ONSHORE NEWS
The Annual Report outlines the
main achievements of the Financial Action Task Force in 2000/2001 under the
Presidency of Spain, including the significant progress in work on
non-cooperative countries and territories (NCCTs). The June 22 report updated
the list of non-cooperative countries and territories.
The FATF has decided to remove
the Bahamas, the Cayman Islands, Liechtenstein and Panama from the list, but
will monitor closely future developments in those countries. Following the
review of thirteen countries, the FATF has identified serious deficiencies in
the following countries: Egypt, Guatemala, Hungary, Indonesia, Myanmar and
Nigeria.
The updated list of NCCTs is as
follows: Cook Islands; Dominica; Egypt; Guatemala; Hungary; Indonesia; Israel;
Lebanon; Marshall Islands; Myanmar; Nauru; Nigeria; Niue; Philippines; Russia;
St. Kitts and Nevis; and St. Vincent and the Grenadines. The FATF calls on its
members to request their financial institutions to give special attention to
businesses and transactions with persons, including companies and financial
institutions, in these countries or territories.
The money laundering agency has
decided to recommend the application of additional countermeasures (including
the possibility of enhanced surveillance and reporting of financial transactions
and other relevant actions) as of 30 September 2001 with respect to Nauru, the
Philippines and Russia, unless their governments enact significant legislation
which addresses identified money laundering concerns.
The FATF hopes that these
countries will enact legal reforms to which they are committed so that they can
avoid countermeasures.
http://www.oecd.org/fatf/pdf/PR-20010622_en.pdf
SUMMARY
The
Bush administration is reviewing rules designed to fight money laundering,
saying they may be burdensome for U.S. banks without achieving their goal.
Treasury Secretary Paul O'Neill has ordered the major review of
anti-money-laundering regulations, as part of a top-to-bottom study of all
department functions aimed at finding out whether taxpayers were getting value
for the money being spent. In congressional testimony last month, O'Neill
questioned whether the $700 million spent annually in efforts to crack down on
money laundering was being wisely expended.
Combating laundering of illicit
money became a major priority in the Clinton administration, particularly after
revelations in 1999 that the Bank of New York, one of the nation's largest, had
served as a conduit for $7 billion in Russian money - some of it believed to be
for criminal activity.
Money laundering, in which
profits from drug trafficking and other illegal activities are moved through a
series of bank or brokerage accounts to disguise them as proceeds of legitimate
business activity, is estimated to absorb close to $600 billion a year. That
equates to 5 percent of the world's gross domestic product.
http://www.dailyherald.com/main_story.asp?intid=3705292
SUMMARY
Tax
officials from the United States and other countries ended a meeting here today
and returned home to seek political agreement for proposals under which the
United States and the Organization for Economic Cooperation and Development
would cooperate on reducing tax revenue lost to offshore havens.
Those proposals, made to secure
American cooperation, are likely to include the removal of a threat of sanctions
against offshore tax havens if they fail to commit themselves to requested
changes by July 31.
Treasury Secretary Paul H.
O'Neill said last month that he had "serious reservations" about the
plan by the O.E.C.D. to reduce "harmful tax practices" carried out by
offshore tax centers. New agreements for the plan are likely to concentrate on
greater transparency and exchange of information, which the United States
supports.
The United States, which backed
away from the initiative under lobbying from low-tax advocates, signaled today
that its involvement in the talks did not mean that its stance had softened.
"It is not a softening,
but a redirection," John Taylor, the Treasury under secretary for
international affairs, said in a briefing for reporters.
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http://www.nytimes.com/2001/06/14/business/14HAVE.html
SUMMARY
Western
economic powers, trying to pressure offshore banking centers to join their fight
against money launderers and tax cheats, meet this week in what could be a
watershed event for small countries that depend on bank secrecy as their
competitive edge. Last year the 30-nation Organization for Economic Cooperation
and Development's Financial Action Task Force compiled a list of 15
jurisdictions -- including six in the Caribbean Basin -- it considers
uncooperative in the fight against money laundering.
Being blacklisted carries with
it the implicit threat of economic sanctions, and during the past year a number
of Caribbean countries have worked hard -- passing laws and closing down rogue
banks -- in hopes of working their way off the list. Last summer the OECD, whose
members are the world's richest democracies, also issued a list of 35
jurisdictions -- 17 in the Caribbean -- it considered unfair tax havens,
contending that low-tax or no-tax banking centers are little more than secretive
fronts where foreigners can park assets and evade taxes.
The Internal Revenue Service
estimates it loses $70 billion in taxes annually because Americans have hidden
their income offshore, and the Clinton administration was a staunch supporter of
the organization's efforts. However, in the wake of last week's meeting of the
OECD's Forum on Harmful Tax Practices at its Paris headquarters, there appears
to be some room for a meeting of the minds between the European countries and
the United States. High-tax European nations want higher taxes in offshore
havens, but O'Neill says the U.S. has no interest in stifling competition and
telling other countries what their tax rates should be.
Twenty-two members of the U.S.
House of Representatives sent a letter to President Bush supporting O'Neill and
saying they opposed any effort to force low-tax countries to raise their rates
and retool their tax systems.
