* Benjamin R. Hartman was graduated from the University of Texas (B.A., 1996; J.D., 2000) and the University of Edinburgh (LL.M., with distinction, 2000). He is currently an associate in the New York office of Salans Hertzfeld & Heilbronn where he concentrates in taxation and commercial litigation. He extends his gratitude to Professor Bill Gilmore at the University of Edinburgh, whose guidance and expertise in the field made this piece possible. He also extends his thanks to Professor H.W. Perry at the University of Texas without whose inspiration he never would have developed his interest in the law.
1 All Havens in a Storm, Economist, July 1, 2000, at 114 [hereinafter All Havens].
2 The report implicitly divides the issues according to the discreet initiatives, saying “Governments must intensify their co-operation and strengthen international frameworks to effectively combat money laundering and harmful tax competition, and to improve the observance of international standards and good governance.” G7 Finance Ministers to the Heads of State and Government, Actions Against Abuse of the Global Financial System ¶ 2, at http://www.g8kyushu-okinawa.go.jp/e/documents/action.html (July 21, 2000) [hereinafter Actions Against Abuse].
3 As if to reinforce the conceptual coincidence of the topics, the G7 reintegrates them under the last sub-heading, and enumerates many of the key goals from each. Id. ¶¶ 9, 10. This despite the fact that the FSF specifically excludes harmful tax competition from its purview. See infra note 19.
4 The G7 actually uses the term “counter-measures,” but to avoid confusion with the counter-measures used against money launderers, I will use the term “sanctions” instead.
5 Actions Against Abuse, supra note 2, ¶ 12.
6 See FATF, Report of the FATF on Non-Cooperative Countries and Territories 8 ¶¶ 49 et seq., at http://www.oecd.org/fatf/pdf/NCCT_en.pdf (Feb. 14, 2000).
7 Bruce Zagaris, Constructing a Hemispheric Initiative Against Transnational Crime, 19 Fordham Int’l L.J. 1888, 1891 (1996) (discussing amendments to the US 1988 Anti-Drug Abuse Act introduced by Senator Kerry). For an analysis of the viability of sanctions against countries complicit in money laundering in the context of GATT and GATS, see generally Matthew B. Comstock, GATT and GATS: A Public Morals Attack on Money Laundering, 15 Nw. J. Int’l L. & Bus. 139 (1994).
8 All Havens, supra note 1, at 114 (discussing the impact of the US and UK issuing an “advisory” to financial institutions recommending enhanced scrutiny of transactions with Antigua).
9 Press Release, 106/2000 CARICOM Response to G7 Charges, at http://www2.carib-export.com/index.php3?page_id=5023 (Aug. 11, 2000).
10 “Its objective is to obtain global commitment to internationally accepted standards of financial regulation and anti-money laundering measures as they apply to the provision of cross border financial services; these standards are set out in the UN Offshore Forum statement of minimum standards.” UNODCCP, United Nations Offshore Forum Cayman Islands, Communiqué, at http://www.odccp.org/document_2000–03–30_1.html (Mar. 30–31, 2000).
11 John Burgess, 15 Nations Cited as Havens for Possible Money Crimes, Wash. Post, June 23, 2000, at E3, available at http://washingtonpost.com.
12 First, they claim that no actual harm was suffered, but rather that there is the potential for harm. According to US Deputy Treasury Secretary Stuart Eizenstat, presence on the FATF list, for example, does not mean that a country is a money laundering center--only that its laws make money laundering possible. Burgess, supra note 11. Similarly, the OECD identifies factors that “may potentially cause harm to the tax systems of other countries as they facilitate both corporate and individual income tax avoidance and evasion.” OECD, Harmful Tax Competition: An Emerging Global Issue 22 ¶ 50 (1998) [hereinafter OECD Report]. Secondly, the rhetoric generally focuses on money laundering and tax evasion, both of which are private criminal acts. The potential harm, therefore, would be caused by private actors who are citizens of the potentially injured state and not by the states against whom the sanctions are threatened. Any attempt to establish such a breach by imputing the acts of criminals upon the Object States must fail prima facie. The criminals would not be agents of an Object State, and so there is no basis to impute the responsibility for their actions upon that state. International Law Commission, International Law Commission Report, 1996: Draft Articles on State Responsibility art. 11, at http://www.un.org/law/ilc/reports/1996/chap03.htm#doc38 (last visited Apr. 6, 2001) [hereinafter Draft Articles on State Responsibility].
