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Some decisions, actions or reports made at or by the Organisation for Economic Co-operation and Development (OECD) have raised controversy.
| | This article needs additional citations for verification .(November 2023) |
Some decisions, actions or reports made at or by the Organisation for Economic Co-operation and Development (OECD) have raised controversy.
Unlike many other inter-governmental organizations like the United Nations or the European Commission, the OECD cannot legislate or enforce laws and lacks the power to coerce a country, member or not, to alter its policy.
However, it can have an influence on national policies through soft laws, by issuing "recommendations", "guidelines" and other "manuals", to which countries or companies can refer. Some of these guidelines have become de facto standards, such as the OECD Guidelines for the Testing of Chemicals or the OECD Model Tax Convention.
Also, negotiations and agreements between representatives of member countries can occur at the OECD and have direct consequences in national laws.
The OECD and its Financial Action Task Force regularly publish the list of uncooperative tax havens.
The FATF blacklist was the common shorthand description for the Financial Action Task Force list of "Non-Cooperative Countries or Territories" (NCCTs). The effect of the FATF Blacklist has been significant and arguably has been more important in international efforts against money laundering than has the FATF Recommendations. [1] While under international law, the FATF Blacklist carries with it no formal sanction, in reality, a jurisdiction placed on the FATF Blacklist often finds itself under intense financial pressure. As a result of the FATF 40+8 Recommendations (among other initiatives), most countries now require their banks to report certain suspicious financial activities to the appropriate financial regulators and law enforcement authorities. [2] (In the United States, they are called Suspicious Activity Reports.)
Most larger countries with significant financial centres consider transactions coming from or transferring to a jurisdiction on the FATF Blacklist to be a suspicious activity, which automatically triggers closer regulatory scrutiny (and considerably more paperwork on the bank's part). Thus, many major financial institutions will not conduct business with counterparts based in Non-Cooperative Countries and Territories (NCCTs).
Since many of the countries that FATF originally listed as NCCTs have major financial industries (Bahamas, Cayman Islands, Liechtenstein), such de facto boycotts could have a significant effect on a country's economy (or at least a politically powerful sector of the economy).
Some observers, such as the American conservative FreedomWorks foundation, argue that the OECD is lobbying for more taxes. In book series such as its Economic Survey of countries, OECD analysts advise countries on their policies including tax. Such groups also remark that the OECD is funded by tax money.
The Multilateral Agreement on Investment was negotiated at the OECD between 1995 and 1998. While the discussion was not secret, it had little public awareness until a draft report was leaked in 1997. That had led to massive outcry and an intensive campaign against it. Eventually, countries gave in and cancelled the agreement.
The economy of Gibraltar consists largely of the services sector. While part of the European Union until Brexit, the British overseas territory of Gibraltar has a separate legal jurisdiction from the United Kingdom and a different tax system. The role of the UK Ministry of Defence, which at one time was Gibraltar's main source of income, has declined, with today's economy mainly based on shipping, tourism, financial services, and the Internet.
The economy of Monaco is reliant on tourism and banking. Monaco, situated on the French coast of the Mediterranean Sea, is a popular resort, attracting tourists to its casino and pleasant climate.
An offshore bank is a bank that is operated and regulated under international banking license, which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to less regulation and transparency, accounts with offshore banks were often used to hide undeclared income. Since the 1980s, jurisdictions that provide financial services to nonresidents on a big scale can be referred to as offshore financial centres. OFCs often also levy little or no corporation tax and/or personal income and high direct taxes such as duty, making the cost of living high.
In financial regulation, a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR) is a report made by a financial institution about suspicious or potentially suspicious activity as required under laws designed to counter money laundering, financing of terrorism and other financial crimes. The criteria to decide when a report must be made varies from country to country, but generally is any financial transaction that either a) does not make sense to the financial institution; b) is unusual for that particular client; or c) appears to be done only for the purpose of hiding or obfuscating another, separate transaction. The report is filed with that country's financial crime enforcement agency, which is typically a specialist agency designed to collect and analyse transactions and then report these to relevant law enforcement teams.
A bearer instrument is a document that entitles the holder of the document to rights of ownership or title to the underlying property. In the case of shares or bonds, they are called bearer certificates. Unlike normal registered instruments, no record is kept of who owns bearer instruments or of transactions involving transfer of ownership, enabling the owner, as well as a purchaser, to deal with the property anonymously. Whoever physically holds the bearer document is assumed to be the owner of the property, and the rights arising therefrom, such as dividends.
The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, Groupe d'action financière (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering and to maintain certain interest. In 2001, its mandate was expanded to include terrorism financing.
