In 2009, leaders of the world's 20 most powerful nations gave the impression that offshore tax evasion would no longer be tolerated. The London G20 threatened tax havens with economic sanctions unless they agreed to exchange bank information. High-level international pressure forced commitments from all tax havens to cooperate. The G20 declared: “the era of bank secrecy is over.”

Three years later, bank secrecy is not over and many tax havens are thriving. In fact, the fight against offshore tax evasion has backfired. Information exchange agreements — the main policy tool that G20 countries use to curb tax evasion — have proven to be largely ineffective.

Each year, the UK's Her Majesty's Revenue and Customs automatically receives millions of reports from British banks about the amount their customers earnt in interest and dividends. This information makes tax evasion via UK bank accounts very hard.

Yet, despite the many tax information exchange agreements concluded in the past years with tax havens, HMRC receives at most a few hundred such reports from them. Tax havens, in fact, do not generally provide information automatically, but only “upon request”.

Under the existing UK-Swiss agreement, for instance, HMRC can request information from Swiss authorities only if they have well-documented suspicion that a UK resident is evading taxes. But this kind of information is almost impossible to come by.

Since the London G20 summit, tax havens have signed more than 700 “upon request” information exchange agreements. But it is arguable whether these arrangements have achieved anything. After all, there is roughly as much money today in tax havens as three years ago. Bank deposits held by foreigners in tax havens amounted to around $2,700 billion at the eve of the G20 London summit, according to the Bank for International Settlements. This figure has slightly increased today. So since the London G20 there has been no substantial repatriation of funds onshore.

Indeed some tax evaders have reacted to the new agreements by simply transferring their funds to tax havens that have no agreement with their home country. And since no country has agreements with all tax havens, there remains ample scope for placing assets in safe and secret location. Tax evaders, our research suggests, quite extensively exploit the loopholes in the network of information exchange agreements.

So offshore centres that have signed many agreements have experienced a significant exodus of cash. Foreign deposits in Jersey, for instance, decreased by around 60 percent between January 2008 and July 2011. But offshore centres that have signed relatively few agreements have seen a significant influx of funds. Over the same period, foreign deposits in Hong Kong increased by more than 40 percent. Overall, this has been a zero-sum game: at the global level, nothing much has changed.

There has certainly been some qualitative progress in the fight against tax evasion — before 2009, many tax havens refused to sign information exchange agreement altogether. Quantitatively speaking, however, progress is very modest — far too modest to justify any celebration of “the end of bank secrecy.”

Yet there exist simple, practical ways to significantly improve tax collection. First, G20 leaders should urge tax havens to sign treaties with all countries: a truly global agreement would prevent tax evaders from transferring their funds from haven to haven.

More fundamentally, the G20 needs to rethink its information exchange standard — and drastically strengthen it. “Upon request” information exchange does not work well. Evading taxes through offshore bank accounts remains easy. Tax specialists widely agree that automatic exchange of information is the most effective solution to curb tax evasion. It would allow tax authorities to obtain comprehensive data about income earned by domestic residents in foreign banks. Automatic reporting of bank information exists within most developed countries — as well as between most EU countries. It does not pose any great practical difficulties.

The European Union pushes for automatic exchange of information. Why doesn't the G20 do so as well? This would undoubtedly have much larger consequences on tax revenues than the current flawed policy.

This is astonishingly important work. It proves that what the Tax Justice Network has called for - automatic information exchange - is what is needed to beat secrecy jurisdictions.

Now will the OECD respond?

NB: Niels Johannesen and Gabriel Zucman are academics from the University of Copenhagen and the Paris School of Economics. Their paper, The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown is available here.