The US has overtaken Switzerland in a global ranking of countries most complicit in helping individuals to hide their finances from the rule of law – but Cayman has leapfrogged both to rank as the worst offender. The Tax Justice Network’s Financial Secrecy Index 2020, published last week, revealed that financial secrecy around the world is decreasing as a result of recent transparency reforms. On average, countries on the index reduced their contribution to global financial secrecy by 7 per cent.

But a handful of jurisdictions accounting for a large share of global financial services have bucked the trend, most notably the US, Cayman and the UK. With Switzerland finally improving enough to move off the top of the index, an Anglo-American axis of secrecy now constitutes by far the greatest global threat of corruption and tax abuse. The Tax Justice Network is calling on policymakers to prioritise sanctions against these backsliders.

The sixth edition of the biennial Financial Secrecy Index sees Switzerland reduce its ranking to the third biggest enabler of financial secrecy in the world, marking the first time the country did not rank worst on the index since 2011. Despite escalating its contribution to global financial secrecy since the publication of the 2018 edition of the index, the US remained the second biggest enabler of financial secrecy in the world after Cayman overtook both the US and Switzerland to the top of the 2020 index. This marks the first time Cayman ranked first on the Financial Secrecy Index. The top 10 biggest enablers of financial secrecy in the world currently are:

  1. Cayman Islands
  2. United States
  3. Switzerland
  4. Hong Kong
  5. Singapore
  6. Luxembourg
  7. Japan
  8. Netherlands
  9. British Virgin Islands
  10. United Arab Emirates

Australia ranked 48th in the index, four places down from the country’s 2018 position.

The Financial Secrecy Index ranks each country based on how intensely the country’s legal and financial system allows wealthy individuals and criminals to hide and launder money extracted from around the world. The index grades each country’s legal and financial system with a secrecy score out of 100 where a zero out of 100 is full transparency and a 100 out of 100 is full secrecy. The country’s secrecy score is then combined with the volume of financial activity conducted in the country by non-residents to calculate how much financial secrecy is supplied to the world by the country.1

A higher rank on the index does not necessarily mean a jurisdiction is more secretive, but rather that the jurisdiction plays a bigger role globally in enabling secretive banking, anonymous shell company ownership, anonymous real estate ownership or other forms of financial secrecy, which in turn enable money laundering, tax evasion and huge offshore concentrations of untaxed wealth. A highly secretive jurisdiction that provides little to no financial services to non-residents, like Samoa (ranked 86th), will rank below a moderately secretive jurisdiction that is a major world player, like Japan (ranked 7th).

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