Financial Secrecy Index | Hacker News Reader

Financial Secrecy Index

fsi.taxjustice.net

148 pointspseudolus58 comments

Reality check:

- US haven status undermines despotic regimes by denying them data on citizens hedging their bets with offshore accounts. This provides the US leverage, intelligence, foreign direct investment & tax revenue.

- Offshore dollar pools (eg. Eurodollars) are problem enough for the US Treasury & FED's monetary policy. Absent US haven status this problem would be far worse.

- The secrecy doesn't much apply to US citizen and less so once the Democrat's $600 bank account reporting requirement is passed into law.

Realty check: US forced FACTA on many countries but never offered reciprocity. Tax haven status apply to all non US citizen, so this leverage exists for many of the US "allies" (btw as a European î don’t believe that such a concept exists) like all OECD countries that have to fight against complex tax evasion schema thanks to the US. What the world want is reciprocity.

There's CRS now, between OECD countries. (and it's FATCA, which made the US more interesting as a money destination)

The USA are the only country not part of CRS. Have a look here: https://www.oecd.org/tax/automatic-exchange/international-fr...

The USA is always "do as I say not as I do" and they have zero credibility regarding tax evasion :

```the IRS is still not obligated to share information pertaining to:

    * Cash accounts held by entities, including those that are resident in the FATCA partner jurisdiction;
    * Non-cash accounts, whether held by individuals or entities, unless the accounts earn U.S.-sourced income; and
    * ‘‘Controlling persons’’ of any entities that have accounts in U.S. financial institutions, regardless of whether those entities are from the partnering country, even if those entities are owned and controlled by residents of the partner jurisdiction.

```

> "allies" (btw as a European î don’t believe that such a concept exists)

I believe in "scratch my back and I'll scratch yours".

What may be illegal for one government to do might be off-shore-able. Therefore, "allies" are useful in such arrangements.

Ah, so it's not money laundering when we are the ones doing it.

That's not what was said... uncharitable response such as yours is unhelpful

A longer way of saying the same thing might be:

The 2nd argument is a benefit only to the US so not relevant to outsiders deciding whether they're "playing fair".

Arguably this applies to the first as well, or at best only US allies.

And the third... Again kind of self interest - one rule for your own citizens and another for everyone else's.

IMO there are two ways to view this: the US acts in its own interests, everyone else does too, fine. It's only hypocritical if the US expects a higher standard from others, "rules based international order" etc, but seeks to exempt itself -

edit: in which case the world just sticks with the previous view, which, hey, every other species does too.

Either erroneous conclusion or made in bad faith. The despotic regimes (like Jordan, Russia, Kenya, and many others) are some of the biggest launderers, according to the Pandora Papers! These regimes are propped up by the United States trust law race to the bottom, not undermined by it. It's an internationalized criminal enterprise.

Laundering is (tax-wise) the opposite of tax evasion though, which what financial secrecy benefits the most.

> data on citizens hedging their bets with offshore accounts

Just to be clear: in the majority of EU countries, it is perfectly legal for a private person to have a bank account overseas. Be it in the US, Panama or somewhere in central Africa. There is also no requirement to report such account.

I clicked on the US and see that it gets loads of secrecy points in all kinds of categories, but 0 points from the category of "Consistent Personal Income Tax".

I laughed.

I skimmed through the PDF about germany and found this interesting bit

>This [federal competition] has repeatedly served as an excuse to engage in ruinous intra-German ‘tax wars’ for lax enforcement, auditing and the hiring and staffing of local tax authorities.6

which i never heard of. So i check the source and got got redirected to just an image.

>http://www.taxjustice.net/topics/race-to-the-bottom/tax-wars...

Some of the listed sources there (https://fsi.taxjustice.net/PDF/Germany.pdf) are broken but not all, some do link to actual credible thrid parties.

Honestly this index seems flawed. Where's Monaco, Malta, or Liechtenstein?

When we speak of finances, these countries are the top of the top and literally where politicians from all over the world hide their money.

Monaco is impractical for most tax evasion purposes, since most advantages require to be resident. If you're not resident, Monegasque banks will send your financial information to the country where you're resident. Malta, Liechtenstein, or most "classic" European havens are largely the same: within the EEA your residence country will have all the bank information about you.

They sure have advantageous tax rates to promote certain types of residency/investment, but the financial secrecy isn't really there, which is what this index is about.

#109, #18, and #52 respectively.

