New York DA's Office Attacks Bank Secrecy Laws

Tax-news.com

03 September 1999

A conference in Jersey this week was told that there was no longer any place for bank secrecy laws. John Moscow, Deputy Chief of Investigations for the New York District Attorney's office, said that the bank secrecy statutes are used by criminals and are not necessary for honest business people. He told the gathering that the economies of the world have become unified and it was time for banking and corporate secrecy laws to be abolished if the rule of law is to survive in the new world. He said that the world can no longer sustain jurisdictions such as the Cayman Islands and the Netherlands Antilles.

The Cayman Islands' Financial Secretary, George McCarthy, retaliated that banking confidentiality in the normal course of business is a common law protection which supports legitimate business dealings and that the Cayman Islands' regulatory legislation complies with international standards regarding the exchange of information on criminal matters.

Mr. Moscow has previously criticised the Channel Islands for its failure to co-operate with other jurisdictions, although recently he acknowledged that the Channel Islands' authorities want to help to fight crime. His strong words can be seen in the context of the general campaign being waged against low tax jurisdictions; but at the same time, many jurisdictions have taken carefully thought-out actions which they evidently feel will be enough to see off the 'high tax moral police'.

This is a war which is largely being conducted behind closed doors, and it is too early to predict the result. All the signs, however, point to a measured tightening-up by the IOFCs rather than a root-and-branch outlawing of 'offshore'

 

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