The secrecy world is so complex and varied that there is no magic bullet that will tackle it. New and widespread public and professional awareness, backed by international co-operation, will be essential. This page outlines, very briefly, some areas to be addressed.
Beneficial ownership
The true ownership or effective control of an asset, whether it be a painting, an office block or a bank account, can be masked through the use of any number of different entities and arrangements - such as trusts and offshore companies, so that it is impossible to work out who is behind that asset.
We believe that it is essential to require that the beneficial ownership, control and accounts of companies, trusts and foundations, and their like, must be readily available on public record, and it must be explicitly required (and enforced) that financial institutions identify the ultimate beneficial owners or controllers of any company, trust or foundation seeking to open an account. Read more here. See also this Tax Research Report on how one might make information exchange systems more effective for developing countries.
Automatic Information Exchange
When the G20 in April 2009 declared that 'the era of banking secrecy is over' and mandated the OECD to lead a crackdown on secrecy jurisdictions, it pushed forwards a process of highly ineffective information exchange, where a jurisdiction wanting to find out information about its taxpayers must make a very specific request - and in effect must already know the precise information it is looking for before it even asks for it (for more details, see this TJN briefing paper, and our dedicated web page on information exchange).
A far better principle is that of automatic information exchange - see more here. The best-known example of this principle is the European Union's Savings Tax Directive, under which countries share relevant information about each others' taxpayers as a matter of routine. It has loopholes, but the principle of automatic information exchange is sound and we consider it the gold standard.
We want governments to collect from financial institutions and from the management of relevant entities and arrangements such as trusts and foundations data on income, gains and property paid to non-resident individuals, corporations, and trusts. The data collected should be provided automatically to the governments where the non-resident is located.
Country by country reporting
Under current international accounting stands, corporations can publish their accounts on a regional or even global basis, with no country detail. It is impossible to unpick these numbers to work out what is happening in each country concerned.
We are arguing for country-by-country reporting, where multinational corporations are required to break down their published numbers for every country in which they operate. For more details, see our briefing paper and our dedicated web page on the subject.
Private intermediaries
The system of global financial secrecy and secrecy jurisdictions is administered by an infrastructure of private intermediaries: primarily bankers, accountants, lawyers and corporate and trust service providers. They are highly active players in the secrecy world. It is essential that international initiatives seek to target those who actively create secrecy and facilitate illicit financial flows. This can be done in various ways, such as through the creation of codes of conduct on taxation (see here and here, for example;) turning tax evasion into a predicate crime for money-laundering purposes, or to make it a specified act of corruption under the United Nations Convention against Corruption (UNCAC).
Read more on the Tax Justice Network's web page dedicated to private intermediaries.
Read more
The Tax Justice Network and a growing number of others have put forwards a wide range of initiatives in this large and complex area. Connect to them here.