The website provides extremely extensive breakdowns of the exact index contributors for each country, presumably those will illuminate why the rankings are what they are.

Excellent ranking for those wishing to have a reasonably well researched list of candidate countries for where they could place their hidden funds and avoid future taxes. Bravo.

realistically you need a decent level of wealth to participate in these tax havens. It's expensive to hire a lawyer who knows this stuff, and even more expensive for administration and execution. The people who have the level of wealth to pay for this are already doing it.

Totally agree. Schemes exists, but they are unavailable for scmucks. As after 2008 financial crysis it was made much more “exclusive” as it was before. For ordinary folks it transformed. For example, in Europe now is popular zero Corp tax on reinvested money.

Apart from the Baltics who is doing that?

Well, researching and listing reality is probably not the problem here.

This is pretty stupid if you ask me, the top of the list is just stable countries with a strong tradition of rule of law.

Of course, those are two prime characteristics you want in a tax haven. You want it to have rule of law since you don't want your money/assets/secrets expropriated or exposed, and you don't want a new regime to come in to do the previous for their benefit. Just as long as the haven is concerned about their laws, not other countries laws.

Haha I thought the same thing. The more I read it, the more it seemed like a list of countries where there's actually due process, even for the bad guys.

Mainly it's countries with easily setup legal anonymous LLPs or without directories of ownership, that are economically stable and where there is little political pressure (internal or external) to decrease secrecy. Lack of internal pressure is common when the country strongly benefits from being an offshore secrecy location (Switzerland, Singapore, HK) or when it's not very susceptible to international pressure (US, UK).

Whether it's "stupid" or not depends on how much you weigh bank secrecy and privacy against the fight on money laundering, corruption, terrorism financing and sanctions evasion.

Either way, the degree of secrecy you get is also usually a lot higher if your assets are not in your home country, which means that bank privacy is much higher for the global rich.

Financial secrecy, or financial privacy?

I honestly don't know how to read it: does this mean that the Cayman Island, ranked 1st, are the most secretive or the less secretive in the world? (according to this ranking)

It's best for financial privacy. Good for them.

And equally so for anyone who escapes globalist & socialist busybodies like AOC and takes their money to a safe place.

NPR did a podcast where they setup a shell company and where they look into the top countries for this.

https://www.npr.org/2021/10/06/1043746410/we-set-up-an-offsh...

Thanks for sharing! I setup a quarterly donation. This is important work.

And at rank 0: Monero.

This is a great starting point, but things like BEPs mean this usually more complex than one country's sole secrecy index.

More like a map of where oppressive regimes want total control over your finances.

Private wealth has already been taxed unfortunately

That site is bullshit. Tax justice my ass. Globalist thugs.

Is there such a thing as Literal Secrecy? You know, when you share personal info with a provider and they aren't supposed to leak it? No, that's called privacy.

I live in one of the high ranked countries and I think the more financial privacy is available, the better. That's how it's supposed to be and if someone oppressed (financially or otherwise) from abroad uses local services to escape that oppression, good for them.

If you have a high tax or reckless spending problem that makes your people take their money out of YOUR country, spend less.

Russia and China score extremely well, and the US is the second worst?

Is it fine when the ruling class can get away with moving money?

Who funded this?

It's completely logical: the Russian and Chinese ruling classes want to hide their ill-gotten money from taxes, from journalists, and from being arbitrarily seized by greedy officials and well-connected rivals. Thus, they move money from the somewhat transparent Russian and Chinese institutions to the safety of more murky Western economies.

Recognizing "classes" in society is so XIX century, we should move away from that.

Re: the original concern - that website's methodology is very vague and intermixes a number of very distinct criteria. That's why their overall result looks bogus and they even have a page to yell at the critics preventively [1].

[1] https://fsi.taxjustice.net/en/introduction/method-and-concep...

The US has a few states that allow you to set up a shell company with very pretty much no proof of identity. It’s one way that South Dakota is apparently a big tax haven now.

https://www.npr.org/2021/10/03/1042885263/pandora-papers-wea...

Planet Money has done an episode on this sort of thing in the past where they found it much easier to open a shell business in the US vs the rest of the world. https://www.npr.org/2021/10/06/1043746410/we-set-up-an-offsh...

That's a red herring honestly, because you can't actually do much with that entity until you get a tax ID (from the IRS) and a bank account (where KYC is very tight). The point being that from a tax standpoint these "anonymous" companies are pretty useless. They can however obfuscate ownership of assets.

