Owen, Christopher: Offshore Survey – August 2002

The OECD says 31 jurisdictions have made commitments to transparency and effective exchange of information in response to its “harmful tax practices” initiative and can now be considered cooperative jurisdictions. But seven jurisdictions – Andorra, Liechtenstein, Liberia. Monaco, the Marshall Islands, Nauru and Vanuatu – failed to make commitments and have been named as “uncooperative tax havens” by the OECD’s Committee on Fiscal Affairs. OECD Deputy Secretary-General Seiichi Kondo said: “We hope they will review their decision, and we are prepared to continue our dialogue with them.” OECD member countries will use the list as a basis for the framework of coordinated defensive measures now being developed.

The 15 new jurisdictions to sign up are Anguilla, Bahamas, Belize, British Virgin Islands, Cook Islands, Dominica, Gibraltar, Montserrat, Niue, Panama, St Lucia, St Kitts & Nevis, Samoa, Turks & Caicos and the US Virgin Islands. As part of its commitment, each jurisdiction has also undertaken to ensure that no new regime or practice is introduced or is modified in such a way that it fails to comply with the principles of transparency and effective exchange of information.

The OECD also released in April a model agreement for effective exchange of information in tax matters, developed by the OECD’s Global Forum Working Group on Effective Exchange of Information. It contains two models for bilateral agreements drawn up in the light of the commitments undertaken by the OECD and the committed jurisdictions. The Working Group was chaired by Malta and the Netherlands and marks the first results of the OECD’s collaboration with cooperative jurisdictions. It included representatives from Aruba, Bermuda, Bahrain, Cayman Islands, Cyprus, Isle of Man, Mauritius, Netherlands Antilles, Seychelles and San Marino. Maltese Minister John Dalli said: “It is crucial that the agreement will become the international standard ? It encourages as many economies as possible to cooperate in this important endeavour,” and noted that it is not in the interest of participating economies that ‘the implementation of the standard contained in this agreement should lead to the migration of business to economies that do not cooperate in the exchange of information.’

FATF launches review of Forty Recommendations.

The Financial Action Task Force has launched a review of the Forty Recommendations to account for changes in money laundering techniques and trends, areas of weakness identified through the its mutual evaluation process and other international developments. A consultation paper that sets out these issues and proposed solutions was issued at the end of May.

The three major areas identified by the FATF in which possible changes could be made to FATF standards are:

OECD names seven jurisdictions as uncooperative tax havens