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Despite advances in sharing tax information and financial transparency, the amount of money the world’s richest are hiding remains overwhelming: around €9.5 billion hidden by opaque laws in third countries or jurisdictions. This corresponds to almost eight times the GDP of Spain. These are the estimates of the British organization Tax Justice Network (TJN), which released this Tuesday the latest edition of its Financial Secrecy Index, which ranks the United States as the worst unemployed in terms of financial opacity, followed by Switzerland and Singapore .
The North American country has very attractive tax regimes such as Delaware or Nevada and was particularly disadvantaged in the TJN classification for not being part of important information sharing agreements such as the Organization for Economic Co-operation and Development (OECD) Common Reporting Standard. This mechanism, in which more than 100 countries participate, in 2020 provided information on $11 trillion in wealth and assets that were hidden.
The Joe Biden Administration is no stranger to the problem. His Treasury Secretary, Janet Yellen, noted last December that the United States may be “the best place to launder and hide ill-gotten gains.”
The Financial Secrecy Index or SFI shows the extent to which countries allow offshore funds to be hidden and laundered. The final score assigned to each territory – 141 jurisdictions were analyzed in this report – depends both on the opacity of its legislation, i.e. lack of or little transparency and information sharing with other countries, and on the range of financial services provided Offered to non-residents over the world total.
The US showed a deterioration in both variables compared to the previous edition related to 2020: opacity increased because the analysis “returned to violate international standards and practices of information sharing”, while the volume of offshore financial services increased by 21% increased. , which represents 25.8% of the financial services provided to non-residents by all jurisdictions worldwide.
“It is hypocritical that under the Foreign Account Tax Compliance Act (FATCA) and related Intergovernmental Agreements (IGAs), the United States requires all countries to share information about US taxpayers’ offshore financial accounts, while the United States e.g for its part, it provides little or no information about its residents to the states,” the report said.
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Singapore enters the podium
After topping the previous ranking, the Cayman Islands – one of many British overseas territories with favorable tax regimes – have fallen to 14th place in this edition of the report. The improvement is due to the fact that, for the first time, they released data revealing the true scope of the financial services they offer to non-residents.
Switzerland remains at the top, although it has improved somewhat. The Swiss country, known for many years for its untouchable banking secrecy, ranks second in the 2022 edition of TJN. Its opacity rating is worse than the US, but its weight in total non-resident services is much lower, under 4%.
In third place is Singapore, which climbs two positions and enters the podium of the most opaque areas for the first time. Like the US, the city-state has both worsened the opacity of its system and increased the volume of financial services for non-residents.
Fourth is Hong Kong, followed by Luxembourg, one of the founding members of the European Union, which Brussels does not include in its list of tax havens. Germany is the other country of the community block appearing in the top 10 positions at number seven. Japan is sixth, the United Arab Emirates eighth; the British Virgin Islands and Guernsey – also dependent on the UK – complete the top ten.
Globally, the Financial Secrecy Index has been declining as more countries introduce or improve beneficial ownership registration laws and advances in international cooperation on anti-money laundering and information sharing. Still, the report warns that the countertrend of five G7 countries — the United States, the United Kingdom, Japan, Germany and Italy — that have increased their financial opacity is holding back global improvement.