The group of 20 (G-20) economies threatened to penalise havens that do not share information on their banking clients after the leak of the Panama Papers provoked a global uproar over tax evasion.

The G-20 will consider “defensive measures” against financial centres and jurisdictions that do not commit to an international standard requiring the exchange of information about account holders, the group’s Finance Ministers and central bankers said in a statement after meeting in Washington in mid-April.

The group said it would work with the Organisation for Economic Cooperation and Development (OECD) to come up with criteria for identifying “non-cooperative jurisdictions” by July, adding that improving the transparency on who controls legal tax entities is vital to the international financial system.

The leak this month of offshore financial records, known as the Panama Papers, exposing billions of dollars in assets hidden in tax havens around the world, has set off a global furore. Seeking to contain the fallout from the scandal – implicating everyone from world leaders to pro- minent businesspeople – some governments have pledged to crack down on tax evasion and money laundering to help regain public trust.

“We welcome some kind of enforcement integrated into the multilateral framework for information exchange,” said Clark Gascoigne, deputy director of the Financial Accountability and Corporate Transparency Coalition, which includes the AFL-CIO and Oxfam America. “Without a stick, it’s not going to work. You need some sort of enforcement mechanism, so this will encourage other countries to comply. So this is a positive step.”

Canadian Finance Minister Bill Morneau told reporters that “I have a high level of confidence that we won’t need to get there” in imposing actual penalties.

The statement refers to a global standard deve- loped by the OECD and endorsed by the G-20. The standard calls on tax jurisdictions to share information on an annual basis about their banking systems, including the names and tax identification numbers of account holders.

The language on tax and financial trans- parency amounts to a victory for major European nations, including the UK, France and Germany, which a day earlier agreed to automatically share information on the ultimate owners of com- panies and trusts.

China put up the most resistance to the tax- related part of the G-20 statement, and the US was also reluctant, according to two G-20 officials familiar with the talks; one person said China was the main reason why the statement did not single out Panama. The officials asked not to be identified because the meetings were private.

Chinese Finance Minister Lou Jiwei, asked at a press briefing for more details on possible penalties for noncooperative tax havens, reiterated the G-20 statement without elaborating.

“With the Americans, there’s always a bright side and a dark side. They have helped us a lot to move things forward,” German Finance Minister Wolfgang Schaeuble told reporters, citing the automatic exchange of account information. “The Americans have a slightly different system and it’s very difficult to win majorities in the US Congress to adapt to the international system.”

US Treasury Secretary Jacob Lew said at a press briefing that the G-20 made a “very strong statement in the communique on our collective view that we need to act to deal with tax shelters and the problem of an international tax system permitting havens to develop”.

In an April 11 op-ed column in the New York Times, Panama’s President Juan Carlos Varela said his government is committed to the automatic exchange of financial and corporate information, and has proposed steps consistent with the goals of the international community.

On the world economy, finance chiefs said risks to the global recovery have stabilised, while threats to the outlook remain, including terrorism and the UK’s potential exit from the European Union (EU).

“Growth remains modest and uneven, and downside risks and uncertainties to the global outlook persist against the backdrop of con- tinued financial volatility, challenges faced by commodity exporters and low inflation,” according to the statement. “Geopolitical conflicts, terrorism, refugee flows and the shock of a potential UK exit from the EU also com- plicate the global economic environment.”

The G-20 struck a less alarmed tone than it did at its previous meeting in Shanghai in February, when officials acknowledged the rocky start to the year for financial markets and expressed growing concern about a downgrade in the global economic outlook.

The finance chiefs and central bankers took heart from a rally in global stock markets.

As in Shanghai, Finance Ministers and central bankers pledged to use all policy tools – monetary, fiscal and structural reforms – to stimulate growth. They reiterated that monetary policy alone can not produce balanced growth.