We welcome this latest research on the under-researched Cayman Islands, an Offshore Financial Centre (OFC) ‘with foreign assets amounting to over 1500 times Cayman’s domestic economy.’ As we so often explain, while Switzerland currently tops our Financial Secrecy Index, if the UK and its Crown Dependencies and Overseas territories were all rolled into one and assessed together, the UK would in fact be number one in terms of the world’s most significant offenders. And the Cayman Islands is a prolific contributor to that dubious pedigree. We rank the British Overseas Territory of the Cayman Islands as number five in our 2015 Financial Secrecy Index, which combines a secrecy score with a global scale weight in financial services exports.
Now we’re pleased to present the following research from Jan Fichtner at CORPNET which “uncovers, investigates and aims to understand global networks of corporate control in contemporary global capitalism.” It’s funded by the European Research Council and is located at the Amsterdam Institute for Social Science Research, University of Amsterdam. We now hand over to Jan Fichtner:
Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional ‘competition’
Prof. Thomas Rixen, who has written a lot about tax ‘competition’ (aka tax wars) in the past, has a new article looking at similar dynamics in the area of financial regulation. Entitled Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional competition, it points out that the shadow banking sector, many of whose players were implicated in the global financial crisis that erupted almost a decade ago, is heavily entwined with offshore financial centres. Typically, this involved banks sponsoring off-balance sheet vehicles, located in places like Cayman or Luxembourg: these supposedly took risk off the banks’ books, but then returned to haunt the banks when they blew up, causing widespread economic disaster.
From the U.S. Department of Justice:
“Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), two Cayman Island affiliates of Cayman National Corporation . . . pleaded guilty to a criminal Information charging them with conspiring with many of their U.S. taxpayer-clients to hide more than $130 million in offshore accounts from the U.S. Internal Revenue Service (IRS) and to evade U.S. taxes on the income earned in those accounts.”
The North Korean Connection
The offshore world, with its secrecy and complex corporate structures can throw up some of the most extraordinary connections. One of them was unveiled this week by Finance Uncovered, a global network of investigative journalists.
”Global citizenship is essentially a branding exercise” and passport shopping is big business Quartz
Fascinating piece on citizenship-for-sale, and speaking on the tax issues
Getting to Good – towards responsible corporate tax behaviour Discussion paper by Christian Aid, ActionAid and Oxfam
G20: global tax system tweaked– not fixed Global Alliance for Tax Justice
2015- The end of tax neutral jurisdictions Cayman Reporter
“It is time to take our heads out of the sand and face the rather grim reality that stares us in the face.”