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G20 urges global community to end banking secrecy

  • Published at 11:30 am April 20th, 2013
G20 urges global community to end banking secrecy

The Group of 20 economic powers yesterday urged the global adoption of standards for sharing bank account information in an effort to fight tax evasion and curtail banking secrecy.

The G20 said they “strongly encourage” all countries to sign on to a commitment to the automatic exchange of banking information “which is expected to be the standard,” in the group’s strongest endorsement yet of a move that takes aim especially at tax havens.

“More needs to be done to address the issues of international tax avoidance and evasion, in particular through tax havens, as well as non-cooperative jurisdictions,” the G20 said in a statement on the sidelines of the International Monetary Fund and World Bank spring meetings.

The group urged all countries to accept the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, a framework for the sharing of banking data.

“We welcome progress made towards automatic exchange of information which is expected to be the standard and urge all jurisdictions to move towards exchanging information automatically with their treaty partners, as appropriate.”

The move aims ultimately to have banks automatically supply information to a country on the accounts of its nationals, in the way the US FATCA -- the Foreign Account Tax Compliance Act -- requires information on Americans’ accounts abroad.

“A door toward the end of banking secrecy is open. It is something extremely important,” French finance minister Pierre Moscovici said late Thursday.

There is “an unstoppable movement toward a ‘European FATCA’” he said, but that and the US effort need to be elevated to the level of the G20.

Ollie Rehn, vice president of the European Commission, hailed the G20’s offensive against banking secrecy.

“We particularly welcome today’s endorsement of automatic exchange of information, and look forward to working with the OECD and G20 countries on developing new international standards on this,” Rehn told journalists.

A senior US Treasury official, speaking on condition of anonymity, said the G20 statement was a strong endorsement, and that more and more countries understood the importance of fighting tax evasion.

Pushing the issue on the institutional level is the Organisation for Economic Co-operation and Development (OECD), whose Global Forum on Transparency and Exchange of Information for Tax Purposes is helping set standards and advance commitment to the effort.

The European crisis has heightened the issue of tax evasion in the eurozone, and more countries have shown interest.

The new approach threatens importantly Switzerland’s longstanding role as a leader in providing secrecy in banking to those who want it -- a pitch that underpins its huge banking industry.

Switzerland is one of 14 countries which have not yet signed on to the basic ideas of bank information sharing, under the OECD Global Forum guidelines.