‘Web of financial secrecy’: Britain, satellites dominate tax haven rating
“Our index reveals that Britain plays a key role in the global
market for financial secrecy,” John Christensen, director of
the Tax Justice Network said in a statement.
This, despite David Cameron’s recent G20 drive to crack down on tax avoidance and promoting tax transparency.
“The City of London uses a web of satellite secrecy jurisdictions based on British crown dependencies and overseas territories to channel huge illicit flows which feeds London’s mad property boom,” Christensen added.
The findings by the non-aligned network of researchers and activists were presented to Britain’s monarch Queen Elizabeth II before the index was released.
“Britain, taken together with its Overseas Territories and Crown Dependencies, is by far the most important part of the global offshore system of tax havens or secrecy jurisdictions,” the letter read.
The note to the Queen also mentioned that the Prime Minister of the country, David Cameron, is doing little to deliver on his pledge to provide more transparency.
“Our findings show that these jurisdictions still fall woefully short of acceptable standards of transparency, having made only modest reforms since 2009, when the G20 led by your government committed itself ‘to take action against non-cooperative jurisdictions, including tax haven,’” the message to the Queen read.
To show the extent of the divide between the political ambitions and actions on-the-ground of British tax havens, the research group has published an illustrated table on their website along with the statement that once again criticized UK’s leadership.
“The crown dependencies and overseas territories have long been considered among the worst offenders of world tax havens", Salman Shaheen, editor for International Tax Review magazine told RT.
“What is surprising is that the British government is not
doing very much about it. I mean it has introduced certain
legislation to clean up its own companies onshore but it really
needs to get its work on tax havens offshore in order,”
Overall Tax Justice Network ranked 82 global financial jurisdictions, 10 of which are directly connected to UK, whose head of state is the British queen. They include places like the fourth-ranked Cayman Islands, fourteenth-ranked Bermuda and the British Virgin Islands ranked 20th.
According to the financial secrecy watchdog, up to US$32 trillion
is sitting in offshore zones where it is either untaxed or
“Rolling back the secrecy that shrouds up to $32 trillion in offshore financial assets remains one of the great challenges of the 21st century,” Christensen said in a statement
The report believes that offshore zones have cost African countries over $1 trillion since the 1970s of which $640 billion came from 16 Commonwealth countries.
“These losses dwarf the external debts of ‘just’ $190 billion for the 33 countries, meaning that Africa is a major net creditor to the world, contrary to what is widely believed,” the letter said.
“The yawning gap between fact and fiction in the fight over global financial transparency is only just starting to shrink. Important shifts – such as the European Union’s decision to curb one important aspect of banking secrecy from 2015 – mask waning momentum for other urgent changes elsewhere,” Markus Meinzer, lead researcher for the Financial Secrecy Index said.
The ranking was calculated by combining a secrecy weighting scale, that factors in components such as banking secrecy and anti-money laundering regulation, with the jurisdiction’s share of services of the world’s total.
The three highest ranking countries on 2012 financial secrecy
index are Switzerland, Luxembourg and Hong Kong.
Switzerland, the “grandfather of the world’s tax havens”, accounts for just fewer than 5 percent of the global market share of offshore financial services.
Last year the country managed about a quarter of the world’s total assets or approximately $2.8 trillion, according to the Swiss Bankers’ Association.
“Switzerland has also been playing the spoiler, striving to block or derail emerging international transparency initiatives,” the watchdog said on its website.
Luxemburg, a tiny EU nation, has also been accused of undermining transparency efforts, when it was placed second on the index.
“Outside what might traditionally be regarded as the financial sector, it also runs a lucrative line in hosting holding companies of transnational corporations, principally to help them avoid (and evade) tax. It is also strenuously seeking to build up an industry based on Islamic finance, and in October 2012 achieved a further fillip when a group of major Chinese banks said they were departing the (very lightly regulated) London markets in favor of the even less regulated Luxembourg,” the country profile reads.
Hong Kong has been ranked third for the rapid growth of offshore industries in Asia that expanded with the overall economic growth on the continent. One of two Chinese Special Administrative Regions, the island accounts for over 4 percent of the global market share for offshore financial services and is the “fastest growing secrecy jurisdictions or tax havens today.”
“Our Index shows that too many jurisdictions still help tax evaders hide their identities and assets behind shells and smokescreens,” Moran Harari, researcher for the Financial Secrecy Index said.
“Without public disclosure of the beneficial owners of these assets, and the automatic exchange of information between jurisdictions to provide the information that law enforcement and tax authorities need, it will be impossible to tackle some of the world’s most pressing problems.”