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CHAPTER III

THE EVIL BANK SECRECY LAWS

“ A spectre haunts the worlds governments. They fear that the combination of economic

liberalization with modern information technology poses a threat to their capacity to raise

taxes.90

A fundamental area of contention which the OECD has targeted as an area which requires

drastic reform and or total elimination is the Bank Secrecy Laws found in many of the

leading offshore centers. Strangely enough, several of the members of the OECD club

have very entrenched and established laws pertaining to financial privacy rights.91

According to the Harmful Tax Competition Report, the lack of access to information

whether through bank secrecy laws or vehicles such as International Business Companies

which are able to have bearer shares collectively causes one of the most harmful

characteristics of a regime. The report continues that availability of protection from

enquiries by tax authorities is one of the biggest attractions of many of the offshore

centers.92 The report further stated that the limited access that certain countries have to

bank information for tax purposes is inadequate to detect and prevent abuses by

90 91 Financial Times of London July 19, 2000 See for eg. The Financial Privacy Act of the United States, For an interesting review of the Bank Secrecy Laws of Switzerland, Austria, Germany, France, Italy Spain, Sweden and Denmark see Int’l Bus. Law 221- 251 (October 1979) Harmful Tax Competition ‘An Emerging Global Issue” OECD 1998 at page 33 92

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