The OECD has suggested that possible sanctions, which could include the imposition of a withholding tax on funds transferred to 'uncooperative tax havens', may be imposed on the seven remaining countries as early as April 2003.

However, the accounting body chief, who is also a partner in BDO Vanuatu, accused the multilateral body of threatening to wreck the economies of small developing finance centres, and of failing to provide them with any viable alternatives.

'We definitely are transparent but the OECD doesn't use a level playing field,' Mr Stafford told the AFP, adding that: 'Our regulatory systems are excellent and money-laundering and anti-terrorism initiatives second to none.'

Mr Stafford went on to dismiss allegations that funds from the Russian mafia are laundered through the jurisdiction's banking system, arguing that suspect companies and individuals are weeded out by strict due diligence procedures. He also pointed out that many of the 'harmful tax practices' that the OECD has taken against were started before the territory became independent from France and Britain in 1971.

'It's only now we are threatening the business of bigger countries we are being told to lay off,' he observed.

The CAA chief revealed that Vanuatu's government has challenged the OECD to suggest an alternative revenue source, arguing that the result of restrictions on the financial sector would be mass unemployment.

According to the AFP news agency, Finance Minister, Joe Carlo also recently expressed mystification as to why Vanuatu was receiving different treatment than some of the OECD's own members.

'For years smaller countries were told to get into financial services. We are doing it properly and the fact that significant OECD members are not committed is an important reason Vanuatu has not agreed to their standards,' he explained.