Heather Lowe, Legal Counsel and Director of Government Affairs at GFI, said of the new model agreement, “Automatic exchange of tax and financial information is essential to combating global tax evasion and money laundering. For years, the OECD recommended member-countries exchange information only upon request, a process that has proved inadequate to detect and deter cross-border financial crime. This is truly a game-changing policy shift at the highest level.”

The new standard will require countries that sign up to the agreement to notify another signatory country if its banks and other financial institutions have accounts in the name of any of that other country’s citizens or companies. Financial institutions, a broad category of global financial players, would be required to collect and provide information about all investment income, financial assets, and account balances of their foreign account holders, in a manner similar to what the U.S. Foreign Account Tax Compliance Act (FATCA) requires. The system also incorporates elements from the European Union Savings and Tax Directive (EUSTD) and Financial Action Task Force (FATF) anti-money laundering standards.

The standard, developed in response to a mandate from the G20 nations last fall, is envisioned as the basis for a new standard of multilateral information exchange, enabling governments to root out tax evaders, money launderers, and other financial criminals wherever they attempt to hide. All thirty-four OECD member countries have already agreed to the standard, and GFI encouraged the G20 to embrace the new standard at its summit this fall in Brisbane, Australia.