Ethics and governance in the European Financial centers

Yesterday I quoted European Tax Commissioner Laszlo Kovacs who said that the actions of Austria and Luxembourg were hampering progress in cracking down on global tax fraud, an issue he said was “high on the political agenda of the EU.

The question is: what is to be done to achieve the goal of automatic exchange?

I have an idea: the services of clearing house are done in Luxembourg by Clearstream. Clearstream International was formed in January 2000 through the merger of Cedel International and Deutsche Börse Clearing.

I suggest that EU governements encourage their banks to chose another clearing house for the clearing services, in a jurisdiction that play the truth and fair competition game.

Two weeks ago TJN launched their website for the Mapping the Faultlines project, which explores the furtive world of secrecy jurisdictions where furtive types get up to all sorts of dubious business.

Now they launch another site, www.financialsecrecyindex.com which takes reader step-by-step into the details of their new ranking of secrecy jurisdictions. The ranking results will be published early November.

Know more

Bloomberg has reported that Austria and Luxembourg opposed the plans, which would force them to give up their system of withholding tax and join an automatic EU-wide information exchange system.

"European Tax Commissioner Laszlo Kovacs said yesterday that Luxembourg and Austria at the time “agreed with the conditions” that they would give up withholding tax and join the automatic information exchange system once the non-EU countries agree to swap tax-related information. “Now they’re working against the conditions,”" Bloomberg quoted.

"László Kovács, the European commissioner for taxation, said that the Liechtenstein agreement should not be “held hostage to other issues”. He said the actions of Austria and Luxembourg were hampering progress in cracking down on global tax fraud, an issue he said was “high on the political agenda of the EU”. Kovács said that no member states were opposed to the substance of the Liechtenstein agreement and that he would present it for formal adoption by EU finance ministers before the end of the year.", Jim Brunsden added to quote László Kovács .

According to TJN Austria yields and opacity score of 91% whereas Luxembourg yields and opacity score of 87%.

Both jurisdictions are no longer on the "OECD grey list" (Cf. list dated 20 October 2009) despite nothing is actually done to implements the agreements. So the title of the "white list" is misleading.