Once every two years, the independent international organization Tax Justice Network makes Financial transparency index. He evaluates countries according to the secrecy and extent of their offshore financial activities.

The main goal of the Index is to demonstrate that reliable tax havens can be not only offshore on exotic and underdeveloped islands, but also quite prosperous, progressive states.

2018 Financial Secrecy Index

Moreover, the top ten includes countries whose government is ready to ruthlessly fight tax evaders ... in other countries.

Here's what the top 10 countries with the highest financial secrecy look like.

10. Guernsey Island

The Guernsey Financial Secrecy Index - an island with a population of 60 thousand people - climbed up 7 positions compared to the previous rating. It accounts for 0.5% of global trade in offshore financial services.

As a result of the huge size of the island’s offshore “industry”, the financial sector dominates the local economy. According to the Guernsey Statistical Service, 21% of the workforce is in the financial sector, and about 40% of gross value added is in the same sector.

In words, the “tax haven” government supports international anti-money laundering standards. However, when it comes to public access to important corporate data, Guernsey becomes a "territory of silence."

9. UAE (Dubai)

Dubai is an important financial center of the Middle East. Its status is mainly based on financial flows from the oil-rich region, and is also explained by the historical role of Dubai as a convenient trading gate between Europe and fast-growing Asia.

The Dubai Financial Center describes in itself in all materials, as a "financial center in full tax territory", that is, it does not provide tax benefits. At the same time, the compilers of the financial secrecy rating of 2018 have no doubt that Dubai is one of the best tax havens in the world. It is located in the free trade zone, has a low tax rate and many means of maintaining bank secrecy.

A significant portion of the financial flows flowing into Dubai comes in the form of cash or gold.

8. Taiwan

The first but not the last Asian country in the top 10 financial transparency.

The first detailed analysis of Taiwan as an offshore center appeared in July 2017 thanks to a group of CORPNET researchers from the University of Amsterdam.

Researchers have found that Taiwan is one of the most famous places for offshore capital in the world. The results of the study came as a surprise to the research team, which noted that previous studies based on IMF data missed Taiwan. And all because the country is not participating in the IMF statistics under pressure from China.

Regarding the importance of Taiwan in the offshore world, researchers noted: “Taiwan is famous for its technology companies, which often own Chinese firms through Hong Kong (33%) and the Caribbean (20%) or their own firms in Hong Kong through the Caribbean (12%) ".

7. Germany

Germany accounts for more than 5% of the global market for offshore financial services. The German government has a mixed perspective on financial secrecy. In recent years, Germany has taken important steps to combat tax evasion and money laundering, both internationally and nationally.

However, there are serious “holes” in German law, and the careless application of tax rules and anti-money laundering rules poses a threat to the effectiveness of the fight against tax evaders.

At the same time, the German government is opposed to public registries of beneficial ownership, and unilateral automatic submission of tax information to developing countries, insisting on a mutual exchange.

6. Luxembourg

The Grand Duchy of Luxembourg ranks sixth in the 2018 Financial Secrecy Index, thanks to a very large share of the offshore financial services market (over 12 percent of the global).

Until recently, Luxembourg was the death star of banking secrecy in Europe because of its aggressive stance towards European financial transparency initiatives. However, from 2013 to 2015, Luxembourg joined various international initiatives related to the exchange of financial information.

Despite these improvements, Luxembourg remains one of the most important offshore zones in the world. The duchy has over 1000 investment funds and about 200 banks - more than in any of the cities on Earth.

5. Singapore

The former British colony accounts for more than four percent of the global market for offshore financial services.

Singapore vies with Hong Kong for the title of "Asia's leading offshore financial center." Singapore primarily serves Southeast Asia, while Hong Kong primarily serves China and North Asia. However, many Chinese and North Asian financial investors, dissatisfied with China’s control of Hong Kong, prefer to keep their assets in more independent Singapore.

Despite Singapore's clear Asian focus, a significant portion of bank deposits comes to the country from the United States and England.

4. Hong Kong

The special administrative region of China has a rather high secrecy rate (71 out of 100 possible), and it accounts for 4.17% of the global market for offshore financial services. Moreover, this indicator is growing every year.

Hong Kong's official role as China's “special administrative region” includes two main components that underpin offshore financial success:

• firstly, the protection provided by Hong Kong to China soothes offshore players;

• secondly, Hong Kong enjoys a high degree of autonomy from China on all matters except external relations and defense, which allows the Chinese authorities to almost not intervene in the Hong Kong financial sector.

3. Cayman Islands

One of the most famous offshore companies in the world. Cayman Islands is an overseas territory of the United Kingdom. Thus, they have significant political and economic autonomy from the UK, and at the same time - strong support and supervision from the UK. This connection gives the owners of financial assets the confidence that they will be able to get help from the British Themis, if necessary, and that the UK will ensure the political stability of the islands.

Previously, the Cayman Islands served as a turning point for drug smuggling and money laundering. However, now most of the business on the islands is completely legal, and is associated with the largest banks, corporations, hedge funds and other organizations. In general, the Cayman Islands offer a low tax and regulatory environment for financial players from around the world, especially Europe and the United States.

2. USA

In the period from 2015 to 2018, America's share in the global market for offshore financial services increased by 14%, to 22.3%.

While the US authorities are constantly looking for ways to protect themselves from foreign tax havens, they do not particularly think about the role of their state in attracting illegal financial flows.

Instead of agreeing to join the new multilateral standard for automated financial information interchange (CRS), America adheres to its own FATCA model, which does not seem to be related to CRS, despite technical similarities. The US independent approach discourages the international fight against tax evasion, money laundering and financial crime.

But Russia joined CRS in 2016.

1. Switzerland

The most “non-transparent” country in terms of disclosing financial information does not change its reputation as a reliable international “bank safe”.

Switzerland is one of the largest offshore financial centers in the world, and one of the largest tax havens in the world. According to the Swiss Association of Bankers, there are 6.6 trillion Swiss francs (6.5 trillion dollars) in the country, of which 48% is received from abroad. Thanks to this, Switzerland is a world leader in international cross-border asset management. She owns a 25 percent share of this market.

In addition to asset management and money management, Switzerland offers investment banking, hedge funds and tax evasion structures, offshore companies and trust management, and many other financial services.

Russia in the financial secret index

Our country is at 29th place (64 points) in the list of countries with the most opaque financial system. This is worse compared to the position in the previous rating (30th place with an opacity level of 54%). However, the last time the drafters of the Index took into account fewer parameters.

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