Example: sure you can transfer your house into South Dakota LLC, and yes when someone looks up the ownership in records, they won't be able to see who owns that house, but there is no tax being avoided.

How's it work if you own the house (purchased by a transfer from ??? to your lawyer) and then sell it (funds sent to your lawyer and then to ???) ?

Probably couldn't get a US mortgage without that tax ID or bank account.

If you rent it out, I guess the contract should be with the LLC and then you run into the tax ID/LLC issues, but people will probably sign a lease with whomever and pay whomever they're told (whether it's the LLC or not).

It depends on what tax you’re theoretically trying to avoid (Your definitely not avoiding property taxes). if you don’t pay tax on the rental income, or capital gains your breaking the law, the question is if the auditors show up, are you really going to be safe? And the answer is possibly? But it would take a ton of work and breaking a whole bunch of other laws along the way (offshore banking relationships in non-cooperation countries, mail drops, repatriation of assets problems etc) , and at the end of the day the government will just put a lien on the house until they’ve gotten what they want.

Yes, the US is so secret we know exactly how much is hidden and where. Meanwhile Russia is so transparent, wealth hoarding oligarchs can't even exist. /s

> Russia and China score extremely well, and the US is the second worst?

This is a list of countries that benefit from capital flight from countries such as Russia and China.

> Who funded this?

https://taxjustice.net/our-funders/

Page 18 of https://taxjustice.net/wp-content/uploads/2021/03/Tax-Justic...

It's basically funded by European grants so it does not seem fishy.

Honestly, I know nothing about them but the largest donor on that list is a USA based NGO..

$2 million Ford Foundation Grant: https://en.wikipedia.org/wiki/Ford_Foundation

Not too surprising to me, honestly.

Wealthy Russians and Chinese are hiding their money in the West (UK, US, Canada) precisely for that reason. London (AKA Moscow-on-the-Thames) is famous for happily taking in and protecting that dirty money.

The "City of London" is indeed the bankster behind the worlds tax havens...

It's a pathetic joke. The US has very little real financial secrecy. The Feds have trivial access to all financial transactions inside of the US if they have cause to need to look. Beyond that, the majority of US wealth is contained in the stock market and land, both of which tend to reveal the wealthy due to public records (which is how we know how much land Bill Gates has been accumulating and how many shares of Tesla Elon Musk owns). The US has a small number of unknown super wealthy because of that, whereas China and Russia are extraordinarily opaque by comparison. The US also requires its politicians to report their wealth within a range. Now try to get that kind of information from Putin or Xi.

Yeah, I do taxes for a living, and people seriously underestimate how hard it is for anyone to hide a substantial amount of money that was made in the U.S. As soon as you want to do anything with it besides hide it under your mattress, there's going to be a record of it that either the state or federal government can obtain.

I think the idea is to hide from other countries. So if you are a wealthy Chinese you have a much better time hiding your money in Delaware than in Paris for instance.

This reminds me of a term used on one of those expat/sovereign man blogs: "Redundant Array of Independent Jurisdictions". The idea being that you have citizenship from Country A, reside in Country B, and run your finances through Country C, so you have no single-point-of-failure in governance over your life/assets.

+ taxes, its less tax efficient to put assets in France than it is in the US - so why would you?

The main issue is certain US states, such as Delaware, allow you to set up anonymous shell companies. Anonymous shell companies are a bit like BitTorrent. Sure, there are legal uses, but there are a lot more illegal ones.

Planet Money did an episode in which they registered just such a company in Delaware: https://www.npr.org/sections/money/2016/03/16/470722656/epis...

Honestly this is not the main issue at all.

This is a bad analogy (so bear with me), Let's say you want to operate an anonymous private mail server, having an anonymous shell corp is like registering your domain name anonymously. Sure an important piece of the puzzle but nothing close to achieving the whole objective. You then need acquire all the other pieces of the puzzle anonymously as well (which is incredibly hard - especially without committing innumerable crimes along the way).

Seperately, I listened to the podcast, those two are financially literate.

How much money did they manage to launder with their shell company?

I have a friend in DE who works for a company whose main reason for existence is setting up shell companies to hide luxury assets for rich Europeans and Russians (planes, yachts, etc)

No we score extremely well and Russia and China are some of the worst. Privacy in finance is a great thing, KYC and reporting requirements are massive violations of privacy and intolerable.

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