Leaders from the Organisation of Economic Cooperation and Development (OECD)
member nations gathered in Paris on Tuesday where a new crackdown on offshore
financial centres is expected to be discussed as part of plans aimed at tighter
regulation of the global financial system.
The initiative is being led by the governments of France and Germany, and could
lead to the drawing up of a new 'black list' of offshore jurisdictions still
deemed to be 'uncooperative' or with tight banking secrecy and confidentiality
laws. Switzerland, Luxembourg and Austria - all jurisdictions with a measure
of banking secrecy - have apparently boycotted the meeting.
From an offshore point of view, the recent rhetoric from the French government
concerning the current banking crisis is worrying. Last week, President Nicolas
Sarkozy questioned why banks that have received backing from the government
should continue "operating in tax havens," while Prime Minister Francois
Fillon described offshore financial centres as the "dark pockets"
of global finance which should be eliminated altogether.
The OECD launched its campaign against 'harmful' tax competition at the turn
of the century, naming more than 30 jurisdictions on its blacklist, since which
time the majority have been removed after promising to put in place tax reforms
that effectively removed the distinction between 'onshore' and 'offshore' regimes.
Meanwhile, the OECD's Financial Action Task Force, which was more concerned
with anti-money laundering, also placed more than a dozen jurisdictions on its
blacklist, all of which have been removed after putting in place legislation
which some argue is even tougher than in some onshore countries. Despite this, French Budget
Minister Eric Woerth has suggested the need for a new blacklist to be released
some time in 2009.
It is thought that about 18 leaders attended Tuesday's meeting, and most are
likely to be sympathetic to the Franco-German position. However, the US was
notable by its absence at the meeting with the looming Presidential election
taking precedence. Nonetheless, Washington is almost certain to support another offshore
crackdown in the months and years ahead, whoever is in the White House.
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