By David Pegg
The United Nations has been urged by the Tax Justice Network to coordinate a global effort to end offshore tax evasion and corruption, amid warnings that the UK is continuing to insulate its overseas territories from financial transparency.
Commenting on the launch of the TJN’s Financial Secrecy Index 2018, which ranks countries on the size and secretiveness of their offshore sectors, its chief executive, Alex Cobham, said big financial centres had proven unwilling to reform voluntarily.
“The 2018 release confirms the long-term picture that the richest and most powerful countries have continued to pose the greatest global risks – with Switzerland and the US established as the key facilitators of illicit financial flows,” he said.
“If we are to end tax evasion, corruption, fraud and money laundering, the world’s major financial centres need to clean up their act. And since they are not willing to do that voluntarily, the UN should create a global convention to end financial secrecy once and for all.”
Switzerland, the US and the Cayman Islands are the biggest contributors to global financial secrecy according to the survey, which is published every two or three years.
The UK does not feature in the top 10 secrecy jurisdictions. However, the TJN warned that the country was continuing to frustrate moves towards greater transparency by protecting its overseas territories – former colonies, some of which have since become prominent tax havens – from reform.
The TJN acknowledged the UK had made progress at home, including by introducing a register of beneficial ownership for domestic companies, but said government efforts to encourage reform in Britain’s overseas territories had stalled following the 2017 general election.
“In recent years the government of the UK refused to impose more financial transparency on these territories, especially with regard to trusts,” the group said.
“To the contrary, it has actively protected them from international scrutiny, for example, by lobbying to remove them from the EU’s list of tax havens released in 2017.”
A spokesperson for HM Treasury said: “Overseas territories are separate jurisdictions with their own democratically elected governments and they decide their own fiscal matters.
“Thanks to our leadership, all of our crown dependencies and overseas territories with financial centres are committed to all global tax transparency standards, including the Common Reporting Standard that makes it harder for companies and individuals to hide their money abroad.”
The US has risen up the TJN’s ranking from third position in 2015. The group said the increase was driven by “a huge rise in their share of the market in offshore financial services”, with no comparable reduction in levels of secrecy.
The US has also declined to take part in international initiatives to combat financial secrecy, such as the automatic exchange of information between states. Instead it has adopted its own approach, imposing financial penalties on overseas financial institutions that withhold information on US taxpayers.
“There is now real concern about the damage this promotion of illicit financial flows is doing to the global economy,” the TJN said.
Published on The Guardian on January 30, 2018