13 Actions Against Abuse, supra note 2, ¶ 12.
14 FATF, Review to Identify Non-Cooperative Countries or Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures 17 n.5, at http://www.oecd.org/fatf/pdf/NCCT2000_en.pdf (June 22, 2000) (citing “those [standards] established by the Basle Committee on Banking Supervision, the International Organisation of Securities Commissions, the International Association of Insurance Supervisors, the International Accounting Standards Committee and the FATF”)(emphasis added).
15 OECD, Towards Global Tax Co-operation: Report to the 2000 Ministerial Council Meeting and Recommendations by the Committee on Fiscal Affairs 21 ¶ 27, at http://www.oecd.org//daf/fa/harm_tax/Report_En.pdf (June 26, 2000) [hereinafter OECD, Towards Global Tax Co-operation].
16 I will ignore the legal distinction between the threat of sanctions and the use of sanctions because I am here concerned with the ultimate availability of those sanctions.
17 See Monetary & Exchange Affairs Department, IMF, Offshore Financial Centers, IMF Background Paper, at http://www.imf.org/external/np/mae/oshore/2000/ eng/back.htm (June 23, 2000).
18 The IMF has a total of 182 members—as compared with thirty-one and twenty-nine, respectively. IMF, IMF Member’s Quotas and Voting Power, and IMF Governors n.1, at http://www.imf.org/external/np/sec/memdir/members.htm#total (Dec. 11, 2000).
19 See FSF, Report of the Working Group on Offshore Centers 10 n.7, at http://www.fsforum.org/Reports/RepOFC.pdf (Apr. 5, 2000); see also, Monetary & Exchange Affairs Department, IMF, Offshore Financial Centers: The Role of the IMF, at http://www.imf.org/external/np/mae/oshore/2000/eng/role.htm (June 23, 2000).
20 J. Drage, Countering Money Laundering: The Response of the Financial Sector, in Money Laundering 60, 65 (Hector L. MacQueen ed., 1993).
21 The member countries are: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, China, Iceland, Ireland, Italy, Japan, Luxembourg, Mexico, the Kingdom of the Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, Turkey, the United Kingdom, and the United States. The international organizations are the European Commission and the Gulf Co-operation Council.
22 OECD, What is OECD, at http://www.oecd.org/about/general/index.htm (last modified Feb. 2, 2001).
23 These include Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Korea, Luxembourg, Mexico, The Netherlands, New Zealand, Norway, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States. The Commission of the European Communities also takes part in the work of the OECD. See Convention on the Organisation for Economic Co-operation and Development opened for signature Dec. 14, 1960, art. 13, 888 U.N.T.S. 180, available at http://www.oecd.org/about/origins/conven-tion/conventn.htm.
24 Members include Australia, Bangladesh, Chinese Taipei, Fiji, Hong Kong, India, Indonesia, Japan, Malaysia, New Zealand, Pakistan, People’s Republic of China, Republic of Korea, Philippines, Samoa, Singapore, Sri Lanka, Thailand, United States, and Vanuatu.
25 Members include Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Costa Rica, Dominican Republic, Grenada, Guatemala, Guyana, Jamaica, Montserrat, Netherland Antilles, Nicaragua, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Caucus Islands, and Venezuela.
26 There are twenty-two members including Andorra, Cyprus, Liechtenstein, Malta, Russian Federation, and San Marino.
27 There are thirty-five members including Bahamas, Dominica, Panama, St. Kitts and Nevis, and St. Vincent and the Grenadines.
28 See OECD Report, supra note 12, at 11 ¶ 18.
29 The FSF identifies eight as cooperative (Dublin, Ireland; Guernsey; Hong Kong, SAR; Isle of Man; Jersey; Luxembourg; Singapore; Switzerland); nine as less cooperative (Andorra; Bahrain; Barbados; Bermuda; Gibraltar; Labuan, Malaysia; Macao; SAR; Malta; Monaco), and twenty-five as the least cooperative jurisdictions (Anguilla; Antigua and Barbuda; Aruba; Bahamas; Belize; British Virgin Islands; Cayman Islands; Cook Islands; Costa Rica; Cyprus; Lebanon; Liechtenstein; Marshall Islands; Mauritius; Nauru; Netherlands Antilles; Niue; Panama; Samoa; Seychelles; St. Kitts and Nevis; St. Lucia; St. Vincent and Grenadines; Turks and Caucus; Vanuatu). This provides a total of thirty-four that could be described as uncooperative. See Monetary & Exchange Affairs Department, IMF, Offshore Financial Centers: The Role of the IMF, supra note 19, tbl. 2.
