This report supports the conclusion that working in conditions of secrecy has become an inherent part of the work of bankers and accountants. Whether wittingly or unwittingly their presence in secrecy jurisdiction helps them or their clients avoid the impact of laws and regulations in those places where they undertake most of their trade. We suggest that this has led to a culture of creative non-compliance with laws and regulations that are likely to increase the volume of illicit financial flows and crime. At the same time, investment by banks and the Big 4 firms in lobbying for laws and regulations that reduce transparency is likely to have resulted in further opacity in the world’s financial system.
A statistical correlation identified in the research supports both hypotheses.
The research quantifies the number of institutions allowed to undertake banking and financial intermediation in each secrecy jurisdiction surveyed. It also identifies the number of offices in secrecy jurisdictions run by the Big 4 accountancy firms (in order of size: PricewaterhouseCoopers (PWC), Deloitte, Ernst & Young (E&Y) and KPMG) who combined dominate the world’s auditing, tax and accounting markets. Together these banks, financial intermediaries and accountants can be termed “secrecy providers”.
Key findings
- A high number of banks and Big 4 firms per capita in a jurisdiction results in them having a disproportionate political influence, and tends to lead to an increase in the financial secrecy offered by such places through law and regulations.
- There are indications that banks and accountants, on occasion, fail to meet the required standards of behaviour expected by law or codes of ethics.
- Designing commercial tax abuse schemes and turning a blind eye upon suspicious transactions have become an inherent part of the work of bankers and accountants.