The United States now ranks as the world’s second-largest contributor to financial secrecy, enabling money laundering, corruption and tax evasion to an increasing degree, according to an index published Tuesday.
As the “global capital of bank secrecy,” Switzerland remains at the top of the Tax Justice Network’s biennial “Financial Secrecy Index” — but the growing share of opaque financial services offered by the United States means it allows more ill-gotten wealth to be stashed away in secrecy, the network said.
The index ranked 112 jurisdictions around the world, with the Cayman Islands, Hong Kong, Singapore, Luxembourg, Germany, Taiwan, the United Arab Emirates and Guernsey rounding out the top 10. Asian wealth hubs Hong Kong, Singapore, and Taiwan landed at fourth, fifth and eighth places respectively.
Hiding the owners of wealth promotes environmental plunder, corruption, terrorism and human rights abuses, while denying governments funds to pay for development and social spending, activists say.
Since the financial crisis of 2008, campaigns to pierce banking and financial secrecy, in particular by requiring corporations to identify their true owners, have gained some traction.
Under heavy pressure from Washington, Swiss banks have paid hundreds of millions of dollars in fines and identified thousands of accounts belonging to Americans attempting to avoid paying taxes.
But according to the Tax Justice Network, an activist organization promoting greater transparency, the United States has not returned the favor to other jurisdictions, with some states in a “race to the bottom” to sell financial services shrouded in secrecy.
“While the United States has pioneered powerful ways to defend itself against foreign tax havens, it has not seriously addressed its own role in attracting illicit financial flows and supporting tax evasion,” the Tax Justice Network said in presenting its findings for 2018.
As its share of the financial services industry grew, the United States rose from sixth place in 2013 to third in 2015, making its ascent to second place this year a “worrying trend.”
Additional reporting by Coconuts Singapore