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Jul
28

INFOGRAPHIC: Automatic Exchange of Information Shouldn’t Leave Countries Behind

Christian Freymeyer

The Organization for Economic Cooperation and Development (OECD) is moving towards implementing a new tool for catching tax evaders: automatic exchange of financial information (AEOI). While the name might sound a bit confusing, the idea is pretty simple. Governments in the system will share financial information with each other at designated intervals, enabling authorities to find individuals and corporations that are stashing assets in foreign countries.

While it’s a welcome initiative, we have serious concerns about the OECD’s efforts thus far to include developing countries. Developing countries are some of the hardest hit by tax evasion and other types of illicit financial flows, and much of the money that leaves often finds its way into bank accounts in the US or Europe. It’s imperative that a global information exchange is written with all countries in mind.

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Jul
25

Debate in Delaware on Tackling Anonymous Companies

Mark Hays

This post originally appeared on the blog of Global Witness, a member of the FTC.

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Last November, a former special agent for the Treasury Department, John Cassara, wrote an op-ed for the New York Times with the headline “Delaware, Den of Thieves?” Cassara described how the state of Delaware (along with Wyoming and Nevada) has become “nearly synonymous with underground financing, tax evasion and other bad deeds facilitated by anonymous shell companies”. He told of his frustration as a law enforcement officer trying to get information out of Delaware about the real owners and controllers of companies registered in the state.

This week, a debate has started in Delaware about its role as a corporate secrecy haven. One-half of the members of the Delaware State Legislaturehave sent a letter to the Delaware Congressional Delegation, urging them to support bipartisan federal legislation introduced by Senators Levin (MI-D) and Grassley (IA-R) to deal with anonymous companies.

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Jul
25

Nigeria Has Potential, But Needs to Stomp Out Illicit Financial Flows First

Christian Freymeyer

2363479089_f08f0f2033_zA new report out from the McKinsey Global Institute claims that Nigeria could be the next hotspot for economic growth and development. The firm says that, by 2030, the west African nation could become one of the world’s leading economies.

And it’s true; Nigeria has seen an economic surge in recent years, thanks to massive oil exploitation, a burgeoning financial sector, and Africa’s largest population. In April, Nigeria even leapfrogged South Africa on its way to becoming the continent’s biggest economy.

But even with annual GDP growth at 7%, millions of Nigerians suffer from poverty. With an average life expectancy of just 52 years and 46% of the population living below the national poverty line, a huge undertaking lies ahead if Nigeria wants to not only grow, but grow equally.

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Jul
24

How to Include Developing Countries in the OECD’s Standard for Automatic Tax Information Exchange

Ann Hollingshead

This week, the Organization for Economic Cooperation and Development released the full version of its new standard for automatic tax information exchange. Under the standard, governments would collect data from financial institutions on investment income, financial assets, and account balances paid to non-resident accountholders. On an annual basis, participating governments would exchange that information automatically with other jurisdictions.

In a statement, OECD Secretary-General Angel Gurria said the launch “moves us closer to a world in which tax cheats have nowhere left to hide.”

The impetus for this new standard came from a mandate by G20 nations and the OECD will formally present the plan to the next meeting of the world’s leaders in September. The standard also follows after a great deal of bilateral and multilateral progress made by the United States and European Union on automatic tax information exchange.

For any of these efforts to have a real impact on economic development and reductions in poverty, it must translate to action in the developing world. That’s because tax revenues are, and will continue to be, the world’s most sustainable source of development funds. Yet if these systems and agreements exist only between developed nations and tax havens—and until developing countries participate in a similar system or agreements of their own—the progress we’ve made will have little effect on economic development and acute poverty.

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Jul
24

The July TaxCast: Google, the EU, and the OECD

Christian Freymeyer

TJNlogoThe Tax Justice Network an FTC member, just released the July installment of TaxCast, a podcast featuring a detailed look at the previous month’s tax news.

In the Tax Justice Network’s latest podcast:

What really happened at the Google shareholder meeting vote on a proposal for ethical tax principles? Plus: we discuss what the new tax haven-friendly EU Commission President might do (or not do), anti-democratic moves in Hong Kong from the big four accountancy firms, and: forget the OECD’s global tax reform – developing countries can and are doing it for themselves. But will the new BRICS Development Bank do any better? And much more…

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Jul
23

Fourth installment of illicit finance journalism program now accepting applications

Christian Freymeyer

5937479085_9d52310535_zIllicit financial flows affect countries all over the world. Unfortunately, developing countries seem to suffer the greatest due to illicit outflows. Sub-Saharan Africa, for example, loses roughly 5.7% of its overall Gross Domestic Product every year to illicit flows, according to research from FTC member Global Financial Integrity.

Along with advocating for strong policy changes, it’s important that a robust and informed press investigates cases of tax evasion, corruption, and harmful tax practices that rob governments of much needed revenue.

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Press Releases
Jul
22

OECD Common Reporting Standard Not Crafted with Developing Countries in Mind

Financial Transparency Coalition

WASHINGTON, D.C. - On Monday, the Organization for Economic Cooperation and Development (OECD) released detailed guidelines on the common reporting standard for automatic exchange of financial information. The plan inches closer to implementation of a global standard but continues to keep developing countries looking in from the outside.

