Global Policy Forum

In 2009, world leaders gathered at the G20 Summit meeting, made the promise of ending corruption and financial secrecy. Nonetheless, an independent research initiative of the Tax Justice Network (TJN) shows that the magnitude of illicit financial flows is as large today as it was in 2009. The World Banks’s Stolen Asset Recovery (StAR) initiative estimates that the illicit trans-boarder financial flows add up to $1-1.6 trillion per year. Findings of the TJN suggest that the total amount of un-taxed assets wealthy individuals hold offshore add up to a revenue loss by governments off $250 billion per year. The losses resulting from corporate tax avoidance are even greater. In the meantime, the OECD’s “Information-Exchange Agreements” (IEA) do little but provide an ideal cover for secrecy jurisdictions to continue “business as usual”. By signing IEAs, jurisdictions qualify for the OECD “white list”, but this has not significantly decreased illicit financial flow. The interplay of vast illicit financial flows, persistent economic crisis and tough austerity measures taken by governments worldwide, is creating a political climate in which tax evasion is less tolerable than ever before for the general public.

               In this light, the TJN’s Financial Secrecy Index (FSI) proves to be an important tool to understand global financial secrecy. The FSI measures the secrecy of jurisdictions and the scale of their activities, to create a ranking of the countries that most aggressively provide secrecy in global finance. What the FSI reveals is that the world’s most important providers of financial secrecy are not, as commonly assumed, small, palm-fringed islands, but rather some of the world’s biggest and wealthiest countries. Moreover, the Index also suggests that OECD member countries and their satellites are the main recipients of illicit financial flows that keep developing countries poor.           

               Illicit flows and financial corruption will only end if their root causes are addressed. This means that offshore secrecy and the global infrastructure that creates it needs to be directly confronted. A first and indispensable step to achieve this goal is to identify secrecy jurisdictions and rank them in order of importance. This is exactly what the FSI succeeds in doing.

*Temporarily withdrawn pending legal interpretation