The automatic exchange of information, between states, on financial accounts opened by non-residents – whether natural persons or entities, such as trusts or foundations – continues to gain momentum. And with them, transparency on hidden money offshore, in the secret of tax havens.
In a press release issued Tuesday, June 30, the Organization for Economic Cooperation and Development (OECD) announced that, in 2019, 97 countries had transmitted information (balances, interest, dividends, proceeds from asset sales, etc.) concerning 84 million current accounts or securities accounts, which total 10 trillion euros of assets. Among them are many countries or territories known for their near-zero taxation, such as the Cayman Islands or Bermuda, or for certain tax regimes that are still very favorable, such as Switzerland or Luxembourg.
Doubling of volumes between 2018 and 2019
These are colossal sums, which States can therefore check if they have been declared to the tax authorities, making the difference with the accounts listed in their books, or if, on the contrary, they have been withdrawn from the tax authorities by individuals or members of criminal networks. The total amount of affected assets has doubled compared to 2018, which was the first real year of automatic exchange (5,000 billion euros, for 47 million bank accounts exchanged by 96 countries).
According to the OECD, these figures attest to a rise in international cooperation, welcome from the point of view of fiscal transparency and the fight against illicit money flows. Launched after the great financial scandal of the Panama Papers of 2016 and deployed since 2017, the automatic exchange of bank data between countries anxious to track down money from tax fraud and money laundering from other criminal activities (drug trafficking, corruption, etc.) is seen as one of the best ways to overcome opacity.
If certain tax lawyers continue to criticize the system validated by the G20 (group of the 19 richest countries, plus the European Union), in the name of the protection of the data of their customers but especially in the concern of preserving their financial interests, automatic exchange reduces bank secrecy and tax fraud. It helps bring the missing money back into state coffers and, according to OECD calculations, reduces the volume of bank deposits in tax havens.
The doubling of volumes observed between 2018 and 2019 is explained in particular by the increase in bilateral trade: the 97 countries which are now participating in automatic exchange transmit their information to an increasing number of partner countries, with now 4,500 bilateral relations, stresses the OECD. These exchanges, which are based on data sent by banks to the tax authorities, in fact require to be highly secure, particularly in developing countries. They have an obligation to invest in tamper-proof systems if they want to participate in the trade and recover the money from the fraud. Now, noteworthy facts, India is one of the members, and Switzerland agrees to share its information with developing countries.
“Fraudsters will no longer be able to hide”
In addition, volumes are increasing because the information exchanged no longer relates only to accounts newly opened by individuals, but to the stock of offshore accounts. A big difference, which promises to bring out new cases of fraud and money laundering … “This multilateral trading system (…) now provides countries around the world, including many developing countries, with a wealth of new information with which their tax authorities can ensure that accounts abroad are properly declared, said OECD Secretary General Angel Gurría, quoted in the press release. Countries will be able to mobilize much more revenue, which is particularly important in light of the current Covid-19 crisis, while moving closer to a world where fraudsters can no longer hide. “
The new data released by the OECD on Tuesday should be watched closely by economists and academics who, since the 2008 financial crisis and in the wake of Gabriel Zucman, associate professor at the University of Berkeley in California and co-author of the ‘trial The Triumph of injustice (Threshold, 304 pages, 22 euros), are interested in “The hidden wealth of the nations” in offshore financial centers. One of the big questions is how these numbers, which aggregate reported and undeclared money, coincide with their own estimates. And how they could be useful to them.
In 2017, the French economist notably relied on international banking statistics to establish that individuals had placed 8.7 trillion euros in tax havens. The global data made public by the OECD, which provide new and unpublished information, therefore supports its work.
According to this close friend of Thomas Piketty, who was his thesis director, if the automatic exchange of bank data constitutes progress, it is not enough on its own to overcome international tax fraud and evasion. Gabriel Zucman advocates in particular for the establishment of high financial sanctions against tax havens, and, for several years, for the establishment of a global financial cadastre, equivalent to that which exists in real estate in France since 1791, but which would identify the holding of financial assets and stocks or bonds.