Malta placed 20th in the Financial Secrecy Index as published by the International Tax Network. This was the first time that Malta was in the top 20 although to be fair, other countries which have a supposedly more open tax system such as Germany placed far higher in the rankings. Malta registered a Secrecy Index Score of 61 based on several factors including Banking Secrecy with a score of 47%. Trusts and Foundation Register registered a maximum score of 100% while Recorded Company Ownership was not far behind at 90%.
Amongst other factors in the equation which gained high scores one finds Corporate Tax Disclosure and Other Wealth Ownership which both registered the maximum score of 100%. The International Standards Co-Operation section recorded a poor performance for Malta with Automatic Information Exchange, Bilateral Treaties and International Legal Co-operation all at an embarrassing 0%. Anti-money laundering registered a 31% score – still very poor.
The report notes that Malta accounts for a little more than 0.1 per cent of the global market for offshore financial services, making it a small player compared with other secrecy jurisdictions.
The Tax Justice Network released this week the results for its biannual Financial Secrecy Index, which places Switzerland and the United States at the top of its list of tax havens. Cayman Islands, Hong Kong, Singapore, Luxembourg, Germany, Taiwan, the UAE and Guernsey rounded out the list’s top ten.
Overall, the Tax Justice Network said about their research: “In identifying the most important providers of international financial secrecy, the Financial Secrecy Index reveals that traditional stereotypes of tax havens are misconceived. The world’s most important providers of financial secrecy harbouring looted assets are mostly not small, palm-fringed islands as many suppose, but some of the world’s biggest and wealthiest countries. Rich OECD member countries and their satellites are the main recipients of or conduits for these illicit flows.”
Furthermore, while specifically discussing this new edition of the Financial Secrecy Index, Tax Justice Network’s executive Alex Cobham said, “The 2018 release confirms the long-term picture that the richest and most powerful countries have continued to pose the greatest global risks – with Switzerland and the US established as the key facilitators of illicit financial flows.”
“If we are to end tax evasion, corruption, fraud and money laundering, the world’s major financial centres need to clean up their act. And since they are not willing to do that voluntarily, the UN should create a global convention to end financial secrecy once and for all,” he added.
John Christensen, the NGO’s director, also explained that many financial centres are very picky as to who they release information to despite claims that they are being more transparent.
Christensen said, “Rich, Western countries get information but poorer countries in Africa do not.”
According to the report’s chapter on Switzerland, this European nation “is ranked in first position in the 2018 Financial Secrecy Index, based on a high secrecy score of 76 and a large global scale weight for the size of offshore financial services (approximately five percent of the global market). Its famed banking secrecy laws remain firmly in place, though with exceptions permitted for some countries to obtain necessary information.”
Furthermore, says the report, “the Swiss will exchange information with rich countries if they have to, but will continue offering citizens of poorer countries the opportunity to evade their taxpaying responsibilities. These factors, along with ongoing aggressive pursuit of financial sector whistleblowers (resorting at times to what appear to be non-legal methods) are ongoing reminders of why Switzerland remains the most important secrecy jurisdiction in the world today.”
In the US’s case, the authors argue that “while the United States has pioneered powerful ways to defend itself against foreign tax havens, it has not seriously addressed its own role in attracting illicit financial flows and supporting tax evasion.”
Furthermore, as reported by Bloomberg, the report slammed the US for “independent-minded approach” to fighting financial crime and emphasized the roles played by US states like Delaware, Nevada and Wyoming in the setting up of “shell companies” that obfuscate the companies’ beneficial owners.
The Financial Secrecy Index was first released in 2009, offering a way to combat financial crimes “by directly confronting offshore secrecy and the global infrastructure that creates it” and identifying “as accurately as possible the jurisdictions that make it their business to provide offshore secrecy.”