30 The Bahamas, Cayman Islands, the Cook Islands, Dominica, the Grenadines, Israel, Lebanon, Liechtenstein, the Marshall Islands, Nauru, Niue, Panama, the Philippines, St. Kitts and Nevis, and St. Vincent.
31 Antigua and Barbuda, Guernsey, Mauritius, and Samoa. See FATF, Review to Identify Non-Cooperative Countries and Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures, supra note 14, ¶¶ 11, 29, 41, & 56. See also All Havens, supra note 1, at 114 (explaining “The government [of Antigua] soon tightened its laws, thus avoiding inclusion on last month’s FATF list (though it was on the other two).”) .
32 See OECD, Towards Global Tax Co-operation, supra note 15, at 17.
33 Id. at 17 ¶ 17; see also, OECD, Six Jurisdictions Join OECD Members in Committing to Eliminate Harmful Tax Practices, at http://www.oecd.org/media/release/ nw00–62a.htm (June 19, 2000).
34 OECD, Towards Global Tax Co-operation, supra note 15, at 17 ¶ 17.
35 The OECD “invites Member countries to refrain from using the names of jurisdictions in paragraph 17 to identify jurisdictions against which new or enhanced defensive measures should be applied, but rather to use the List of Uncooperative Jurisdictions for this purpose. The Forum recognizes that Member countries retain the right to apply, or not apply, defensive measures unilaterally to any jurisdiction.” Id. at 26 ¶ 38.
36 Id. at 18 ¶ 19.
37 Id. at 19 ¶ 22.
38 The Bahamas, the Cook Islands, the Marshall Islands, Niue, Nauru, Panama, Liechtenstein St. Kitts-Nevis, and St. Vincent and the Grenadines.
39 See supra note 29.
40 FATF, Review to Identify Non-Cooperative Countries or Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures, supra note 14.
41 Id. at 1 ¶ 5.
42 Id.
43 FATF, The Forty Recommendations 2 ¶ 3, at http://www.oecd.org/fatf/40Recs_ en.htm (June 28, 1996).
44 FATF, Review to Identify Non-Cooperative Countries and Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures, supra note 14, at 1 ¶ 1.
45 William C. Gilmore, Dirty Money: The Evolution of Money Laundering Countermeasures 80 (2d ed. 1999) [hereinafter Dirty Money]; see also Drage, supra note 20, at 64-65.
46 FATF, Review to Identify Non-Cooperative Countries or Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures, supra note 14, at 17 n.5.
47 FATF, Report on Non-Cooperative Countries and Territories, supra note 6, Annex.
48 OECD, Towards Global Tax Co-operation, supra note 15.
49 OECD Report, supra note 12, at 53 ¶ 142.
50 Id. at 7 ¶ 1.
51 OECD, New Chair of the OECD’s Committee for Fiscal Affairs, at http://www.oecd.org/media/release/nw00–07a.htm (Jan. 27, 2000).
52 OECD Report, supra note 12, at 54 ¶ 145.
53 Id. at 7 ¶ 1.
54 Id. at 7 ¶ 3.
55 OECD, Towards Global Tax Co-operation, supra note 15, at 25 ¶ 35.
56 Id. at 26 ¶ 36.
57 FATF, Report on Non-Cooperative Countries and Territories, supra note 6, at 8 ¶ 54 (emphasis added).
58 All Havens, supra note 1, at 114; CIA, The World Factbook 2000, at 19 (describing the proportion of Antigua’s economy that is composed of financial services), available at http://www.odci.gov/cia/publications/factbook/index.html.
59 All Havens, supra note 1, 114 (citing French finance minister Laurent Fabius).
60 See generally Comstock, supra note 7, at 166–73. Although Comstock argues that tariffs should be used against states that refuse to become parties to international money laundering agreements, he acknowledges that such tariffs ultimately could be found to violate trade obligations under GATT and GATS. Id. at 172.
61 See Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331, available at http://www.un.org/law/ilc/texts/treaties.htm.
