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Exchange of Information

A pivotal element of the OECD’S and indeed the industrialized nations attack upon so-

called tax havens has been the lack of proper exchange of information agreements.

Traditionally, most of the offshore centers have avoided signing any exchange of

information agreements with respect to tax avoidance. There has been a much more

cooperative atmosphere in signing agreements to aid the combating of illegal money

launderers and tax perpetrators in certain defined cases.

It has been reported that the OECD applauds all of those offshore centers which have

made very drastic changes to their laws in order to eliminate criminal activities such as

money laundering and drug dealing. Despite this the OECD feels that states must be

prepared to go further in dealing with any illegal practices including tax offences.128

However, to this point wholesale exchange of information agreements or treaties have not

been signed by the major offshore financial centers as it is considered detrimental to the

survival of the industry.

The argument here has been that many legitimate clients prefer a financial center that

provides them with some level of personal privacy that would not normally be afforded in

their home country particularly any of the industrialized countries. Hence,

128 Jeffrey Owens, Head, Fiscal Affairs OECD, Promoting Fair Tax Competition “ We believe we have to go further. As long as any government tolerates that the residents of other countries can use their jurisdictions to facilitate any illegal non-reporting of income then the criminal dishonest element will continue to undermine the integrity of that offshore financial center. Tainted money will always corrupt.’

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