UK overseas jurisdictions, collectively with the UK itself, make up the world’s biggest enabler of financial secrecy, according to analysis by the Tax Justice Network (TJN).
While the UK overseas jurisdictions, some of which have a reputation for operating as offshore secrecy hubs, have reduced their overall supply of financial secrecy to the world, the UK itself has increased its supply of financial secrecy at home according to data drawn from TJN’s Financial Secrecy Index 2022, (Trade-based Financial Crime, 20 May 2022).
Tax and TBML
The UK and its overseas jurisdictions are collectively responsible for costing the rest of the world US$87.9 billion in lost tax a year by enabling non-residents to hide their finances and evade tax, the data shows.
Tax evasion and customs offences are important predicate offences for trade-based money laundering (TBML) according to the Asia-Pacific Group on Money Laundering while shell companies registered in the UK’s overseas jurisdictions have been able to obscure their sources of funds and beneficial owners, techniques frequently used in trade-based financial crime.
Major secrecy suppliers
The UK itself loses US$25 billion a year to offshore tax evasion by wealthy individuals enabled by other countries according to the TJN’s Financial Secrecy Index 2022 – a ranking of the world’s biggest suppliers of financial secrecy.
Two British jurisdictions, the British Virgin Islands (BVI) and Guernsey, ranked among the world’s top 10 biggest suppliers of financial secrecy.
BVI, which has recently come under the spotlight following corruption investigations and the arrest of its premier in the US on drug charges, remained in 9th place on the index while Guernsey moved up from 11th to 10th.
UK overseas jurisdictions, which include the British Overseas Territories and Crown Dependencies, are now responsible for 8.9 per cent of all financial secrecy in the world, down from 13 per cent in 2020. The UK itself supplies 1.6 per cent according to the TJN.
Its analysis concludes that collectively, the UK and its overseas jurisdictions supply over 10 per cent of all financial secrecy in the world, which is almost double the amount of financial secrecy supplied by the US, the highest ranking jurisdiction on the Financial Secrecy Index 2022.
TJN’s new analysis, UK network remains biggest financial secrecy supplier despite reining in, can be found here.
The Asia-Pacific Group on Money Laundering’s, Typology Report on Trade Based Money Laundering, which describes the links between tax evasion, customs offences and TBML can be found here.
Categories: Trade Based Financial crimes News