The mother-in-law of Formula 1 billionaire Bernie Ecclestone has reportedly been taken hostage for £28 million; believed to be Brazil’s biggest ransom demand.
Aparecida Schunck was allegedly abducted from her home in Interlagos, Sao Paulo, according to Brazilian Veja magazine. The 67-year-old mother of Ms Fabiana Flosi the 38-year-old wife of Mr Ecclestone presumably does not have this sort of money to pay her abductors, but her son in law does!
Ms Fabiana married Mr Ecclestone, 85, in 2012, after he divorced his wife Slavica Radic. He is reputedly worth an estimated US $ 3.1 billion.
Sao Paulo is not new to kidnap. It reached its peak in 2001/2 with more than 300 reported kidnaps a year. However, Brazil is still in the top five countries for kidnap with more than 1,000 reported a year in 2012. The actual number is likely to be many, many times more than this.
Abduction, however, is less common than ‘express kidnap’ which is commonly done by police, demanding the victim go to an ATM at gunpoint to pay to them a ‘bribe’.
Is it hardly surprising therefore with this going by the police, that some countries are refusing to sign a bi-lateral agreement with Brazil for the automatic exchange of information on financial data.
Governments across the globe are committed to the eradication of tax evasion which is good, tax evasion is not to be tolerated. The OECD Council approved The Common Reporting Standard (CRS) on the 15th July 2014. Each jurisdiction which signs up is committed to obtain information from their financial institutions and automatically exchange that information with other jurisdictions on an annual basis.
Guidance on what information is to be collected, which financial institutions are required to report, the different types of accounts and the information of the taxpayers as well as the due diligence procedures to be followed were first published in July 2014. However, concerns were soon expressed as to whether the information collected and exchanged would be secure in the hands of some of the ‘home’ countries of the beneficial owners such as Brazil.
While it is expected that most countries will sign up to CRS via a multilateral convention, some jurisdictions such as Hong Kong have adopted a ‘bi lateral’ approach, which means it will sign up only one country at a time and will not sign up to some of the less developed and secure jurisdictions.
The OECD is keen to stress that each country must meet certain standards to safeguard the information and if these standards are not met, other countries need not exchange the information collected with them. This let out clause is naturally not welcomed by many of the poorer developing countries which see themselves as being denied access to the information collected but then not exchanged. The OECD acknowledge this concern and has tasked the Global Forum to work with the OECD Task Force on Tax and Development in finding a solution.
It is public knowledge that Bernie Ecclestone is a billionaire and he would have been well advised to insure against the risk of his mother in law’s kidnap. However, as from 2017, the risk of kidnap of anyone who has an offshore bank account is likely to increase dramatically. The only way for these people to sleep soundly at night is to either move their account onshore, or to a country which has not signed a bilateral agreement with their home country or to countries which will not exchange the information collected until their systems are secure from hacking by criminals. Even if secure from hacking anyone with monies offshore should be concerned that their information could be sold by corrupt employees of these government institutions. It happened in Liechtenstein and could happen anywhere.
Privacy planning is, for UHNW families with investments world-wide, not a nice to have, but a must have. As from 2017, the confidentiality of financial information wherever it is, can no longer be guaranteed, unless it is in a country which does not collect or exchange information.
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