2.8 The Common Transmission System Standard

a country will make more effective use of financial data, thus becoming more effective in combating money laundering,” corruption, and tax crimes (FATF 2012b, 7).

In establishing robust data hosting platforms, LEAs must respect the legal protections to which suspects are entitled in access to their information. To ensure that legal protections are upheld, information received in the course of interagency cooperation must not be accessible by unauthorized persons, and information security management must be guaranteed (OECD 2015a). For example, the common transmission system (CTS)48 enables the automatic exchange of information between hundreds of jurisdictions and thousands of financial institutions.49 Resources, such as the file preparation and encryption user guides, are prepared to enable smooth and secure information sharing (OECD 2018b). See box 2.8 on the CTS standard.

Data and information management is critical because the lack of secure, reliable systems may compromise cooperation within and across jurisdictions by reducing trust. Procedural safeguards, including those designed to prevent any undue access or sharing, go a long way toward fostering trust in a system (OECD 2015a). The OECD has developed a model protocol that can be used and adapted in tax matters by interested jurisdictions (OECD 2015c).

BOX 2.8 The Common Transmission System Standard

The Common Transmission System (CTS) was launched in 2017 and currently supports the automatic exchange of common reporting standard (CRS) information, country-by-country reports, and tax rulings by more than 100 jurisdictions. The CRS calls on jurisdictions to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions. The CRS has four parts: • A model Competent Authority Agreement (CAA) providing the international legal framework for the exchange of CRS information • A common reporting standard • Commentaries on the CAA and the CRS • The CRS XML Schema

In February 2020, the Organisation for Economic Co-operation and Development (OECD) released information technology formats and guidance to support technical implementation of the OECD’s CTS for the exchange of information by tax administrations. The CTS also supports a wide range of other exchanges, including on-request and spontaneous exchanges, as well as the transmission of information pertaining to mutual agreement procedures, the OECD’s Treaty Relief and Compliance Enhancement (TRACE) initiative, and other forms of cooperation.

Data can be made available using a cloud server, with secure storage and subject to data privacy and confidentiality requirements (OECD 2015c). Because authorities must ensure they are using similar systems and interfaces to store data, shared systems could “be designed and developed with interoperability in mind” (OECD 2015c). The accuracy, adequacy, and reliability of the information fed into a shared database must also be verified. Databases may include more comprehensive and exhaustive data at the investigative stage because tax authorities, FIUs, and LEAs are looking for leads to develop an investigation and can often share information with their counterparts through application of existing legislation or protocols. The management of information at the prosecution/judicial stage has to be directed more toward the possible charges under consideration and take into account the legal limitations provided in criminal legislation and procedures.

But simply collecting data is not enough. Countries may wish to consider using new technologies in upgrading data pooling and analysis systems that could provide ease of administration, including, potentially, blockchain, artificial intelligence, and data mining.

Agencies need tools that will allow them to identify and track the links between the information collected. Such tools will require additional capacities for connecting and analyzing databases such as data analytics. Policy makers should support interoperability by requiring agencies to link their databases and triangulate the data collected. Smart technology such as artificial intelligence and neural networks could help in triangulating the data in, for example, company registries, tax databases, land registries, and other financial records. Some tax authorities and LEAs now use data mining, artificial intelligence, and deep learning to cross-analyze data they already have with data from external sources, including that derived from the automatic exchange of tax information and social media (TFI Info 2020).

The OECD’s recently published Tax Crime Investigation Maturity Model (OECD 2020), a self-assessment diagnostic tool, is intended to help jurisdictions understand where they stand in the implementation of the OECD’s Fighting Tax Crime—The Ten Global Principles (OECD 2017b), based on a set of empirically observed indicators. By setting out indicators for each increasing level of maturity, the model also charts an evolutionary path for future progress toward the most cutting-edge practices in tax crime investigation across four levels of maturity: Emerging, Progressing, Established, and Aspirational. Assessing the current level of interagency coordination domestically and internationally across the value chain of the law enforcement process, from initial intelligence gathering for detection and prevention to investigating, prosecuting, and eventually recovering the criminal proceeds, is an integral part of the self-assessment.

The effectiveness of interagency coordination for countering illicit financial flows is specifically examined during the self-assessment process. The model looks at interagency coordination across multiple dimensions, including a joint national risk assessment, a joint risk mitigation plan with shared responsibility, an improved legal and operational framework for reporting and information sharing, use of enhanced cooperation by way of an MoU, a joint investigation,