The UK is “by far the most important” player on the global financial secrecy market. While only ranked 21 on the Tax Justice Network index, the aggregated web of jurisdictions around the world makes Britain the top router of global financial secrets.
“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,”
Shaheen said.
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
slightly taxed.
“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.”