Then more than 200 economists,
including Milton Friedman, wrote Bush, urging him to reject the OECD initiative.
The group of former IRS
commissioners, which included Republicans as well as Democrats, said the United
States would have more potential to achieve success within the OECD framework.
``With increasing globalization
and the use of the Internet, U.S. taxpayers seeking to evade U.S. taxes will
have an increasing ability to transfer assets to tax havens further afield,''
the letter said.
Several countries, including
the Bahamas, have passed tough anti-laundering legislation in the past year, and
the Bahamas and other island nations have revoked the licenses of banks
suspected of illicit activities.
Charles Intriago, who publishes
the newsletter Money Laundering Alert, said the same ``impenetrable laws'' of
bank secrecy that allow money launderers to operate also lend themselves to tax
evasion.
http://www.miami.com/herald/content/business/digdocs/063938.htm
SUMMARY
A
Tokyo tax on profits of Japan's largest banks appears to have hit them hard,
with taxes for fiscal 2000 estimated to be 1.5 times greater than combined net
profit, the Nihon Keizai Shimbun (Nikkei) said on Saturday. Authorities said the
funds were needed to counter the risk of a financial system crisis.
According to the Nikkei, some
eight banks and banking groups, including Mizuho Financial Group, incurred a
combined total tax bill of about 80 billion yen for fiscal 2000, 1.5 times
greater than their combined net profit for the year. Japan's top banking groups,
squeezed by stagnant lending and rising costs to deal with a mountain of problem
loans, reported gloomy earnings last month for the fiscal year just ended.
The tax, the brainchild of
maverick Tokyo governor Shintaro Ishihara, was opposed by the banks and central
authorities. But it was popular with voters, in part out of resentment at a 7.26
trillion yen infusion of public funds that major banks received in 1999 to help
clean up bad loans. Analysts predicted the Tokyo tax would pump around 110
billion yen a year into the treasury of Tokyo, whose finances have been battered
by the prolonged economic slump, but said its impact on banks' profits would be
limited.
Osaka has implemented a similar
law. Twenty one of Japan's largest banks sued Tokyo late last year over the tax,
calling for it to be declared invalid. A judgment has yet to be reached in the
case.
http://www.japantoday.com/e/?content=news&cat=3&id=31540
SUMMARY
Ireland's
Attorney General, Michael McDowell, has accused officials in Brussels of
arrogantly trying to force Europe's diverse nations into a superstate no one
wants.
Mr McDowell told the Institute
of European Affairs in Dublin that Irish voters rejected the European Union's
Nice Treaty partly because of a "widespread perception that developments in
Europe were taking a turn, or moving in a direction, that caused deep
unease".
He
said "a narrow class of activist office-holders, elected and unelected",
were charging ahead of public opinion with proposals for a European
constitution, a justiciable Bill of Rights, EU direct taxation, a defence arm, a
judicial machinery to prosecute and punish citizens, an elected EU president,
and an EU government.
"Few
if any of these proposals carry popular significant support." he claimed.
During
the weekend's summit at Gothenburg, EU leaders refused to contemplate altering
any text in the treaty, although it is technically null and void for all 15
states if any country refuses to ratify it. The Irish prime minister, Bertie
Ahern, was told it was his responsibility to resolve the constitutional impasse,
despite several leaders admitting privately that they would have had
difficulties if the treaty had been put to a popular test in their own
countries. Mr McDowell is the fourth Irish cabinet member to break ranks. The
finance minister, Charlie McCreevy, caused astonishment in Gothenburg by
describing Ireland's rejection of the treaty as a "healthy
development".
http://www.telegraph.co.uk/et?ac=000143789351982&rtmo=lzl7kwzt&atmo=99999999&pg=/et/01/6/20/wiea20.html
The World Trade Organisation has ruled that a Dollars 4bn (Pounds 2.8bn) US tax break for exporters is in violation of international trade rules, a decision that will escalate tensions between the US and the European Union.
A WTO dispute settlement panel found that the tax measure was a prohibited export subsidy, according to officials in Washington familiar with the decision.
The ruling, which was released to the two governments in confidence yesterday, was first reported on the website of Inside US Trade, a respected Washington newsletter.
But the decision comes at a difficult time when anger is growing in the US Congress over the EU's pending decision to block the merger between General Electric and Honeywell.
The U.S. Congress overhauled the so-called foreign sales corporation tax after a previous WTO finding against the tax break.
Under the original scheme, companies could win an exemption from US corporate taxes by routing revenues from overseas sales through an offshore sales subsidiary.
But the new U.S. law, while structured differently from the previous FSC programme, expanded slightly the tax benefits to large
U.S. exporters, such as Boeing and Caterpillar.
http://
www.ft.com/globaleconomy
http://globalarchive.ft.com/globalarchive/articles.html?id=010623000588&query=offshore
Related Articles
Inside Trade Full Document
http://www.insidetrade.com/public/2001_2949.pdf
http://globalarchive.ft.com/globalarchive/articles.html?id=010623000588&query=FSC
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