OECD Anti Money Laundering

Last week I had a major realization…

…You see, I was reading the OECD Anti Money Laundering reports (someone actually reads those?).

Now for those who do not know,  The Organisation for Economic Co-operation and Development (OECD) is an organization with a mission to “promote policies that will improve the economic and social well-being of people around the world” [1].

They are an independent supranational organization funded by its member nation’s tax payers and they are not part of the democratic process. They pay themselves huge tax free salaries to come up with “recommendation” that in the end we all have to follow.

As mentioned what I have been reading a number of reports [2, 3]  concerning the international banking sector. Their goal is a noble one: to combat money laundering and terrorist financing.

But it is not the only thing that is going on.

Their motives appear to be far more complex and sinister…

But first let me explain you what they are working on…


Automatic Exchange Of Information

The OECD is currently working on a format that supports automatic information exchange of information. This means that governments that are members of the OECD are required to force their financial institutions to collect all the data on foreign persons, individuals AND legal entities (Persons) and make them available in a database.

The collected data will have be sorted and send over to the jurisdictions where the Persons have residency (and this is a very broad definition). All this will happen automatically and once per year. Name, date of birth, tax identification number, balance at years end (and according unofficial sources even the IP address and specific transactions).


Now, why is this very worrisome?

1. First of all the data is collected by entities that have a very bad track record of safe guarding your privacy. Governments. And it is not made sure who will have access to all these records [4]. Every collection of data is prone to be hacked or sold to the highest bidder.

2. You don’t know where it is going to be used for. It is said that it is to avoid tax evasion. But of course it does not stop there. This information can be sold to credit rating bureaus, banks, life insurance , ex – wives, creditors and criminals.

3. It is never guaranteed that information is accurate. A mistyped zero by some bureaucrat more focused on Flying Birds in a database could have huge implications on your tax return.


The cost for all this oversight and collection is enormous. And complying with all the due diligence requirements will be very time consuming. This will increase the overall cost of the financial system a lot which has to be paid for by the end consumer (you) in money and headaches (in fact, it already is).

The cost for implementing this will be much higher than the funds that can be collected in evaded taxes. So why jump through all these hoops?

Here is what I realized:

This is not just about tax evasion or money laundry …It is about control…

(and I will tell you why in a minute)


But first: think about it,

When all the information about you financial situation is known , it is very easy to figure out where you are up to. Because when someone can look at all your transactions? Right now your husband or wife might not even have that information.

And this will leave the door wide open to start implementing global taxes. This is already being discussed by international supranational (above your democratic government) organizations [5] (like the OECD, the IMF, World Bank, UN, G-20, WTO) that will collect taxes for some sort of “common good”, like imaginary tax avoidance of multinationals or during an “emergency” like an economic crisis.

These organizations are not accountable via normal democratic means. They exist above the law and are themselves tax exempt (oh… the irony).

And it will not be a one way stream of information. There will be a counter direction of regulation and control. Once there is one centralized system it is very easy to freeze you out. You could be eliminated from using the services when you have posed a threat to the “integrity of the financial system”. Just like happened with Snowden. Imagine what it would mean when these organisations can eliminate Persons (dissidents or competitors) at will with one push on the button from the international financial system…


And It Doesn’t Stop Here

When you go through these contracts you notice that every international agreement leads to another.

The automatic exchange of information can be done based on article 26 of model tax treaties and the Convention on Mutual Administrative Assistance in Tax Matters of the UN. Within these agreements there are always very broad definitions and things mentioned like “according to the standards”. These “standards” can be changed and no-one will be able to tell what they are 5 years from now.

In short, every international agreement that governments sign up to contains back doors and “legal frameworks” on which further policies and new standards can be based. This is a very slippery slope that totally takes place outside of the public debate.

Don’t take this lightly. These international organizations already dictate how financial services industries are being run. They create standards and every country that does not do as they say is put on a gray or a black list. When you are on those lists, you cannot use the international financial system anymore and you are $%@^&.

So you have to comply (again, with international unaccountable organizations AND their “evolving standards”…)

It is like an offer you can’t refuse…


Why Is Nobody Concerned?

Very simple. They fill a need. They answer to our calls. Since the crisis people have been looking for someone to blame. These are the mismanaging banks (correctly so) and of course the big tax avoiding corporations. If only these organizations would pay their “fair share” in taxes, all our problems would be over!

And the OECD, UN and the IMF and other regulatory organizations are the dark knights who ride in on fiery regulatory horses to fight for their noble goals with swords of incomprehensible working papers and shields of diplomatic immunity.

Of course, the do not do anything to actually fight tax avoidance by big multinationals, they just come up with regulations for everybody else who is not in the club.

This call by the misinformed and misunderstanding public is the equivalent of signing up for a pact with the devil.


To Summarize:

Big supranational unaccountable organizations are using mafia tactics to force financial institutions and independent nations into a reporting system that produces a complete financial database of every company and individual with a bank account available for data-mining by whoever is authorized (or rich/connected enough). This scares me…


Is It likely That These Systems Will Be Implemented?

Five years ago it was impossible to even consider for Swiss banks to provide information on their account holders. Now they are readily exchanging information. The Swiss banking secrecy is dead. Automatic exchange of information within the EU and Switzerland might start as early in 2017.

But for those paying attention, economic and political power is shifting East. The West is desperately clinging onto a failing financial system that produces these insanely invasive measures.

It is not a given that Russia and China will be bullied into these reporting systems. And they are not the only ones.

[Edit, 20 July 2014] The Brics have announced that the plan to set up their own bank to bypass the IMF and World Bank [6].

The power of Western governments is being used to back up these systems. When their supreme power fails, so will this system.


And the technological developments like the Bitcoin technology have highly disruptive potential. All these measures and laws are focused on bank accounts and existing legal entities. When people start using peer to peer payment systems to transfer funds without using these accounts it will be very difficult for a centralized system to control these matters.

I fully believe that a peer to peer currency like Bitcoin has the future and will remove our current financial system. Unfortunately, I have already seen individuals run around in the Bitcoin scene who are actively trying to regulate and control the matter based on the “regulatory foundation already in place”.


So the battle for a honest economic and financial system is far from over.

Let’s hope it does not become much worse, before it gets better…


Fancy to learn more about how to limit your exposure to out of control regulation? Find it here.



[1] www.oecd.org

[2] Standard for Automatic Exchange of Financial Account Information – Common Reporting Standards. February 2014. OECD

[3] Automatic Exchange of Information – what it is, how it works, benefits, what remains to be done. 3 July 2012. OECD

[4] Keeping it Safe, Joint OECD/Global Forum Guide On the Protection Of Confidentiality Of Information Exchanged For Tax Purposes. 23 July 2012. OECD.

[5] Wouters, J., Meuwissen, K. RSCAS 2011/12. GLOBAL TAX GOVERNANCE: WORK IN PROGRESS? Robert Schuman Centre For Advanced Studies, Global Governance Programme-03.

[6] http://www.bloomberg.com/news/2013-03-25/brics-nations-plan-new-bank-to-bypass-world-bank-imf.html