Finance ministers from over 51 countries signed an agreement in a step closer to ending the dark financial underworld of tax-evasion and money-laundering. Another 30 countries pledged to join by 2018.
The deal is called the Multilateral Competent Authority Agreement and will look to build a collective exchange of bank accounts, taxes, assets, and income held outside local tax jurisdictions.
The two-day summit was organized by the Organization for Economic Cooperation and Development (OECD) and the Global Forum on Transparency and Exchange of Information for Tax Purposes. It was hosted by German Finance Minister Wolfgang Schauble and held in Berlin.
“Banking secrecy, in its old form, is obsolete,” German Finance Minister Wolfgang Schaeuble said in an interview in Bild on Wednesday.
The practice is “no longer appropriate at a time when people can transfer their money all over the world at the press of a button via the internet,” said Schaeuble.
Germany is a staunch opponent of Bank secrecy by geography. On its southern border lie historically secretive Austria and Switzerland, and on the western frontier is Luxembourg, also known for its tight-lipped financial institutions.
Members like the Cayman Islands, the Virgin Islands and Liechtenstein – all notorious for being tax havens, signed the agreements.
Asset hideouts like Austria, Switzerland, and the Bahamas didn’t sign the agreement itself, but promised to join the initiative by 2018.
The new American anti-secrecy measure, FATCA, added a sense of urgency to the debate.
FATCA legislation, signed into law in 2010 and enacted on July 1, 2014, requires overseas financial institutions to identify their American customers to the IRS. The law applies to any account with more than $50,000.