Wealthy people worry about their personal financial information being shared under the Common Reporting Standard (CSR), research shows.
The concern is down to the possibility of data breaches and follows 2.6 billion records breached worldwide in 2017 across 1,765 separate incidents, according to the Breach Level Index.
Old Mutual International (OMI) surveyed financial advisers internationally and almost 60% said their clients were concerned about CSR in some way – and in 22% of cases this was due to the risk of a breach.
CSR is designed to help combat tax evasion.
Jason Pearce, head of technical sales for Hong Kong and Northeast Asia at OMI, said: “With the CRS there is a lot of data moving around the world, not necessarily in a secure fashion, and this could lead to devastating consequences if people’s records are compromised.
“We know that data is at its most vulnerable when it is being transmitted, so it stands to reason that someone with complex financial affairs will want to find ways to mitigate the risks of their personal data being intercepted.”
Pearce said the complexities of the financial affairs of high net worth individuals means that they may have assets held in multiple jurisdictions around the world, the details of which may be shared with multiple tax authorities, sometimes insecurely.
OMI is recommending the use of offshore bonds and other tools. Offshore bonds mean assets such as bank deposits, exchange-traded funds, open-ended funds and hedge funds can be held in a portfolio bond, and rather than wealth managers of these individual assets reporting back and forth between various tax authorities, only the provider of the portfolio bond is required to report the surrender value to the relevant authority.
The research also found many of the 180 advisers surveyed felt they had either a good or strong understanding of CSR.
The OECD developed the CSR in 2014.
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