To begin with: what does “strong confidentiality” actually mean? The expression is often used for marketing purposes. It is more useful to distinguish three different things: the public visibility of information, the KYC obligations of banks and providers, and the information-exchange mechanisms between tax administrations.
Treaties and cooperation between States
When countries wish to cooperate, they build lasting relationships and sign treaties in order to reach agreement on a range of subjects. Among these is the exchange of information, which can take several forms.
In Europe, for example, tax administrations may exchange information under several mechanisms, in particular automatic exchange, exchange on request and spontaneous exchange.
Automatic exchange
Automatic exchange may cover different categories of information depending on the applicable arrangements: financial accounts, certain types of income, remuneration, immovable property, income from digital platforms, or certain cross-border information.
Where an automatic exchange mechanism applies, the institution concerned identifies in particular the tax residence of the account holder or of the persons concerned, and transmits the information through the prescribed channel. For example, certain information relating to a financial account held in Germany by a French tax resident may be transmitted to the French administration under the applicable rules.
Exchange on request and spontaneous exchange
In other situations, the exchange may take place on request, where one administration asks another State for specific information, or spontaneously, where an administration passes on, of its own initiative, information it considers relevant to another country.
What to take from this
So it is clear that information can be exchanged, and that in a sense the information can be traced.
Care is therefore called for, and the risk should be weighed before taking any action.