Anti-Money Laundering (AML) refers to a set of policies and practices to ensure that financial institutions and other regulated entities prevent, detect, and report financial crime and especially money laundering activities. Anti-Money Laundering is often paired with the action against terrorism financing, or Combating the Financing of Terrorism, using the acronym AML-CFT. In addition arrangements intended to ensure that banks and other relevant firms duly report suspicious transactions, the AML policy framework includes financial intelligence units and relevant law enforcement operations.
Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors.
In domestic and international commercial law, a beneficial owner is a natural person or persons who ultimately owns or controls an interest in a legal entity or arrangement, such as a company, a trust, or a foundation. Legal owners, commonly described as the "registered owners", may hold those interests as beneficial owners or for the benefit of someone else, in which case they may be described as a "nominee".
An international business company or international business corporation (IBC) is an offshore company formed under the laws of some jurisdictions as a tax neutral company which is usually limited in terms of the activities it may conduct in, but not necessarily from, the jurisdiction in which it is incorporated. While not taxable in the country of incorporation, an IBC or its owners, if resident in a country having “controlled foreign corporation” rules for instance, can be taxable in other jurisdictions.
The Financial Action Task Force blacklist, is a blacklist maintained by the Financial Action Task Force.
Partially at the behest of the international community, Nauru’s government no longer sanctions certain activities that, while technically legal, could serve to facilitate criminal activity. In 2003, it ended the controversial practice of selling its passports. It also banned offshore banks. In 2005, Nauru was still placed on the Financial Action Task Force on Money Laundering's (FATF) List of Non-Cooperative Countries (NCCTs). A division of the Organisation for Economic Co-operation and Development, the FATF was created in 1989 to address global concerns over the proliferation of money laundering. A generally low rate of petty crime in Nauru has been reported.
In financial regulation, a politically exposed person (PEP) is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence they may hold. The terms "politically exposed person" and senior foreign political figure are often used interchangeably, particularly in international forums.
The Asia/Pacific Group on Money Laundering (APG) is a FATF style regional inter-governmental (international) body, the members of which are committed to effectively implementing the international standards against money laundering, the combating the financing of terrorism (CFT) and financing the proliferation of weapons of mass destruction. APG was founded in 1997 in Bangkok, Thailand, and currently consists of 42 member jurisdictions in the Asia-Pacific region and a number of observer jurisdictions and international/regional observer organisations.
A tax haven is a term, sometimes used negatively and for political reasons, to describe a place with very low tax rates for non-domiciled investors, even if the official rates may be higher.
An offshore financial centre (OFC) is defined as a "country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy."
The Global Forum on Transparency and Exchange of Information for Tax Purposes was founded in 2000 and restructured in September 2009. It consists of OECD member countries as well as other jurisdictions that have agreed to implement tax related transparency and information exchange. The forum works under the auspices of the OECD and G20. Its mission is to "implement the international standard through two phases of peer review process". It addresses tax evasion, tax havens, offshore financial centres, tax information exchange agreements, double taxation and money laundering.
Financial services in Gibraltar refers to the services provided in the British Overseas Territory of Gibraltar by the finance industry: banks, investment banks, insurance companies, credit card companies, consumer finance companies, government-sponsored enterprises, and stock brokerages.
Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations where there is little or no economic activity, thus "eroding" the "tax-base" of the higher-tax jurisdictions using deductible payments such as interest or royalties. For the government, the tax base is a company's income or profit. Tax is levied as a percentage on this income/profit. When that income / profit is transferred to another country or tax haven, the tax base is eroded and the company does not pay taxes to the country that is generating the income. As a result, tax revenues are reduced and the government is detained. The Organisation for Economic Co-operation and Development (OECD) define BEPS strategies as "exploiting gaps and mismatches in tax rules". While some of the tactics are illegal, the majority are not. Because businesses that operate across borders can utilize BEPS to obtain a competitive edge over domestic businesses, it affects the righteousness and integrity of tax systems. Furthermore, it lessens deliberate compliance, when taxpayers notice multinationals legally avoiding corporate income taxes. Because developing nations rely more heavily on corporate income tax, they are disproportionately affected by BEPS.
The Qatar Financial Information Unit (QFIU) is a Qatari government regulatory agency responsible for financial intelligence efforts to combat money laundering and financing of terrorism. Like other national Financial Intelligence Units (FIU) around the world, it requires banks, investment companies, insurers and other financial institutions to report suspicious financial transactions. QFIU then analyzes the information and disseminates the relevant data to law enforcement authorities for further investigation and action.