By Lisa Jucca
ZURICH (Reuters) - Black-listed tax havens Andorra and Liechtenstein on Thursday relaxed their strict bank secrecy rules in the face of a global crackdown that looks set to force top offshore center Switzerland to open up.
The moves come as finance ministers from the G20 group of developed and emerging countries prepare to meet in Britain from Friday ahead of a summit in London on April 2 that is expected to seek ways to fight offshore tax evasion.
Other offshore centers, whose banking industries have thrived under the blanket of privacy laws to attract foreign wealth, have also made concessions in recent weeks, as the financial crisis prompts cash-strapped western governments to be more aggressive against tax evaders.
The tiny Alpine principality of Liechtenstein said on Thursday it would comply with international tax and data sharing standards set up by the Organization for Economic Cooperation and Development (OECD), by-passing neighboring Switzerland in the quest for more tax transparency.
"I'm quite sure Switzerland will take similar steps in the near future," Crown Prince Alois von und zu Liechtenstein said.
Andorra, a bank secrecy stronghold nestled between France and Spain, said also on Thursday that it was planning to relax bank secrecy to be removed from an OECD blacklist. It planned to pass a law to this end by November.
The OECD list includes Liechtenstein, Andorra and Monaco, but France and Germany want others added.
PRESSURE MOUNTS ON SWITZERLAND
Switzerland, the world's biggest offshore banking center with estimated assets under management of about $2 trillion, is under pressure from a U.S. tax fraud investigation into services offered by UBS
The country is mulling a revision of its banking secrecy laws. It has set up a committee of experts to come forward with proposals on more international tax cooperation in view of the G20 meeting and will discuss the topic at a meeting on Friday.
Asked about the Liechtenstein move, Justice Minister Eveline Widmer-Schlumpf told Swiss television on Thursday the government was working on a review of bank secrecy rules and expected to present its ideas "shortly".
France and Germany, two G20 members, last week proposed new steps against non-cooperative tax centres and called for a revised set of criteria to draw up a new list to determine whether Switzerland should be added to the list.
A 2008 report by the OECD lists Switzerland, Austria, Luxembourg, Liechtenstein, Panama, Singapore and others as states where it deems bank secrecy rules undesirable. Estimates suggest more than $11 trillion may be stored in tax havens.
Any move by Switzerland will be watched closely by other financial centres and by the $7 trillion wealth management industry, which has been operating out of the many offshore centers spread around the world.
Liechtenstein, whose banks have suffered big withdrawals since Germany launched a probe last year into 1,000 citizens suspected of dodging tax by parking money there, said its move could serve as an example to other nations under pressure.
"As the current recession requires huge stimulus packages from governments, pressure against tax-haven countries and banking secrecy is increasing," said Nicolas Michellod, an analyst at Celent, a research and consulting firm.
"This is not a surprise that small countries like Liechtenstein are the first to be under siege," he said.
Other offshore centers have already taken steps to improve tax co-operation.
The island of Jersey signed an agreement with Britain early this week aimed at fighting tax evasion.
Belgium, one of three European Union countries that still retain bank secrecy, has said it will move to automatic exchange of tax information.
Austria, another bank secrecy hub, will not go as far as Belgium but has indicated it is willing to seek ways to offer more tax cooperation.
Luxembourg is still defending its banking secrecy but met Austria and Switzerland recently to seek ways to address the current international debate on tax.
($1=1.158 Swiss Franc)
(Additional reporting by Sam Cage; Writing by Emma Thomasson)
