So we have this announcement from the OECD.
“Switzerland has today become the 52nd jurisdiction to sign the Multilateral Competent Authority Agreement [MCAA], which will allow it to go forward with plans to activate automatic exchange of financial account information in tax matters with other countries beginning in 2018.”
Which all sounds jolly good, and it is certainly an improvement from a sordid past: we generally like the OECD Common Reporting Standards that this is referring to, though we’ve pointed out a number of loopholes too.
This is Switzerland, though, and you won’t be surprised, dear readers, to discover that there’s a catch. Two catches, in fact.
The first catch is this:
“The Swiss decision is subject to Parliamentary approval, as well as the possibility that voters may be asked to approve the necessary laws and agreements.”
Swiss voters have a long record of being bolshy and rejecting things they don’t like (that’s democracy, which is a good thing), but the financial sector has a variety of powerful lobbying machines able to shape public opinion whichever way they like it (which is in general terms a bad thing). Expect this thing to be held up and kicked about before it ever sees the light of day.
The second catch is perhaps even more fundamental, and it follows a blog we did entitled Warning: tax havens getting ready to wriggle out of global transparency initiatives. As Mark Herkenrath of Alliance Sud points out, parsing the Swiss statement on all this:
“The signing of the MCAA is without prejudice to the question regarding the countries with which the automatic exchange of information should be implemented, as the bilateral activation of the AEOI [automatic exchange of information] with certain states will be submitted to the Federal Assembly separately for approval.
The MCAA sets out the conditions for the annual exchange of account information between the competent authorities of two countries in accordance with the OECD standard. The list of states with which information is to be exchanged automatically can be submitted at a later stage.”
In other words, Switzerland is going to pick and choose which countries it condescends to (partially) lift secrecy for, and it isn’t necessarily going to be in a hurry to do this. As we’ve said before, this will presumably be decided based on a balance between how lucrative that particular country is for Swiss bankers, versus how powerful they are and how much heat that country is likely to apply to Switzerland if they don’t play ball.
Cue a lot of developing countries remaining as victimised by Swiss secret banking practices as before.
It’s time that the OECD started considering the word ‘sanctions’ for uncooperative countries. Otherwise their incentives to reform in a meaningful way remain weak.
Remember this – and repeat after us, because there’s a lot of misunderstanding out there.
Swiss. Banking. Secrecy. Remains. Firmly. In. Place
It’s been penetrated in limited ways by some countries, to be sure, but it’s alive and kicking (the world’s poor).