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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
A woman shouts as she takes part in a demonstration calling for a tax on financial speculation and the abolition of tax havens.

Financial secrecy takes place when there is a refusal to share this information with the legitimate authorities, in order to tax wealthy taxpayers appropriately or to enforce its criminal laws.

The Financial Secrecy Index by Tax Justice Network (TJN) is a tool for understanding global financial secrecy, corruption and illicit financial flows.

The index reveals that the traditional stereotype of tax havens is misplaced. India with a secrecy score of 53, is ranked at 25 among a survey of 73 secrecy jurisdictions.

The FSI reveals without doubt that the world's most important providers of financial secrecy are not small, palm-fringed islands as many suppose, but some of the world's biggest and wealthiest countries.

It also reveals that the illicit financial flows that keep developing nations poor are predominantly enabled by rich OECD member countries, which are the main recipients of these illicit flows.

It also reveals that the illicit financial flows that keep developing nations poor are predominantly enabled by rich OECD member countries and their satellites, which are the main recipients of these illicit flows.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
The company logo is seen at branch office of Swiss bank UBS at the Bahnhofstrasse in Zurich.

Switzerland (Rank 1)

FSI Value: 1879.2
Secrecy score: 78

Switzerland has been ranked as the most financially secretive nation.

Switzerland is the grandfather of the world's tax havens, one of the world's biggest financial centres, and one of the world's biggest secrecy jurisdictions or tax havens.

About a third of the world's cross-border invested private wealth is managed in Switzerland, amounting to around US$ 2 trillion, according to the Swiss Bankers' Association, states TJN.

Financial secrecy comes in three forms. The first is bank secrecy – such as that offered by Austria, Luxembourg, and Switzerland.

Bankers promise to take their clients' secrets to the grave, and the secrecy jurisdiction often applies criminal penalties to those who break the secrecy.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
People walk out of a branch of the Cayman National Bank in George Town, Cayman Islands.

Cayman Islands (Rank 2)

FSI Value: 1646.7
Secrecy score: 77

Cayman Islands is ranked at second position on the 2011 Financial Secrecy Index.

Cayman Islands accounts for slightly under 5 per cent of the global market for offshore financial services, making it a large player compared with other small island secrecy jurisdictions.

Another method of secrecy is allowing the the creation of entities - trusts, corporations, foundations - whose ownership, functioning and/or purpose is kept secret.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Luxembourg.

Luxembourg (Rank 3)

FSI Value: 1621.2
Secrecy score: 68

Luxembourg is ranked at third position on the 2011 Financial Secrecy Index.

Luxembourg accounts for slightly over 13 per cent of the global market for offshore financial services, making it a huge player compared with other secrecy jurisdictions. Luxembourg is one of the world's top secrecy jurisdictions.

It works actively and aggressively to defend financial secrecy, in the face of European efforts to promote transparency.

The third form of secrecy relies on jurisdictions putting up barriers to co-operation and information exchange.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
A cruise ship parks in front of two of Hong Kong's most luxurious high-rise residential buildings.

Hong Kong (Rank 4)

FSI Value: 1370.7
Secrecy score: 73

Hong Kong is ranked at fourth position on the 2011 Financial Secrecy Index.

Hong Kong accounts for slightly over 4 per cent of the global market for offshore financial services, making it a large player compared with other secrecy jurisdictions.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Tourists pose with the Charging Bull sculpture in Bowling Green park, near Wall Street, in New York.

United States (Rank 5)

FSI Value: 1160.1
Secrecy score: 58

The United States is ranked at fifth position on the 2011 Financial Secrecy Index. USA accounts for slightly over 21 per cent of the global market for offshore financial services, making it a huge player compared with other secrecy jurisdictions.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
A man dressed as a Chinese God of Fortune walks inside the Resorts World Sentosa casino on Singapore's Sentosa Island.

Singapore (Rank 6)

FSI Value: 1118.0
Secrecy score: 71

Singapore is ranked at sixth position on the 2011 Financial Secrecy Index.

Singapore accounts for slightly over 3 per cent of the global market for offshore financial services, making it a small player compared with other secrecy jurisdictions.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Jersey.

Jersey (Rank 7)

FSI Value: 750.1
Secrecy score: 78

Jersey is ranked at seventh position on the 2011 Financial Secrecy Index.