62 It is unnecessary to determine to what extent the suggested measures constitute breaches under international law and, furthermore, it is not the goal of this Article to analyze to what extent the various acts threatened by the OECD and FATF would constitute illegal sanctions under international law. Rather, the goal is to assess the availability of sanctions under international law to OECD and FATF member states. If sanctions are not available, then a further analysis of which of the acts constitute sanctions would be necessary. That inquiry exceeds the scope of this Article.
63 Draft Articles on State Responsibility, supra note 12. It should be noted that the article is titled Countermeasures in Respect of an Internationally Wrongful Act, but to avoid confusing the concepts contained therein with that of counter-measures against money laundering, I will use the term “sanction” to describe the coercive measures taken by Subject States against Object States. Id.
64 See supra text accompanying note 12.
65 UNODCCP, Financial Havens, Banking Secrecy and Money-Laundering 59 (1998).
66 These terms are loosely borrowed from Rosalyn Higgins. Consensus actually could be broader than custom so far as to include general principles, but this Article limits the analysis to custom. See generally Rosalyn Higgins, Problems and Process: International Law and How We Use It 16 (1999).
67 Statute of the International Court of Justice, June 26, 1945, at http://www.icj-cij.org/icjwww/ibasicdocuments/ibasictext/ibasicstatute.htm (last visited Apr. 7, 2001).
68 Strictly speaking, in the latter case, the 25 Criteria would not be enforceable except by derivation from other enforceable obligations.
69 Higgins, supra note 66, at 16.
70 Restatement (Third) of the Law of Foreign Relations Law § 301(1) (1986) [hereinafter Restatement (Third)]. There are a number of names for international agreements but the most common are treaties and conventions. See id. at cmt. a.
71 Id. § 102 cmt. g.
72 Id. § 312(1).
73 Id. § 312 cmt. c; but see id. at cmt. d (describing how ratification subsequent to signature or accession is more common means of expressing consent).
74 Coincidence is actually just a re-categorization of some traditional sources.
75 Vienna Convention on the Law of Treaties, supra note 61, art. 34; see also Restatement (Third), supra note 70, § 324(1).
76 That is true so far as the OECD or FATF member state which is invoking sanctions is privy to the parallel instrument.
77 Nuclear Tests Case (Austl. v. Fr.), 1974 I.C.J. 253, 267, ¶ 43.
78 Restatement (Third), supra note 70, § 301, cmt. c.
79 United States. v. McCaskey, 9 F.3d 368, 378 (5th Cir. 1993).
80 Nuclear Tests Case, 1974 I.C.J. at 269-70, ¶ 51.
81 Malcolm N. Shaw, International Law 634 (4th ed. 1997).
82 See Bruce Zagaris & Sheila M. Castilla, Constructing an International Financial Enforcement Subregime: The Implementation of Anti-Money-Laundering Policy, 19 Brook. J. Int’l L. 871, 879 (1993).
83 D.J. Harris, Cases and Materials on International Law 65 n.1 (4th ed. 1991).
84 See Higgins, supra note 66, at 16
85 See Statute of the International Court of Justice, art. 38(1). General principles are typically limited to procedural concepts. See also Harris, supra note 83.
86 North Sea Continental Shelf Cases (F.R.G. v. Den.; F.R.G. v. Neth.) 1969 I.C.J. 4, 43-44 ¶¶ 74–78. For consideration of the circularity of this requirement, see Higgins, supra note 66, at 18–19; see also Restatement (Third), supra note 70, § 102, Reporter’s Note 2.
87 North Sea Continental Shelf Cases, 1969 I.C.J. at 44 ¶ 77.
88 See id. at 42¶ 73 (emphasis added). The fact that the interests of the Object States are specifically effected is obvious. Their own practices as manifest by their domestic and international acts are, therefore, critical to the expansion of any rule of custom.
89 Restatement (Third), supra note 70, § 102, Reporter’s Note 2.
90 Id. § 102 cmt. c.
91 Id. § 102 cmt. d. (citing Norwegian Fisheries Case).
92 See supra section C on Brief Consideration of Obligations: Incurrence, Breach, and Sanctions.
93 See id.
94 It could be argued that consent could be demonstrated indirectly by the acceptance of the Forty, but this argument will be reserved for the topic of Coincidence.
