Blacklist countries shielding tax cheats, Darling urges G20

Chancellor Alistair Darling is urging the G20 group of richest countries in the world to blacklist nations that allow wealthy individuals and companies to hide their financial affairs behind a veil of secrecy.

Countries like Panama, the Dominican Republic and the Turks and Caicos Islands are in the firing line for refusing to reveal details of who is hiding cash in their banking and financial systems.

The G20 leaders, including President Obama and Prime Minister Gordon Brown meet in Pittsburgh today to discuss the global financial crisis.

Darling made a statement prior to the start of the summit calling for the G20 to blacklist countries that fail to share information with financial regulators in other countries.

Failure to comply could result in economic sanctions.

“Just as we have been tackling tax havens, we also need to go after those countries that offer regulatory havens where mainstream regulators here and in America and in Europe can’t get the information they need,” Darling said. “If you don’t comply you get until March next year then you will be blacklisted.”

Brown and Darling will encourage other G20 leaders to back the blacklist when the G20 meets in November.

Besides threatening sanctions against nations that fail to comply, they also want the G20 to offer financial support to tax shelters that drop their status and allow G20 regulators access to their banks and finance houses.

“What we are saying to these companies is, ‘Look, you live in the same world as the rest of us; you enjoy the privileges when you travel that everybody else does,” Darling said. “You can’t shelter behind this veil of secrecy where we can’t get the information we need to understand the risks to which some of our institutions may be exposed.”

Darling wants the Financial Services Authority to have reciprocal access with other regulators so information that might help the government assess financial risk to UK banks and financial institutions.

Darling said he was hopeful the G20 would agree as the “whole climate” of thinking on regulation has changed over since the financial crisis began - especially as many G20 countries now hold large stakes in banks.

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