Jersey accounts for slightly under 1 per cent of the global market for offshore financial services, making it a tiny player compared with other secrecy jurisdictions.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Visitors ride a boat as they enjoy fully bloomed cherry blossoms at Kitanomaru National Garden in Tokyo.

Japan (Rank 8)

FSI value: 693.6
Secrecy score: 64

Japan's tax haven rules are formulated to prevent Japanese taxpayers from using foreign corporations located in low tax jurisdictions.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Headquarters of the European Central Bank (ECB) in Frankfurt.

Germany (Rank 9)

FSI Value: 669.8
Secrecy score: 57

Switzerland's banks have been popular among German tax dodgers. Germans have an estimated euro 200 billion stashed away in Swiss banks.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
A traffic jam is seen on the Sheikh Isa Bin Salman Highway.

Bahrain (Rank 10)

FSI Value: 660.3
Secrecy score: 78

Bahrain does not tax corporate profits except for companies in the oil and gas industry.

The OECD also includes Bahrain in its list of tax haven jurisdictions committed to improve exchange of tax information.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
British Virgin Islands.

British Virgin Islands (Rank 11)

FSI Value: 617.9
Secrecy score: 81

The British Virgin Islands has over 50 islands, islets and cays located about 95 kilometres east of Puerto Rico.

There are no capital gains taxes, inheritance taxes or death duties in the territory. Government revenues are derived from local income tax, import duties, stamp duties, license fees and company fees.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Bermuda beach.

Bermuda (Rank 12)

FSI Value: 539.9
Secrecy score: 85

Several US corporations have incorporated in Bermuda to reduce their taxes. There is no income tax in Bermuda.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Mounted police officers ride ahead of a tour bus in Westminster.

United Kingdom (Rank 13)

FSI Value: 516.5
Secrecy score: 45

The United Kingdom is ranked at 13th position on the 2011 Financial Secrecy Index.

The country has been assessed with 45 secrecy points out of a potential 100, which places it in the lower mid range of the secrecy scale.

United Kingdom accounts for slightly over 20 per cent of the global market for offshore financial services, making it a huge player compared with other secrecy jurisdictions.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Tourists relax at the swimming pool on board a Princess Cruises liner.

Panama (Rank 14)

FSI Value: 471.5
Secrecy score: 77

In Panama, you can receive income from all other parts of the world and pay no tax on it.
Panama is considered an easy place for foreigners to buy property as well.

There are almost no restrictions on owning land in most areas. Panama has a well developed service sector.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Brussels Grand Palace.

Belgium (Rank 15)

FSI Value: 467.2
Secrecy score: 59

Belgium is one of the most attractive European countries for establishing a company.
The country offers an attractive business environment with political and economic stability.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Marshall Islands.

Marshall Islands (Rank 16)

FSI Value: 457.0
Secrecy score: 90

The Marshall Islands have been removed from the OECD's list of harmful tax havens after the jurisdiction committed itself to improving transparency and establishing exchange of tax information.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Village of Kaprun in Austria.

Austria (Rank 17)

FSI Value: 453.5
Secrecy score: 66

Ranked 18th in terms of financial secrecy, Austria is one of the richest countries in the world, with a nominal per capita GDP of $43,723 (2010.).

The country has a high standard of living. In 2010, it was ranked 25th in the world for its Human Development Index.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
A man cleans a Ferrari car in front of the Cannes Festival Palace with the Dubai tourism logo poster.

United Arab Emirates (Rank 18)

FSI Value: 439.6
Secrecy score: 79

The UAE has favourable tax schemes. The Emirates has used its mostly tax-free status to attract businesses and entrepreneurs to the region.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Bahamas.

Bahamas (Rank 19)

FSI Value: 431.1
Secrecy score: 83

Bermuda, another tax haven has the highest gross domestic product per capita in the world at $70,000 per citizen.

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Financial secrecy: Blame these 20 nations!

Last updated on: October 7, 2011 09:08 IST
Cyprus.

Cyprus (Rank 20)

FSI Value: 406.5
Secrecy score: 58

Cyprus is the third largest island in the Mediterranean sea and one of its most popular tourist destinations.

It has an advanced, high-income economy with a very high Human Development Index.