Global Financial Integrity

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Global Financial Integrity Lauds Tax Evasion Investigation; Urges Greater International Cooperation and Transparency

Monique Perry Danziger, +1 202 293 0740 ext. 222
Global Financial Integrity
Monique Perry Danziger, +1 202 293 0740 ext. 222

WASHINGTON, DC – Global Financial Integrity applauds German Chancellor Angela Merkel and her administration for leading a historic push for greater cooperation and transparency in international tax matters.

The growing scandal, in which the German security service paid more than $7 million to an informant who provided account information from a Lichtenstein bank that is controlled by the Principality of Lichtenstein, could snare as many as 900 wealthy Germans in the tax dodge scheme.  Tax evasion is no small problem for the German government.  Estimates by the German Tax Union, a non governmental group, put the total annual cost of tax evasion in Germany at approximately $44 billion.

Emerging details indicate widespread financial manipulation in which money was shifted through secondary entities such as businesses and foundations, before ultimately leaving Germany and entering the secreted, untouchable confines of financial centers such as Liechtenstein.

“As long as these secrecy jurisdictions exist and financial oversight is lax, tax evasion will continue to be a problem for all nations,” said Raymond Baker, Director of the Center for International Policy’s Global Financial Integrity Program.  “This is a wake-up call to poor and rich countries alike; there needs to be greater transparency and coordinated international regulation of financial practices.”

Therefore, Global Financial Integrity calls on the Financial Action Task Force to implement regulations which require that the beneficial ownership and management of all corporations, foundations and trust accounts be fully transparent.  “Lifting the veil of secrecy on shell corporations, fake foundations and anonymous trust accounts will lead to improved transparency and better opportunities to monitor money laundering activities,” Baker noted.

Germany is not alone in losing money to tax evasion.  Ireland recently recovered over a billion dollars in a crackdown of offshore bank accounts.  The British trade union TUC has claimed that tax evasion is costing the UK treasury more than $50 billion per year.

Baker said that disguised entities now number in the millions across the globe.  And, coupled with so-called “flee clauses,” the nominee directors and fake owners of these disguised corporations and foundations can transfer the entity from one secrecy jurisdiction to another when law enforcement officials from any country launch an investigation.  “Entities that are hidden behind nominee shareholders, directors, and trustees must be eliminated in order to shore up what is an evidently weak international system of fiscal oversight,” Baker said.