Financial safety

United States “Beats” Switzerland as a Perceived Global Haven for Money Laundering and Tax Evasion

The United States has overtaken Switzerland as a financial secrecy haven, according to the latest rankings – the Financial Secrecy Index 2020 (“2020 Index”) – issued by the Tax Justice Network (“TJN”), which describes itself in part as an independent international network conducting research, analysis and advocacy on international tax and financial regulation and the impact of tax evasion and avoidance.  According to the 2020 Index, the U.S. now has the dubious distinction of holding second place in these rankings, having “lost” only to the Cayman Islands for first place.

As always, such reports and rankings, which purport to present incredibly complex and fluid systems as neatly distilled rankings, based on numerical factors presented with seeming objective precision, must be taken with a grain of salt. Invariably, they simplify issues and reflect implicit, subjective and potentially biased judgments. Nonetheless, the 2020 Index represents the latest in a string of international pronouncements turning an uncomfortable spotlight on the U.S., which (as we have blogged here, here and here) appears to be increasingly viewed by the rest of the world as a (hypocritical) haven for money laundering and tax evasion. Switzerland may regard having been “trumped” by the U.S. in these rankings with a bit of irony and schadenfreud, given the lengthy campaign by the U.S. to battle Switzerland’s banking and tax secrecy laws and customs, including many prosecutions by the U.S. involving undisclosed offshore accounts held by U.S. taxpayers in Switzerland (and elsewhere).  Certainly, the 2020 Index highlights the substantial intersection between money laundering and tax evasion, both of which thrive in environments where anonymous shell companies may proliferate.