July 21, 2014
Clark Gascoigne, +1 202 293 0740 ext. 222
GFI’s Platform Issue Moving Forward to International Implementation
GFI Notes that Issues Still Need to Be Addressed, Warns that Developing Country Participation is Critical
WASHINGTON, DC – The Organization for Economic Cooperation and Development (OECD) today released a document encompassing standard agreements for the automatic exchange of financial information between countries as well as newly drafted guidance on implementing those agreements, in moves generally welcomed by Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization. In their press release, the OECD also asked for comments from the public by September 12th about how the framework for voluntary disclosure by taxpayers could be improved. The documents are expected to be formally adopted at the G20 Summit in Australia in November 2014, after approval by the G20 Finance Ministers at their September 20-21st meeting in Cairns.
Heather Lowe, GFI’s legal counsel and director of government affairs, said “Global Financial Integrity has been advocating for the creation of a global system of automatic exchange of financial information since our founding in 2006, and we consider today’s publication by the OECD a very successful and important step forward. This needs to be an ongoing process, however, and not a finished product. The real test will be whether the standards create a functioning and effective system of exchange of financial information, and whether that system is truly global, with low income countries permitted and willing to participate. We have concerns that some of the provisions may prevent these two critical goals.”
GFI research finds that illicit financial flows drain roughly US$1 trillion per year from developing countries—stifling economic growth and fueling crime, corruption, and tax evasion.
“We continue to have concerns that the provisions regarding identification of who owns or controls bank accounts may not be adequate to make those determinations, and without correct identification of the real people behind the accounts, the system cannot produce results,” noted Ms. Lowe. “The draft also lacks a framework for determining whether countries meet the data privacy and confidentiality standards referred to in the draft,1 potentially making that a subjective assessment made by one country about another, which could be used as an easy justification for refusing to exchange information, when the real reasons for the refusal may be market-driven or for political leverage.”
GFI also expressed disappointment that the information being exchanged appeared to be limited to use by tax authorities.
“The flow of illicit money around the world is not just tax evading money, it includes other criminal and corrupt money,” noted GFI President Raymond Baker. “It is a poor use of global resources to collect and exchange this information but then restrict its use solely to tax authorities. The world’s criminal investigators are struggling to trace the money that finances and rewards drug traffickers, corrupt political regimes, and terror networks. Illicit finance is a systemic issue, not just a tax issue, and this new tool should be used to fix the system as a whole.”
- OECD (2012), “Keeping it Safe: The OECD Guide on the Protection of Confidentiality of Information Exchanged for Tax Purposes”, OECD, Paris, available at www.oecd.org/ctp/exchange-of-tax-information/keeping-it-safe-report.pdf.
Notes to Editors:
- Click here to read the press release from the OECD today on the Global Standard for Automatic Exchange of Information.
- Click here to download the full PDF (8MB) of the OECD’s Standard for Automatic Exchange of Financial Account Information in Tax Matters.
- Click here for more on the Standard from the OECD.
Global Financial Integrity
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Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization, which promotes transparency in the international financial system as a means to global development.
For additional information please visit www.gfintegrity.org.