OECD welcomes changes to banking secrecy rules

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Two EU countries and Switzerland last week (13 March) announced their intention to amend banking secrecy rules following pressure from the OECD and its members.

Austria, Luxembourg and Switzerland made the move following strong criticism from Western governments that the existing rules support tax evasion. The rule changes guarantee cooperation with foreign tax authorities in cases where evidence of tax evasion can be provided. 

The three countries will now adopt the definition of tax evasion used by members of the Organisation for Economic Cooperation and Development (OECD). 

The rule changes will not affect account holders who are not under suspicion, according to the Swiss Bankers Association (SBA). “An automatic exchange of information is excluded,” the SBA said. 

OECD pressure 

The announcements come ahead of the London summit on April 2, where G20 leaders are expected to call for a crackdown on non-cooperating tax zones. It is expected that a decision will be taken at the summit to publish a “black list” of tax havens compiled by the OECD. 

The organisation has played a major role in pushing for a resolution to this issue. OECD Secretary-General Angel Gurría welcomed the announcements, noting that they “mark a fundamental change and an important moment in the history of international cooperation”. Gurría argued that in the current economic crisis, “it is important to assure honest taxpayers that tax burdens are being fairly shared”. 

The three European nations have been under increasing pressure to reform as countries across the world struggle to meet their fiscal obligations (EURACTIV 09/03/09). 

Peer Steinbrück, Germany’s finance minister, has also spoken out over the issue, declaring that Germany finds it “unacceptable” that some European countries welcome tax evaders. 

Switzerland has been under particular scrutiny of late. Swiss bank UBS had to pay the US government $780 million to settle charges that it had helped American citizens to evade tax. 

The three countries feel that this step will be sufficient to quell the political pressure that they have been under. “The SBA now expects an end to all improper international criticism of Switzerland and its legal system, and also an end to threats to put Switzerland on a so-called ‘black list’,” said an SBA spokesperson. 

Call for action 

However, politicians from other countries remain sceptical. Steinbrück told reporters at the G20 meeting of finance ministers that “there’s a difference between announcements, concrete agreements and measures backed by legal action,” while French Finance Minister Christine Lagarde noted tellingly that “the devil is in the detail”. 

G20 leaders meet in London on 2 April where they are expected to publish an OECD compiled list of non-cooperating tax zones. The OECD has been vocal on this issue, insisting that “improvements in exchange of information in tax matters are part of a broader agenda to improve transparency and global governance and to restore confidence in financial markets.” 

As agreements are made with Austria, Luxembourg and Switzerland, other jurisdictions with strong secrecy laws, notably Monaco, will come under greater pressure to adopt similar reforms. 

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