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Further Steps Needed in Crackdown on Tax Evasion

Global Financial Integrity (GFI) applauds the on-going work of the U.S. Department of Justice and the Internal Revenue Service towards bringing wealthy tax evading citizens to justice.

Following the release today of the previously confidential "annex" of criteria UBS will use to choose which accounts it remits information on, GFI urges consideration of further comprehensive reform of global financial protocols as significant shortcomings remain in the diplomatic and regulatory landscape.

"The annex released today sets forward a piecemeal approach to enforcement which is slow and requires a large amount of resources. We need to focus on the root of the problem: the prevalence of banking secrecy around the world," said GFI director Raymond Baker.

GFI makes the following recommendations as components of an effective global strategy to combat banking secrecy:

Passage of the Baucus-Rangel Foreign Account Tax Compliance Act of 2009, introduced earlier this month, this anti-tax-evasion legislation would increase transparency in offshore financial jurisdictions and prove a powerful deterrent to U.S. tax evaders;

Expansion of the mandate for application of the European Union Savings Tax Directive (similar to the U.S. Qualified Intermediary program);

Continuance of G20 work on establishing rules for increased transparency and accountability in global finance;

Automatic exchange of information in tax information exchange agreements and tax treaties in lieu of the current "on demand" standard.

"The UBS case is but one example - one bank in one country which peddled secrecy to those who had something to hide - but the scope and scale of the banking secrecy problem is far larger and requires a commensurately larger solution," said Mr. Baker. "Today we're seeing U.S. tax evaders who hid assets in Swiss bank accounts take a dose of punitive medicine, but around the world there are countless other tax evaders, corrupt governments, and criminals utilizing this same system of financial opacity to carry out their nefarious activity. The time has come for the U.S., EU, and G20 nations to work together to continue the process towards greater transparency and accountability in the global financial system."

Global Financial Integrity (GFI) promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money. In putting forward solutions, facilitating strategic partnerships, and conducting groundbreaking research, GFI is leading the way in efforts to curtail illicit financial flows and enhance global development and security.

For additional information please visit www.gfip.org.