Rather than offer a period of non-reciprocity, where developing countries could simply receive financial data, the only mention of non-reciprocity agreements is catered to tax havens.

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Jul
17

Can the Vatican Bank be a Moral Leader in Transparency?

Ann Hollingshead

In its list of Most Influential People this year, TIME magazine called Pope Francis a “moral leader in word and deed.” In the commentary on this accolade, President Obama said this of the pope: “His Holiness has moved us with his message of inclusion, especially for the poor, the marginalized and the outcast. But it has been his deeds, his bearing, the gestures at once simple and profound — embracing the sick, ministering to the homeless, washing the feet of young prisoners — that have inspired us all.”

When it comes to poverty and inequality, Pope Francis has truly been both a champion and a moral leader. The pope does not just speak about the injustice of inequality, the travesty of poverty, or the moral imperative to bring economic development and inclusion to the developing world. Over his lifetime, he has emphatically observed these values in his own life, forsaking many of the luxuries typically afforded to men in his positions. He has also consistently urged Christians and Priests to do the same; that is, to practice what you preach.

By extension, we might expect that the bishop of Rome should govern his state, Vatican City, in a way that is consistent with these principles. With Pope Francis’ record in mind—and understanding the deep connection between financial transparency and poverty worldwide—we might expect that the Vatican should be a beacon of transparency in an otherwise opaque world.

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Jul
17

New Thomson Reuters Foundation Media Program to Investigate Illicit Finance, Tax Abuse

Clark Gascoigne

This post originally appeared on the blog of Global Financial Integrity, a member of the FTC.

Thomson Reuters Foundation Seeks Applications from African Media for Illicit Finance Training and Assistance Program by July 28th

6198428500_15e8067a95_zAre you an ambitious journalist in Africa with an interest in probing illicit finance, money laundering, and tax related abuses? Or, perhaps, you represent an outstanding, independent media organization based in Africa with a desire and reputation for exposing financial crime and corruption?

Either way, the Thomson Reuters Foundation is launching a new three-year program assisting African media on the reporting of illicit finance and tax abuse, and they are hoping that you will apply.

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Jul
16

Why Did the Chicken Cross the Channel? To get to a tax haven

Christian Freymeyer

Last week, the International Consortium of Investigative Journalists (ICIJ) announced that it had received troves of data on a number of wealthy UK individuals that held money in an offshore bank in the Channel Isles, a British crown dependency and well known tax haven.

The ICIJ, along with The Guardian, dissected the documents, and released a number of stories outlining some of their findings. One of the more interesting tax arrangements uncovered seems to be that of the owners of Nando’s, the worldwide restaurant chain famous for its chicken dishes.

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Jul
16

Transparent company ownership: how does the UK government’s proposed action live up to its rhetoric?

Rosie Sharpe and Robert Palmer

This article originally appeared on the blog of Global Witness, a coordinating member of the FTC.

7508035710_8c9a4ab55b_zLate last year, David Cameron announced that the UK would put the names of the people who own and control British companies into the public domain – something that we at Global Witness have long been campaigning for, alongside other NGOs such as ONE and Christian Aid. Such transparency is important because it’s well known that people who want to hide dirty money use the anonymity provided by companies to do so. There are plenty of examples of British companies being abused in this way.

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Jul
15

Crypto-currency: Can cyber havens be regulated?

Financial Transparency Coalition

By: Priscilla Lin, FTC Spring Intern 2014

Priscilla researched an evolving trend in illicit flows: using the electronic currency Bitcoin to obscure the identities behind financial transactions. Here is what she learned about the practice:

Bitcoin can be sent from anywhere to anywhere at a very low cost, while simultaneously keeping a user’s identity hidden. This all sounds convenient for online payments, but without proper regulations, the use of crypto-currency could easily lead to tax evasion.

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Bitcoin was launched in 2009, as the world’s first crypto-currency. Satoshi Nakamoto, a pseudonym for the unknown person or group of people responsible, created the revolutionary currency. One key feature of Bitcoin is its decentralized nature, which doesn’t require regulators or bankers, resulting in low transaction costs. However, this also poses severe challenges for revenue authorities trying to trace and tax the digital currency.

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Latest Press Releases

OECD Common Reporting Standard Not Crafted with Developing Countries in Mind

Financial Transparency Coalition · July 22, 2014

On Monday, the Organization for Economic Cooperation and Development (OECD) released detailed guidelines on the common reporting standard for automatic exchange of ...

GFI Assails Disheartening U.S.-BNP Paribas Settlement

Global Financial Integrity · July 1, 2014

WASHINGTON, DC – Global Financial Integrity (GFI) expressed skepticism today that the settlement reached between ...

G8 Has Yet to Live Up To Its Promises on Tax and Transparency

Financial Transparency Coalition · June 18, 2014

G8 countries have yet to live up to the important commitments they made on tax and transparency at their Northern Ireland summit ...