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EU urges Luxembourg, Austria to open up bank secrecy

The EU’s Tax Commissioner urged Luxembourg and Austria on Friday to abandon opposition to moves to open up bank secrecy, against a backdrop of a cross-border campaign to track illicit funds.

The Commissioner Algirdas Semeta needs approval from finance ministers from all 28 European Union for the automatic exchange of information on personal savings accounts by the end of 2013.

“The era of banking secrecy is coming to an end,” Semeta told the ministers.

He gave as examples decisions by Switzerland, Liechtenstein and Singapore to adopt agreements with the United States, and a decision by Switzerland to sign standards laid down by the Organisation for Economic Co-operation and Development.

Austria and Luxembourg have long blocked or slowed progress on what leading countries in the G20 group, and European Union leaders, see as a key step in curbing tax evasion.

On the eve of talks which would also examine a related push on money-laundering, the Luxembourg government argued that the EU risked handing its closest rivals a competitive advantage.

Luxembourg, with an economy heavily dependent on financial facilities for foreigners, argued that the EU should first nail down equivalent deals with several neighbouring tax havens.

The same standards must be applied “by all the major financial centres in order to avoid a flight of capital out of the EU,” the Luxembourg government said.

It warned that insufficient progress had been made by European Commission negotiations with non-EU Switzerland, Liechtenstein, Monaco, Andorra and San Marino.

But Semeta insisted: “To Luxembourg and Austria in particular, I say: you need to recognise the changes that have occurred since you first spoke of a level playing-field.”

He said: “The world is already moving. And the EU must not be left behind.”

Ministers need to legislate now for the automatic exchange of information on personal savings accounts “to send a clear signal to our market operators and negotiating partners” that the EU is serious about fighting tax fraud, Semeta said.

Luxembourg has indicated it will accept this principle by 2015, but only on condition these side deals with the Swiss and others are in place.

EU leaders set an end-2013 deadline for agreement at a May summit.

Oxfam has estimated that more than $12 trillion (9.0 trillion euros) is hidden in EU-anchored tax havens — with Britain and its dependencies alone, from Guernsey to Grand Cayman, accounting for more than half.