US now more secret than Cayman
(CNS Business): Despite the constant criticism of the Cayman Islands as a so-called tax haven by US politicians and media, in the latest edition of the Financial Secrecy Index, compiled by the Tax Justice Network, the United States is placed above the Cayman Islands in its rankings. The report, which comes out every two years, was published on Monday and places the US at number three, whereas Cayman is ranked fifth in a list topped by Switzerland.
The index includes a country report on over 90 jurisdictions. In the Cayman report the index authors found that while the jurisdiction still has a high secrecy score, it “has improved substantially … based on its decision to embrace some important global transparency initiatives”.
While the report was still highly critical of Cayman, the US has stolen the headlines, having moved up the ranking because its government refused to take part in the information exchange system created by the Organization for Economic Cooperation and Development.
Instead, the US created the Foreign Account Tax Compliance Act (FATCA), which obliges banks around the world to provide details about American account holders who try to dodge taxes, even though the United States has its own internal tax havens.
“While the US 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,” TJN said in the report. “Washington’s independent-minded approach risks tearing a giant hole in international efforts to crack down on tax evasion, money laundering and financial crime.”
The authors of the report said that by identifying the most important providers of international financial secrecy, the index reveals that traditional stereotypes of tax havens are misconceived.
“The world’s most important providers of financial secrecy harbouring looted assets are mostly not small, palm-fringed islands as many suppose, but some of the world’s biggest and wealthiest countries,” they stated.
