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A examination of the relationship between money laundering tax evasion and tax havens

Strengthen our efforts to combat financial abuse, including money laundering, tax evasion and corruption, given its potential to undermine the credibility and integrity of the international financial system, cause serious macroeconomic distortions, and jeopardize national financial sectors.

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Market integrity is an important pre-condition for financial stability, and we look forward to the joint paper by the IMF and World Bank asked for by the IMFC on their respective roles in combating financial abuse and in protecting the international financial system. Ottawa, Canada, November 16-17, 2001 G20 Action Plan on Terrorist Financing We will implement quickly and decisively measures that the United Nations have identified as essential to combating terrorist financing.

We will block terrorists' access to our financial system. We will work with the International Financial Institutions IFIsthe Financial Action Task Force on Money Laundering FATFthe Financial Stability Forum FSF and other relevant international bodies to prevent abuses to the financial system and threats to its integrity through the promotion of international standards relevant to terrorist financing, money laundering and financial sector regulation and supervision.

We welcome the conclusions of the recent FATF extraordinary plenary on terrorist financing. Above all, we will enhance our ability to share information domestically and internationally as a vital component in the fight against terrorism.

  1. Hence, confidential information of the SRO would be shared with its members and would therefore often lead to the prosecution of whistleblowers for example.
  2. We are committed to cooperate to effectively fight such abuses and make a strong call on all countries especially those OECD countries that have not taken necessary steps- in particular in allowing access to bank information- to join us in this effort and look forward to having regular reports on the progress of international initiatives in this area.
  3. Second is to consider the conceptual coherence of the phenomena that might be captured under different definitions; to what extent are they the same or different?

While that meeting was shadowed by the events of September 11, 2001, today the recent tragic events in Bali and Moscow reinforce our resolve to combat terrorism and those that would fund it. To this end, we reviewed the progress made in implementing our Action Plan, including the freezing of terrorist assets, implementation of international standards, exchange of information, provision of technical assistance, and reporting on our actions.

We also agreed to continue our efforts to eliminate other abuses of the financial system, particularly money laundering. We pledged to carry forward our work in this regard, through support of the activities of International Financial Institutions IFIs and other relevant international fora, and through appropriate domestic actions.

We will review progress on these matters at our next meeting. We discussed and explored ways to enhance the bilateral exchange of fiscal, financial and customs information needed by countries to enforce their own fiscal and other laws. These measures will contribute to efforts to combat abuses of the financial systems such as fiscal evasion, fraud and money laundering.

We are committed to cooperate to effectively fight such abuses and make a strong call on all countries especially those OECD countries that have not taken necessary steps- in particular in allowing access to bank information- to join us in this effort and look forward to having regular reports on the progress of international initiatives in this area.

We remain committed to disrupting terrorist financing networks. We recognized that this effort requires a focus on both the formal and informal financial sectors. Therefore, while we will continue efforts to improve our formal financial systems, to expand their scope, and to protect them from this abuse, we will also concentrate efforts to subject informal financial sectors to appropriate monitoring and enforcement actions.

Summary of Conclusions on Tax Havens and Money Laundering in G20 Finance Communiqués

We pledged to carry forward our work in this regard, through support of the activities of IFIs and other relevant international fora, and through appropriate domestic actions. In this context we urged FATF to make progress, as appropriate, in the enlargement of its membership. We reaffirmed our commitment to fight the abuse of the international financial system in all forms. We will work to implement the high standards of transparency and effective exchange of information through legal mechanisms such as bilateral information exchange treaties, and we also call on those financial centres and other jurisdictions within and outside the OECD which have not yet adopted these standards to follow our lead and take the necessary steps, in particular in allowing access to bank and entity ownership information.

Why illicit financial flows and multinational tax avoidance are not the same thing

While we have made progress in fighting money laundering and the financing of terrorism since 11 September 2001, much remains to be done. We welcomed the decision by the IMF and the World Bank to make comprehensive assessments on money laundering and terrorist financing a regular part of their work.

Berlin, Germany, November 20-21, 2004 G20 Statement on Transparency and Exchange of Information for Tax Purposes We, the Finance Ministers and Central Bank Governors of the G20, are committed to enhancing good governance and fighting illicit use of the financial system in all its forms. Consequently, we are committed to transparency and exchange of information for tax purposes.

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We regard this as vital to enhance fairness and equity in our societies and to promote economic development. Financial systems must respect commercial confidentiality, but confidentiality should not be allowed to foster illicit activity.

Lack of access to information in the tax field has significant adverse effects.

Summary of Conclusions on Tax Havens and Money Laundering in G20 Finance Communiqués

It allows some to escape tax that is legally due and is unfair to citizens that comply with the tax laws. It distorts international investment decisions which should be based on legitimate commercial considerations rather than the circumvention of tax laws. The G20 therefore regards it as a mark of good international citizenship for countries to eliminate practices that restrict or frustrate the ability of another country to enforce its chosen system of taxation.

We are therefore committed to the high standards of transparency and exchange of information for tax purposes that have been reflected in the Model Agreement on Exchange of Information on Tax Matters as released by the OECD in April 2002. We call on all countries to adopt these standards.

  • We regard this as vital to enhance fairness and equity in our societies and to promote economic development;
  • People seeking to evade law enforcement hide their activities;
  • Illicit trade in tobacco and alcohol to evade duties and tax often carried at large-scale by organised crime groups, working under cover of apparently legitimate businesses;
  • A revised version of the corporate tax reform was adopted by the Swiss Parliament on 28 September

High standards of transparency require that governmental authorities have access to bank information and other financial information held by financial intermediaries and to beneficial ownership information regarding the ownership of all types of entities. High standards of exchange of information require that such information be available for exchange with other countries in civil and criminal tax matters.

Exchange of information in tax matters should not be limited by dual incrimination principles in criminal tax matters or by the lack of domestic tax interest in civil tax matters. There must be appropriate safeguards on the use and disclosure of any exchanged information. We call on all countries with financial centres to adopt and implement the high standards articulated by the OECD so that we can move towards an international financial system that is free of distortions created through lack of transparency and lack of effective exchange of information in tax matters.

It is important that countries which do meet these standards have confidence that they will not be disadvantaged and that financial centres in countries that choose not to meet these standards will not benefit from that choice. The G20 therefore strongly support the efforts of the OECD Global Forum on Taxation to promote high standards of transparency and exchange of information for tax purposes and to provide a cooperative forum in which all countries can work towards the establishment of a level playing field based on these standards.

In this context, we welcome the efforts of the OECD Global Forum on Taxation to promote high standards of transparency and effective exchange of information for tax purposes. Further progress is needed and we encourage continuing implementation efforts and call on those countries and territories that have not yet implemented high standards of transparency and exchange of information to do so. We reaffirmed our commitment to take action against money laundering and terrorist and illicit financing.

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