Nick Shaxson ■ OECD again pretends it’s solved the problem of financial secrecy
The OECD seems to have learned from experience that if you make a grand, unsubstantiated claim in support of your work, half the world’s journalists will cut and paste your statements without stopping to check how true they are. For example, in 2011, they grandly announced that The Era of Bank Secrecy Is Over, garnering plenty of headlines along those lines. As we have noted subsequently, several times: Oh no it isn’t.
Now, from a few days ago, there is this headline in the Sydney Morning Herald: OECD declares end to bank secrecy.
Sigh. We will start by noting, nit-pickily, that declaring an end to something suggests it has been a problem until now – which clearly invalidates that 2011 headline.
More substantively, though, we have big, updated beefs about claims like this from the OECD.
It is true, on the level of personal income taxes and financial affairs, the OECD has come up with its Common Reporting Standards (CRS) – a useful, if flawed blueprint for transparency – at least, hopefully, for some time in the not too distance future. It’s got technical loopholes, for sure but hey: nobody’s perfect. It’s a big improvement.
Developing countries are, once more, left with crumbs: promises about capacity building, but so far nothing to ensure that the likes of Switzerland don’t only sign treaties with the mighty, powerful countries, and try to wriggle out of bits they don’t like. Poorer, more vulnerable nations will remain victims of predatory Swiss (and many other) bankers.
It seems that the OECD’s stomach doesn’t seem to be in the fight to do everything to help poorer countries benefit from transparency: witness their tax chief’s statement in July that
“Most (developing countries) are not yet ready and most of them don’t want [automatic information exchange.]“
And then there’s a big question about the United States. Will it pay more than lip service to the CRS as an international standard: it seems they are quite happy to receive information from transparency initiatives, but not quite so keen to confront Wall Street and hand over information about foreign dirty money. (See from p39 here for more details.)
Take a look at this Global Witness analysis to illustrate just how lax and tolerant towards dirty money the U.S. has been:
“Right now, there is a gaping hole in U.S. law that enables corrupt individuals and other criminals to easily hide their identity behind anonymous companies. This allows them to launder dirty money through U.S. banks. The problem is twofold:
U.S. banks, with few exceptions, are not required to identify the real, or “beneficial,” owner of companies that open accounts. This means they are not doing nearly enough to identify the actual human that the money they are handling belongs to, or what might have been done to obtain it;
It is perfectly legal to set up a company in the U.S. without disclosing who ultimately owns it. This means that there is too little beneficial ownership information available to bankers or in the public domain.
We could say more on this, but, we think, we can safely conclude that secrecy is alive and well.
A fuller evaluation of the OECD’s progress on financial secrecy will follow, in due course.
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29 September 2021