Four finance centres blacklisted last Thursday in a renewed crackdown on tax fraud were taken off the list on Tuesday after committing to international standards on bank information disclosure.
The Organization for Economic Cooperation and Development said that it was moving Uruguay, Costa Rica, Malaysia and the Philippines to a grey list of offenders that say they will put things right, a long list that includes major finance centres such as Switzerland.
The OECD published three lists last Thursday in response to a request from world leaders looking for ways to tighten up on financial regulation at a G20 summit in London the same day.
It put just four on the blacklist, more than 30 on the grey list of repentants and about 40 countries on a white list of places where the authorities are considered fully committed to international standards of information exchange.
The OECD announced the changes in a statement and at a news conference on Tuesday where OECD chief Angel Gurria said: “This very important move by so many jurisdictions...is one of the first deliverables of the G20 meeting.”
He fielded numerous questions from Swiss journalists asking whether China had been put on the all-clear white list from the outset for political reasons despite questions about the commitment of Macao and Hong Kong to OECD standards.
Chinese President Hu Jintao was one of several leaders from the world’s largest developing economies who met their counterparts from the leading industrial economies last Thursday at the summit on the global economic crisis.
Gurria brushed off the questions about China and made it clear that the OECD had to show that it was keen to apply the same standards to some of its own membership, such as Switzerland and Luxembourg. “We want to see them progress,” he said.
Switzerland, Luxembourg and a string of other financial centres announced in the days preceding the G20 summit that they would move towards meeting OECD standards.
Gurria said what counted now was keeping up the pressure so that those which committed to meet standards follow through on the pledge. Sanctions would be a sign of failure, he said. The renewed pressure is starting to bear some fruit.
Ireland recently collected $1 billion that would otherwise have escaped the taxman’s net, according to OECD documents, and the Dutch government said recently as many as 20 people per day were owning up to having offshore accounts. It is the tip of an iceberg, given that the OECD says some US estimates suggest the annual tax loss tops $100 billion.
What matters now is perhaps how long the renewed political support for the clampdown will last. The OECD started working on the issue more than a decade ago in the wake of the Asian financial crises but the campaign lost political support.
That, officials say, was partly because several OECD members such as Switzerland had problems with the campaign but were not blacklisted along with the many smaller, more exotic offshore centres that are not part of the OECD’s membership -- covering 30 mostly wealthy countries. (Reuters)