The massive Panama Papers leak of the Mossack Fonseca law firm in 2016 struck a nerve about the growing media trend of publishing private tax and financial information – which is in the name of public interest. While this ordeal did provide newsworthy insight into some questionable actions of a few high-profile individuals, thousands of other clients associated with the firm in question had their personal dealings exposed to the world, despite the lack of any wrongdoing. CEO of Redbed Investments LLE, Reda Bedjaoui emphasizes that privacy and authentic transparency are separate aspects that can and should be strictly maintained in the modern finance market, but not at the expense of each other. Meaningful safeguards should be implemented as future international agreements and guidelines adapt to a new era in data availability and access, existing alongside increased calls for transparency.
Significant changes in the organized sharing of an individual’s financial information have occurred over the last several years. In 2014, the Organization for Economic Co-operation and Development (OECD) established the Common Reporting Standard (CRS), setting the rules for a new global network of tax reporting. It calls on the tax authorities of participating countries to obtain information from their respective financial institutions, and automatically exchange that information with other member countries annually. To its credit, the CRS does impose privacy and data protection obligations on every tax authority involved in the exchanges. It is required to safeguard financial data, limit use of data to strictly relevant purposes, and disclose any breaches of confidentiality to the OECD.
Although this improved cohesion has streamlined data-sharing between nations for the right purposes, Reda Bedjaoui notes that certain privacy protections may risk being overlooked during such a rapid implementation of an internationally-recognized system with numerous members.
“This sprint towards the automatic exchange of financial account information is understandable, but very little attention seems to have been put towards the glaring need to provide effective safeguards for confidentiality, privacy and data protection,” he says. “Both transparency and accountability are needed, but so is privacy and the ability to obtain confidential legal advice.”
Bedjaoui sees confidentiality as merely a starting point; data protection laws should give the subject much more extensive rights. For example, any misuse of the data should be challenged. The individual in question has the right to be notified and given access to the information pertaining to themselves, providing the opportunity to correct any inaccuracies. Legal remedies should exist to protect the rights of the data subject, and compensation must be paid for improper processing and use of data, which includes any leaks to the general public. By implementing these measures, nations can properly ensure compliance, while protecting the rights to privacy of the countless people who use offshore financial opportunities in a lawful manner.
Reda Bedjaoui is an internationally recognized expert in corporate governance, risk management, and regulatory compliance. As the CEO of Redbed Investments LLE, he routinely manages commodity risk exposure while providing governance guidance to businesses around the world. Raised in Paris, France, Mr. Bedjaoui studied at Université de Montréal, earning a Bachelor in Law degree. He continued his education at Hague Academy of International Law in the Netherlands, and was subsequently admitted to the Bar of Quebec, Canada (Montreal Section) in 1995. Reda has honed his practice and knowledge of commercial law, corporate law, and international arbitration in positions at renowned law firms in both Montreal and Paris.