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[Vexari]

TAX HAVENS CLEANER THAN G~7 ACCUSERS..

Haven nations have stronger anti~money laundering laws and better enforcement than major nations..


President's Choice..The Pot Calling the Kettle Black
Jurisdiction..General
Last Modified..Wednesday, March 31, 2004


Those of us who work in the offshore world have long known that the best of the offshore financial centres (OFCs) now have far better standards of know your customer and anti-money laundering controls than the main OECD member countries. But the OFCs are still routinely treated as ‘the usual suspects’ by the liberal media and Western governments whenever terrorist financing, money laundering and organised crime are on the agenda.

This week we report on the recently released assessment of the financial supervision standards in the OFCs by the International Monetary Fund (IMF). The IMF report confirms that, on average, the OFCs are more in compliance with international supervisory standards for financial services than other jurisdictions assessed by the IMF.

The IMF reports that OFCs have a higher rate of compliance with the Basel Core Principles in the areas of cross-border banking, information disclosure requirements and, significantly, in prudential regulations and requirements. And in the area of money laundering prevention 76% of the offshore jurisdictions were in compliance with the Basel Core Principles compared to only a 45% compliance rate for onshore jurisdictions.

Post 9/11 studies showed that the OFCs play little to no part in terrorist’s financing operations. And all of the major money laundering scandals of the last 10 years have substantially occurred in Russia, Western Europe (mainly London and Switzerland) and New York.

Along the same lines, we also report this month that the OECD is claiming success in its bid to remove so called ‘harmful tax competition’. Out of a total of 47 preferential tax regimes cited as ‘harmful’ by the OECD in 2000 some 13 (i.e. over 27%) have now been found on further examination not to be actually harmful! Meanwhile the OFCs have been subjected to enormous expense and inconvenience in the last four years to defend themselves against the OECDs unwarranted attack.

Of course Ireland had the best response to the OECD. Ireland has eliminated the difference in tax rates paid by international companies and by domestic firms. Not by raising the tax rate on international companies to the domestic rate, as the OECD clearly wished. But by lowering domestic taxes to an across the board rate of just 12.5%.

As a result Ireland (along with Cyprus) now has the lowest corporate tax rates among 69 jurisdictions surveyed by KPMG in an annual report on the subject (see our story on the KPMG report in the Global section this month).

So, in that case, far from reducing tax competition, the OECD actually increased the tax competition faced by its members as a direct result of its actions!

It is time for the OECD and FATF to acknowledge that the top OFCs now have better financial supervisory regimes than most of their members do and that accordingly, in future, they should be treated as being innocent and not ‘guilty’ until they are clearly proven as such.

W William Woods
President, OffshoreOn

http://www.offshoreon.com/articles/5337.asp?docid=5337