Financial secrecy around the world is decreasing as a result of recent transparency reforms, and on average, countries around the world have reduced their contribution to global financial secrecy by 7 percent, according to a new report.
Hong Kong and Singapore have fared marginally better in preventing illicit and illegitimate or abusive financial flows compared to 2018, but have maintained their rankings on the «Financial Secrecy Index,» according to the Tax Justice Network, which published its sixth edition of the list on Tuesday.
The index ranks jurisdictions based on their role globally in enabling secretive banking, anonymous shell company ownership, anonymous real estate ownership or other forms of financial secrecy transparency, which in turn facilitates money laundering, tax evasion and huge offshore concentrations of illicit and untaxed wealth, estimated at $21 trillion to $32 trillion globally.
Hong Kong kept its fourth position, even though its secrecy score fell by 6.6 percent, owing to an increase in its global scale weight. Similarly, Singapore maintained its fifth-place ranking despite its secrecy score falling by 3.2 percent in 2019. Above the pair, Switzerland moved off the top of the index to third, behind new leader Cayman Islands and the United States.
Major Players Buck Trend
The report noted that the biggest reforms have been in the automatic exchange of information and beneficial ownership registration, whereas reforms in country-by-country reporting have been weak. It highlighted that several major jurisdictions, which account for a large share of global financial services are becoming more secretive, most notably the U.S., Cayman Islands and the U.K.
«An Anglo-American axis of secrecy now constitutes by far the greatest global threat of corruption and tax abuse,» it said, calling on policymakers to prioritize sanctions against these «backsliders.»
The secrecy score takes into account 20 indicators across four categories: ownership registration, legal entity transparency, integrity of tax and financial regulation, and international standards and cooperation. The rankings also factor in the jurisdiction's share in the global total amount of cross-border financial services, so countries like the U.S., which have a larger share, rank higher despite a lower secrecy score.