95 See supra note 25.
96 Press Release, 106/2000 CARICOM Response to G7 Charges, supra note 9.
97 See CFATF, Memorandum of Understanding, at http://www.cfatf.org/eng/memo (Oct. 10, 1996); see also APG, Secretariat of the Asia/Pacific Group on Money Laundering, Factsheet, at http://www.oecd.org./fatf/pdf/APGFact-2000_en.pdf (May 2000).
98 FATF, Other International Anti-Money Laundering Initiatives, at http://www.oecd.org./fatf/Initiatives_en.htm (last modified Sept. 5, 2000). The EGMONT Group is not a binding body. It is introduced in this section for the sake of coherence. Furthermore, although the FATF mentions the Basle Committee, it is here included because its membership does not include any Object States.
99 Arguably, the Forty Recommendations could fit under parallel obligations, but because of the fact that there is no privity between Subject and Object States, it is more appropriate to consider them under Unilateral Declarations.
100 See United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances, opened for signature Dec. 20, 1988, 1696 U.N.T.S. 449, available at http://www.incb.org/e/conv/1988/index.htm (last visited Apr. 6, 2001).
101 Dirty Money, supra note 45, at 51.
102 United Nations Office for Drug Control and Crime Prevention, Monthly Status of Treaty Adherence, at http://www.odccp.org/document_1999–11–03_1.html (Mar. 1, 2001).
103 Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, Council of Europe, opened for signature Aug. 11, 1990, Europ. T.S. No. 141 (entered into force Jan. 9, 1990), available at http://conventions.coe.int/treaty/en/Treaties/Html/ 141.htm.
104 See Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime, Aug. 8, 1990, at http://conventions.coe.int/treaty/EN/cadreprincipal.htm (last visited Apr. 6, 2001). I will presume, for the sake of argument, that Liechtenstein would be bound by estoppel if not legally bound.
105 Dirty Money, supra note 45, at 188.
106 FATF, The Egmont Group of Financial Intelligence Units, at http://www. oecd.org./fatf/Ctry-orgpages/org-egmont_en.htm (last modified Aug. 17, 2000).
107 See generally FATF, Review to Identify Non-Cooperative Countries or Territories: Increasing the Worldwide Effectiveness of Anti-Money Laundering Measures, supra note 14 (identifying Panama, Monaco, Isle of Man, Guernsey, Cyprus, British Virgin Islands, and Bermuda).
108 Since this argument is simply a reformation of that made above under Consent, I will not reiterate it.
109 Dirty Money, supra note 45, at 84.
110 Id. at 82 (quoting remarks made by the Head of Financial Affairs Division of the OECD).
111 FATF, More About the FATF and Its Work, at http://www.oecd.org/fatf/About-FATF_en.htm (last modified Nov. 21, 2000).
112 FATF, Basic Facts About Money Laundering: What are the Forty Recommendations, at http://www.oecd.org./fatf/MLaundering_en.htm (last modified Sept. 4, 2000).
113 APG, The 1998 Terms of Reference of the Asia/Pacific Group on Money Laundering, (Mar. 10--12, 1998) reprinted in Dirty Money, supra note 45, app. IX at 338.
114 Id. at 339.
115 Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures, at http://www.cm.coe.int/dec/1997/600/x17.htm (Sept. 9-10, 1997).
116 Dirty Money, supra note 45, at 187.
117 CFATF, Memorandum of Understanding, Art. 1., at http://www.cfatf.org/eng/ memo (Oct. 10, 1996).
118 CFATF, Kingston Declaration on Money Laundering, at http://www.cfatf.org/ eng (Nov. 5–6, 1992).
119 CFATF, Memorandum of Understanding, supra note 117. However, in July 2000, the Caribbean Community, whose membership largely overlaps with the CFATF, did reassert its commitment to fighting money laundering even though this reassertion lacks the legal nature of the Memorandum. See Press Release, CARICOM, Communique Issued On The Conclusion of the 21st Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM) (July 6, 2000), at http://www.caricom.org/pres91_00. htm.
120 APG, Money Laundering: The International and Regional Response 13, at http://www.oecd.org./fatf/pdf/APGBack-1998_en.pdf (May 1998) (first, identifying the Forty Recommendations as “an international standard for anti-money laundering measures”; then defining one of its purposes as to “[e]ncourage the adoption, throughout the region, of international anti-money laundering standards.”).
