
• commercial considerations we value
  confidentiality, and avoid financial centres
  ready to compromise it
• if transparency is the mantra, why do governments
  conceal their own surveillance activity?

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What Can Go Wrong With Data Collection?

• mission creep
• regime change
• the Dutch experience in WW II
• a casual culture towards personal data
• policing abuse require data collectors to
• disclosure of leaks, and
• damages for injured parties

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Privacy Victories for OFCs That Nobody Noticed

• OFC regulation of financial service providers was
  a masterstroke
• information tracking is largely confined to the
  private sector, limiting fishing expeditions in
  OFCs and data convergence
• JAHGA standard for preparation of financial
  statements (2005)
• on request vs automatic information exchange

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What Lies Ahead

• OECD plans to rate financial centre compliance
  with their information exchange program (name and
  shame?)
• UK Treasury Committee Inquiry on offshore centres
• EU Savings Tax Directive automatic exchange for
  all data on cross-border flows of funds?
• a Democrat (Obama) administration is likely to
  crack down on tax havens

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Riding the Transparency Tidal Wave

• skill up, and phase out your legacy business
• call for a level playing field, but be careful
  what you wish for!
• demand transparency (and accountability) in
  government programs to track data
• OFCs should insist on securing the benefits of
  globalisation as they assume its burdens
• increase co-operation across the small offshore
  centres at government, institutional and private
  sector levels

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Riding the Transparency Tidal Wave
Richard HaySTIKEMAN ELLIOTT LLPSTEP Caribbean
Conference 5 May 2008 Panama