When Bankers Become Informants: Behavioral Effects of Automatic Exchange of Information

Jeanne Bomare and Matthew Collin
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Jeanne Bomare: Centre for the Analysis of Taxation, London School of Economics
Matthew Collin: EU Tax Observatory (Paris School of Economics) and NMBU

No 33, Working Papers from EU Tax Observatory

Abstract: Over the past decade, more than 100 jurisdictions have signed automatic exchange of financial information agreements (AEoI) in an effort to fight cross-border tax evasion. This paper studies the effectiveness and coverage of these agreements using account data leaked from an Isle of Man bank with a large customer base in countries participating to AEoI. We establish three sets of results. First, we find that the design of the governing AEoI agreement absolved the bank from reviewing and reporting a very large share (81%) of all the wealth owned by tax residents of AEoI participating countries, and instead the responsibility passed to smaller entities with weaker incentives to comply. Second, out of the wealth that fell under the bank’s reporting responsibility, foreign tax authorities only received reports covering 50% of what their tax residents held at the bank. We estimate that a further 32% went unreported due to loopholes in rule design. The rest of the accounts did not appear to have been reported, although through the information available in the leak we classified them as reportable. Third, we find evidence that bank clients who were more at risk of being reported on preemptively closed their accounts, potentially circumventing the AEoI reporting process. This paper provides new evidence on the potential limits of these agreements and how sophisticated individuals can ultimately avoid the AEoI transparency shock.

Keywords: Tax Evasion; Information Exchange; Tax Enforcement (search for similar items in EconPapers)
JEL-codes: F42 G21 H26 (search for similar items in EconPapers)
Pages: 67 pages
Date: 2025-06
New Economics Papers: this item is included in nep-acc and nep-iue
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