121 Select Committee of Experts on the Evaluation of Anti-Money Laundering Measures, supra note 115.
122 Israel and Lebanon are also NCCs that are not members of any of these organizations but are outside the sample.
123 The simple fact that the FATF identifies only fifteen countries while the OECD identifies forty-two goes a long way to demonstrate the relative breadth of state practice in the two initiatives.
124 Press Release, 106/2000 CARICOM Response to G7 Charges (Aug. 11, 2000), at http://www2.carib-export.com.
125 See Restatement (Third), supra note 70, §102 cmt. d (citing Norwegian Fisheries Case).
126 The focus of this examination is the legal force of the 25 Criteria, not the Forty Recommendations. Because of the discrepancies between the Forty and the 25, explored below, a more thorough analysis of the existence of legal obligations to the Forty Recommendations is not necessary.
127 Zagaris & Castilla, supra note 82, at 879.
128 See CFATF, Memorandum of Understanding, supra note 97.
129 The initiative is not limited to the member countries, but for the sake of simplicity, I only consider the rights of member states.
130 See supra notes 21-23.
131 According to the June report, jurisdictions were “asked to submit information pertinent to the application of the tax haven criteria in the context of their facts and circumstances . . . [And] the full participation of each jurisdiction was invited and encouraged.” OECD, Towards Global Tax Co-operation, supra note 15, at 10 ¶ 8. It could be argued that the Tax Haven Countries have implicitly accepted the 4 Criteria by such participation. However, since the report fails to indicate which jurisdictions, if any, participated, it is impossible to explore the possibility of such implicit consent.
132 See Press Release, 106/2000 CARICOM Response to G7 Charges, supra note 124.
133 OECD, Improving Access to Bank Information for Tax Purposes, Mar. 24, 2000.
134 Id. at 4 (emphasis added).
135 OECD Report, supra note 12, at 54 ¶ 143.
136 Id. at 66.
137 Id. at 38 ¶ 90.
138 Id. at 53 ¶ 140.
139 OECD Convention on Mutual Administrative Assistance in Tax Matters, opened to signature Jan. 25, 1988, Europ. T.S. No. 127, 27 I.L.M. 1160 (1988).
140 OECD, Model Tax Convention on Income and Capital (1992).
141 See Bill Gilmore, Money Laundering and International Tax Cooperation: Exploring the Interface, in Tax Competition: Broadening the Debate 26, 35 (Eur. Fin. F. 2000).
142 Committee on Fiscal Affairs, OECD, Tax Information Exchange Between OECD Member Countries: A Survey of Current Practices 10–11 ¶ 6 (Feb. 22, 1994).
143 See Additional Protocol to the European Convention on Mutual Assistance in Criminal Matters, Mar. 17, 1978, at http://conventions.coe.int/treaty/EN/ cadreprincipal.htm (last visited Apr. 23, 2001).
144 To deal with non-criminal tax matters, the Council of the European Communities issued Directive 77/799/CEE. Though originally limited to the field of direct taxation, this Directive has expanded to include administrative assistance in matters related to direct and indirect taxation. The Nordic Countries have further implemented regionally the Nordic Convention on Mutual Assistance in Tax Matters, which has been in force since 1991. See generally Committee on Fiscal Affairs, OECD, Tax Information Exchange Between OECD Member Countries: A Survey of Current Practices, supra note 142, at 11 et seq.
145 Id. at 11 ¶ 7.
146 Denmark, Finland, Iceland, the Netherlands, Norway, Poland, Sweden, and the US. See Convention on Mutyual Administrative Assistance in Tax Matters, Jan. 25, 1988, at http://conventions.coe.int/treaty/EN/cadreprincipal.htm (last visited Apr. 6, 2001).
147 See supra notes 95–97. The criteria are not binding either by consent or consensus, but the category of Consensus is still viable because of the possibility of parallel customary obligations.
148 The Cook Islands are observers to the APG. But as described supra notes 113–114 this is not strictly speaking a binding obligation, and is certainly not for observers.
149 FATF, The Forty Recommendations, supra note 43, Recommendation 11.
150 FATF, Report on Non-Cooperative Countries and Territories, supra note 6, at 3 n.7.
151 Even if we presume that the customer identification obligations were intended to apply to shell companies, they still meet the same obstacles that were described concerning Criterion 7.
