The End of Bank Secrecy? A new TJN report

   0   0 Blog, Information Exchange, TJN

A new (preliminary) report from the Tax Justice Network

‘The end of bank secrecy?’
Bridging the gap to effective automatic information exchange

Leading finance ministers are meeting in Berlin this week to initiate a new global standard for the automatic information exchange of tax data.

In a preliminary report,[1] Tax Justice Network evaluates the OECD’s common reporting standard, due to be enshrined in a new multilateral competent authority agreement at the Berlin summit.

Report authors Markus Meinzer and Andres Knobel[2] argue that the new global standard will not end bank secrecy, but it is a first step towards rolling it back.  Meinzer and Knobel reveal that this voluntary scheme, resting on confidentiality requirements and mutual reciprocity, is likely to exclude many developing countries.   Automatic information exchange will only be fully effective when all jurisdictions participate in the scheme and when sanctions are imposed for non-compliance.

Meinzer and Knobel’s preliminary report:

  • summarises the scope of the common reporting standard, including financial institutions that will be required to collect information and which will be exempt; indicates what information will be collected and what will remain secret; and explains which entities, legal arrangements and individuals are covered and which are excluded;
  • reveals several loopholes in the new arrangements, including: the entities, trusts and foundations behind which individuals may hide; high minimum thresholds for beneficial ownership; limited account balance information; and the “principle of specialty”, which will prevent data from being used to fight corruption and money-laundering;
  • demonstrates how the demand for full reciprocity is likely to exclude low-income developing countries; how subjective confidentiality requirements will allow each jurisdiction to cherry-pick with whom to exchange information; and why the lack of a global multilateral agreement for all jurisdictions to sign up to represents a lost opportunity.

Quotes

Markus Meinzer, Tax Justice Network analyst, said:

Leading finance ministers are right to claim historic progress with this landmark agreement for automatic tax information exchange. However, it is not acceptable if signatories can arbitrarily refuse to provide data to other signatories without giving a public explanation. If this elective scheme lays the foundations for a future world system, there’s a large risk that real progress will be much slower than early adopters would have us believe.

Andres Knobel, Tax Justice Network analyst, said:

The new OECD standard on automatic information exchange is a big first step towards tackling illicit financial flows. However, serious obstacles to the inclusion of developing countries and a number of unresolved loopholes will prevent its effectiveness, allowing rich individuals with plenty of options to avoid reporting. Moreover, its narrow focus on tax evasion represents a missed opportunity in the fight against corruption and money laundering.

For further comments, please contact:

Markus Meinzer: +49 178 340 5673 markus@taxjustice.net

Andres Knobel: +54 911 6008 3197 andres@taxjustice.net

[1] The report is a draft legal and political analysis of the CRS and its Commentaries published on July 21st, 2014, taking into account public developments as of 23 October 2014. After incorporating feedback and comments by experts and partners, the report’s authors plan to finalise their analysis after the multilateral competent authority agreement has been signed.

[2] Meinzer and Knobel compile the Financial Secrecy Index for the Tax Justice Network.


Related Posts

UN must defend target to curtail multinational companies’ tax abuse

Photo by Luca Santori, Creative Commons LicenseThe Tax Justice Network, The Independent Commission for the Reform of International Corporate Taxation, and the Global Alliance for Tax Justice call on the UN Secretary General to make sure the commitment to action on tax abuses by multinational companies remains part of the new UN Sustainable Development Goals.

READ MORE →

The BVI: Responsible for worldwide tax losses of $37.5 billion a year

BVI report blogAn extraordinary report by consultants Capital Economics, for BVI Finance, claims that the British Virgin Islands are responsible for $1.5 trillion of assets invested around the world, and that these result in 2.2 million jobs and $15 billion in tax revenue. A better approximation would be that the BVI imposes global tax losses of $37.5 […]

READ MORE →

Event: Making Tax Work for Women in the UK and Globally

Invitation_ Tax and Gender eventOn Wednesday 28th June 2017 at 16.30 our very own Liz Nelson will be speaking at an event in London that aims to bring together gender and tax justice advocates to highlight the need for coherent and gender-responsive fiscal policies to safeguard the rights of women and girls both in the UK and globally. The […]

READ MORE →

Historic event on women, human rights and tax justice in Bogota

BogotaLast week civil society organisations, researchers, labour union activists and policy makers met in Bogota, Colombia to explore how tax justice issues can ensure governments, multinational corporations and others meet their obligations to women in order to secure their full range of human rights. The Women’s Rights and Tax Justice conference opened with a conversation […]

READ MORE →

The Offshore Wrapper: the Panama Papers, one year on

Photos from the Protest outside PwC 1 Embankment Place, part of the Global week of action for tax justiceWelcome to the Offshore Wrapper – your weekly update from TJN.  Happy Paniversary! This week it’s been one year since the Panama Papers were leaked, and a number of organisations around the world have been marking the occasion though the global week of action for tax justice. In London, activists from the TJN and the […]

READ MORE →

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top