Global Financial Integrity

 

Reaction: Government Shutdown Delays Automatic Tax Information Sharing

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Clark Gascoigne

A version of this article was originally published by the Global Development Professionals Network section of The Guardian.

One of the biggest advancements in curtailing illicit financial flows to date is the US Foreign Account Tax Compliance Act (Fatca) signed into law in March 2010. The law required foreign financial institutions to report to the US government information on all of their US clients. Almost immediately, foreign governments demanded the same from the United States, leading to a flurry of intergovernmental agreements between the US and foreign nations — many of them developing countries — establishing a system of automatic exchange of tax information.

In order for the law to work effectively, and in order for developing nations to benefit from it, each of these intergovernmental agreements needs to be negotiated and signed both by US treasury department officials and by their foreign counterparts. Unfortunately, with the US government shutdown for more than two weeks, those treasury department officials are unable to do their jobs.

For example, while not representing a developing nation, French foreign minister, Pierre Moscovici, was in Washington this past weekend for the annual World Bank and IMF meetings. He mentioned that he had intended to sign a Fatca implementation agreement with his US counterparts on Friday, but that the event could not take place because the government wasn’t open. And while government officials wait, illicit money continues to flow.

Clark Gascoigne is communications director at Global Financial Integrity, a Washington-based research and advocacy organisation

A version of this article was originally published by the Global Development Professionals Network section of The Guardian.