152 All five relevant members of the OAS have been cited for some violation, but the OAS Model makes no reference to the identification of legal or business entities outside the context of the obligations of financial institutions keeping records of clients’ identities.
153 Liechtenstein only partially meets this criterion, so the Council of Europe initiative is of little consequence.
154 See supra notes 118–121 and accompanying text.
155 The seven are the Bahamas, Cayman Islands, Cook Islands, Liechtenstein, Panama, St. Kitts and Nevis, and St. Vincent and the Grenadines.
156 The four are the Bahamas, Panama, St. Kitts and Nevis, and St. Vincent and the Grenadines.
157 CFATF, Revised CFATF Recommendations, at http://www.cfatf.org/eng (last visited Apr. 4, 2001). It is interesting to note, however, that Recommendation 19 goes further to say that countries with insufficient resources ought to receive aid from other countries. See id.
158 Model Regulations Concerning Laundering Offenses Connected to Illicit Drug Trafficking and Other Serious Offenses, Recommendation no. 3, at http:// www.cicad.oas.org/en/legal_development/legal-regulations-money.htm (Oct. 1998).
159 See id. at Recommendation no. 1.
160 See FATF, Other International Anti-Money Laundering Initiatives, at http://www.oecd.org./fatf/Initiatives_en.htm (last visited Apr. 4, 2001).
161 See OECD, Towards Global Tax Co-operation, supra note 15, at 22 ¶ 29.
162 See Gabriel Stein, Economics and Tax Harmonisation, in Tax Competition: Broadening the Debate, supra note 141, at 1, 1 (citing OECD statistics).
163 The former coincides with Section A(iv): Excessive secrecy provisions regarding financial institutions, Criteria 8 and 9; Section A(iii): Inadequate customer identification requirements for financial institutions, Criteria 4--7. See FATF, Report of the FATF on Non-Cooperative Countries and Territories, supra note 6, Annex, Criteria Defining Non-cooperative Countries or Territories, at 10. There is also the possibility that the OECD’s concern about customer identification could coincide with the FATF’s concern about beneficial ownership which is first discussed in the context of the owners of financial institutions and the customers of such institutions, also under Loopholes in Financial Regulations, (Criteria 2, 3, 5, and 7), and then later discussed in the context of ownership of business and legal entities, under the title of Obstacles Raised by Other Regulatory Requirements. (Criteria 13 and 14.) The concept of beneficial ownership is prevalent in the area of tax enforcement. However, the OECD does not expressly describe it as a concern, nor does the 2000 Report mention the concept, so there is no reason to impute this concern to the OECD Criteria.
164 Ignoring the late date of the adoption of Comment to Article 15.
165 OECD, Model Tax Convention on Income and Capital art. 26 & Commentary (Reservations) ¶ 24(1992).
166 Id. art. 26 & Commentary (Observations) ¶ 22.
167 Government of India v. Taylor, 1955 A.C. 491, 1 All ER 292 (H.L. 1955).
168 Attorney-General for Canada v. William Schulze & Co., [1901] 9 Scots L. T. Reps. 4 (Outer House).
169 OECD Report, supra note 12, at 51 ¶ 136.
170 See id. at 24 ¶ 54.
171 Stein, supra note 162, at 10.
172 Committee on Fiscal Affairs, OECD, Tax Information Exchange Between OECD Member Countries: A Survey of Current Practices, supra note 142, at 18 ¶ 22. Note that the US has expressed the view that the Article should apply to all taxes imposed by a Contracting State, not only taxes covered by the Convention.
173 Id. at 26 ¶¶ 47–48.
174 See OECD Convention on Mutual Administrative Assistance in Tax Matters, supra note 139, Preamble.
175 United Kingdom Inland Revenue, Exchange of Information on Direct Taxation Within the European Union, Appendix I, Mutual Assistance in the Field of Direct Taxation: a Coordinated Audit by 12 Supreme Audit Institutions of Member States of the European Union (Nov. 5 1997), at 17–18 tbl. 6.
176 See Restatement (Third), supra note 70, § 905.
177 CARICOM, Statement on OECD Harmful Tax Policy (July 6, 2000), available at http://www.caricom.org (last visited Apr. 6, 2001).
178 See Reuven S. Avi-Yonah, Globalization, Tax Competition, and the Fiscal Crisis of the Welfare State, 113 Harv. L. Rev. 1573, 1665 (2000).