New financial secrecy index questions G20 transparency claims

By agency reporter
November 29, 2013

Despite statements advocating transparency and tighter tax rules, key G20 economies are actively and aggressively promoting financial secrecy, according to a new index released this month - November 2013 - by the Tax Justice Network (TJN), which questions G20 intentions to make the international financial system more transparent.

In its Africa Progress Report this year, the Africa Progress Panel exposed how tax avoidance and financial secrecy form major obstacles that prevent Africa’s natural resource wealth from benefitting the continent’s people.

“For every dollar of aid provided by OECD countries to developing nations, ten dollars or so flow back, under the table, towards OECD nations and their offshore satellites,” the increasingly influential TJN says.

This helps “explain why widely heralded international efforts to crack down on tax havens and financial secrecy have been rather ineffective, despite many fine words from G20 and OECD countries,” the TJN say.

The 2013 Financial Secrecy Index combines a secrecy score with a weighting for scale of activity to create a ranking of the countries that most actively and aggressively promote secrecy in global finance. Switzerland tops the index as the most secretive, with Luxembourg following up.

The UK is ranked at 21. Indeed, British Prime Minister David Cameron won praise this year for his leadership on tax and transparency issues. But the TJN remains scornful.

“Claims in September by British Prime Minister David Cameron that the UK havens are no longer a concern are baseless,” the TJN say. “While the British Virgin Islands, Cayman Islands and some other British jurisdictions have recently curbed some secrecy offerings, others have expanded theirs.”

“Had we aggregated the entire British network it would easily top the index.”

In sixth place, the United States has gaps in its money laundering laws, which allow the handling of some criminal proceeds if the crimes were committed outside the US. Anonymous shell companies thrive in Delaware, Wyoming, and Nevada states.

The size of Frankfurt’s financial industry explains Germany’s position at eighth place. Until 1999, Germany allowed bribe payments to be tax-deductible, but has made some progress with its anti-money laundering framework since then.

Ranked at 17, Canada is “effectively a regulatory haven for the world’s extractive industries”, the TJN say.

The Africa Progress Panel welcomed proposals this year for global reforms on tax and transparency in the extractives sector, by the G8 and the G20. TJN’s index shows, however that there is a long way to go to close the gap between rhetoric and action.



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