The Reserve Bank on Tuesday said it would deal with the problem of black money being hidden in tax havens by continuously updating its regulations in line with the G-20 guidelines on strengthening transparency in cross-border movement of capital.
“The Reserve Bank would continue to incorporate in its regulations latest international best practices (to deal with tax havens and non-cooperative jurisdictions),” the central bank said in its response to the recommendations of the G-20 Working Group on Enhancing Sound Regulation and Strengthening Transparency.
The working group of G-20 nations, which include developed and developing countries, underlined the need for increased disclosure requirements on the part of taxpayers and financial institutions to report transactions involving non-cooperative jurisdictions.
The recently concluded G-20 summit in London pledged “to take action against non-cooperative jurisdictions including tax havens.”
The G-20 communique said, “We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over.”
Following the G-20 declaration, Organisation for Economic Cooperation and Development (OECD) came out with a list of countries which did not commit to the internationally agreed tax standards.
The RBI said that its guidelines on Anti Money Laundering (AML) and Combating of Financing of Terrorism (CFT) were in consonance with the Financial Action Task Force (FATF), an inter-governmental body on Anti-Money Laundering.
Moreover, it added, banks have been advised to be extremely cautions while continuing relationships with banks located in countries with poor know-your-customer (KYC) standards and also nations which have been identified as non-cooperative in the fight against money laundering and terrorist financing.