A global industry of financial secrecy has developed over recent decades that involves the world’s biggest banks, law practices, accounting firms and specialist providers. These service providers design and market secretive financial structures that can be used by clients to circumvent countries’ tax laws and financial regulations. Financial secrecy structures such as shell companies and banking secrecy laws enable corruption, money laundering, tax evasion and the financing of terrorism and have been shown to have played an important role in the 2008 economic collapse.
To identify which jurisdictions supply the greatest share of global financial secrecy, the Tax Justice Network developed the ground-breaking Financial Secrecy Index, which ranks countries by their contribution to global financial secrecy. While the Financial Secrecy Index has helped policymakers identify the worst contributors to financial secrecy on a global level, questions remained on how policymakers can use the data from the Index to identify the jurisdictions from which their countries suffer the greatest supply of financial secrecy.
In response, the Tax Justice Network has developed the Bilateral Financial Secrecy Index which builds on and complements the Financial Secrecy Index. The Bilateral Financial Secrecy Index addresses the receiving side of financial secrecy, providing each country with a breakdown of the greatest suppliers of financial secrecy to its jurisdiction. For example, while Switzerland is ranked as the top contributor to global financial secrecy on the Financial Secrecy Index 2018, Switzerland is only the ninth greatest contributor of financial secrecy targeting Portugal according to the Bilateral Financial Secrecy Index 2018. The top contributor of financial secrecy to Portugal is the Netherlands, which is ranked 14th on the Financial Secrecy Index.
This research consists of two parts: an academic study documenting the financial secrecy faced by 86 jurisdictions across the world, and a policy paper evaluating the EU’s success in countering financial secrecy and recommending the pursuit of automatic exchange of information treaties through the application of withholding taxes on non-cooperative jurisdictions.