Switzerland and the US are the biggest promoters of financial secrecy, according to a new index published by the Tax Justice Network (TJN).
In a report by the International Consortium of Investigative Journalists, the index ranks countries based on their level of secrecy and the percentage of financial services provided to non-residents. The top 10 jurisdictions are ranked as follows:
• Switzerland
• US
• Cayman Islands
• Hong Kong
• Singapore
• Luxembourg
• Germany
• Taiwan
• United Arab Emirates (Dubai)
• Guernsey
According to TJN, Switzerland is still the worst offender in terms of financial secrecy. “Switzerland has delayed the implementation of automatic information exchange, and in 2017 lawmakers attempted to stop it altogether with countries they deemed ‘corrupt’,” the report noted.
It says the US, which ranked third in TJN’s 2015 secrecy index, has refused to take part in international efforts to curb financial secrecy, instead setting up a parallel system that seeks information on US citizens abroad but does not provide data to foreign countries.
“The 2018 release confirms the long-term picture, that the richest and most powerful countries have continued to pose the greatest global risks – with Switzerland and the US established as the key facilitators of illicit financial flows,” said TJN chief executive Alex Cobham.
Creating the index
The criteria used to build the index include the absence of a public register, harmful tax residency rules and whether the system allows for bearer shares, which obscure ownership.
TJN noted improvements since the 2008 financial crisis, particularly the automatic exchange of information that will be implemented in 2018 for many countries, including the Bahamas, Samoa and St Kitts and Nevis. The report also underlines increased public pressure in favour of public registers of company owners.
It highlights the EU's blacklisting of 17 secrecy jurisdictions last month, only to delist eight countries a few weeks later, including Panama (ranked 12 in the index) and Macao (ranked 22). Members of the EU themselves rank high on the secrecy index, it says – Luxembourg, the Netherlands, Malta and Germany are among the top 20 jurisdictions promoting financial secrecy.