Complete bank secrecy is becoming obsolete. The Automatic Exchange of Information (AEOI) framework enables the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes to implement the Common Reporting Standard.

Financial institutions—banks, building societies, insurance companies, and investment firms—now request information about account holders’ tax residence status. Cyprus maintains agreements allowing tax authorities to share financial account data across borders.

Who Is Affected?

Individuals opening or maintaining bank accounts face these requirements. Those holding investments through insurance or investment firms, or serving as trustees of certain trusts, may also be subject to disclosure obligations.

The Objective

Treaty countries systematically collect and transmit bulk financial data about foreign residents to their respective tax authorities. As the OECD describes it: automatic exchange involves periodic transmission of taxpayer information concerning various income categories.

Data Confidentiality Concerns

While encrypted during transmission, uncertainty remains regarding storage, access controls, and usage parameters. The OECD’s framework remains vague, stating information may only be used for certain specified purposes and disclosed to certain specified persons.

Countries must execute Competent Authority Agreements (CAAs) within existing frameworks:

  • Double taxation conventions (Article 26)
  • Mutual Administrative Assistance Convention (Article 6)
  • EU directives enabling automatic exchange

Nations must incorporate the Common Reporting and Due Diligence Standard into domestic legislation.