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ALOFI, Niue (April 1, 2002 – Niue Economic Review/Reuters)---The OECD is removing the Cook Islands from its proposed blacklist of uncooperative tax havens after the tiny Pacific nation pledged to improve its tax and regulatory systems.

However, Niue appears to remain in the OECD black book despite the country's promise to repeal offshore banking legislation on March 7. The legislation was never tabled in the Assembly because of alleged legal threats from a Niue registered bank operating in Greece.

An OECD spokesperson would not reveal Niue's current status as of last week.

Sources say the OECD may release the blacklist within days.

Being dropped from the list means the Cook Islands avoids sanctions, which would have kicked in next year.

Nauru, Niue and Vanuatu have rejected the OECD demands.

They called instead for the OECD to clean up its home turf first, saying reform was needed in Luxembourg, Switzerland and Singapore.

The Cook Islands, made up of two dozen coral and volcanic islands 3,500 kilometers (2,100 miles) northeast of New Zealand, is an independent state, although its 21,000 inhabitants have citizenship rights in New Zealand. It passed legislation in 1982 making it an international tax haven.

Niue, which is self-governing in free association with New Zealand, passed international banking and business company registration laws in 1994. The tiny country of 1,700 residents receives about $2 million from offshore transactions each year.

Mathilda Urhle, commissioner of the Cook Island's Offshore Financial Services, said it was possible government revenues earned from the six trustee companies licensed to operate in the Cook Islands might decline.

"It's something that the government is prepared to take a hit on . . . We don't want any business that does not comply with the regulatory framework that the Cook Islands is trying to improve."

Overseas financial services contributed about 8 percent of the islands' gross domestic product, including about $2.8 million in direct income last year, she said.

Under the new rules, financial institutions in the Cook Islands are required to have greater knowledge of their clients, their backers and the real beneficiaries of accounts.

The institutions will also have to make their own background checks on clients rather than rely on checks carried out by other institutions.

For additional reports from the Niue Economic Review, go to PACIFIC ISLANDS REPORT News/Information Links: Magazines/Journals/Niue Economic Review.

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