Economy Jake Johnson

‘A Shameful Distinction’: US Ranked World’s Biggest Perpetrator of Financial Secrecy

When it comes to the world's financial secrecy, the United States ranks number one.

By Jake Johnson / Common Dreams

A global index published Tuesday ranks the United States as the world’s leading perpetrator of financial secrecy, citing the country’s refusal to share key information with the tax authorities of other nations and its status as a generous tax haven for foreign oligarchs, rich executives, and other elites.

The ranking comes despite U.S. President Joe Biden’s campaign-trail pledgeto “bring transparency to the global financial system, go after illicit tax havens, seize stolen assets, and make it more difficult for leaders who steal from their people to hide behind anonymous front companies.”

In December, following the leak of an enormous trove of tax documents that called additional attention to the country’s secretive financial system, Treasury Secretary Janet Yellen conceded, “There’s a good argument that, right now, the best place to hide and launder ill-gotten gains is actually the United States.”

The latest edition of the Financial Secrecy Index, a project of the Tax Justice Network (TJN), echoes that assessment, faulting the U.S. for its weak corporate tax disclosure rules and overall lack of transparency. In fact, the index awarded the U.S. the highest secrecy score since 2009, when the ranking began.

“That isn’t a prize the U.S. wants to claim for itself,” Gary Kalman, the executive director of Transparency International U.S., said in a statement. “The combination of secrecy and size of our financial system puts the U.S. ahead of other notorious secrecy havens like the Cayman Islands and Switzerland. That’s a shameful distinction.”

While noting that some progress has been made over the past year and a half—specifically Congress’ passage of a ban on anonymous shell companies, entities often used to hide illicit cash—TJN found that “the U.S. now fuels more global financial secrecy than Switzerland, Cayman, and Bermuda combined.”

TJN also stressed that the shell company law enacted in January 2021 is riddled with loopholes such as “limited definitions of which legal entities and beneficial owners must register, 23 baked-in exemptions to registration, and an absence of requirements on all trusts.”

To improve on its dismal ranking, TJN urged the U.S. to “reciprocally exchange information with other countries by adopting the Common Reporting Standard and become a party to amended Convention on Mutual Administrative Assistance in Tax Matters,” steps that “would cut its supply of financial secrecy to the world by 40%.”

The U.S.-based Financial Accountability and Corporate Transparency (FACT) Coalition also outlined a number of actions the Biden administration and Congress should take, including “introducing consistent anti-money laundering due diligence and reporting requirements to the $11 trillion U.S. private investment fund industry.”

“While the U.S. has committed to being a leader in cracking down on global corruption, these rankings show how corrupt actors are weaponizing our financial system against democracy here and abroad,” said Ian Gary, the FACT Coalition’s executive director.

The updated index comes a day before G7 finance ministers are set to meet in Bonn, Germany to discuss aid to Ukraine and enforcement of the unprecedented Western sanctions targeting Russian oligarchs, political leaders, and the broader economy.

TJN argued Tuesday that despite “subversion” by G7 countries, global financial secrecy has continued to shrink overall thanks to “more countries adopting or improving beneficial ownership registration laws—which require the identification and registration of the real individual, made of flesh and blood, who ultimately owns, controls, or benefits from a company or legal vehicle—and by more countries, particularly lower-income countries, improving international cooperation on anti-money laundering efforts, information exchange, treaties, and judicial cooperation.”

Alex Cobham, TJN’s chief executive, said in a statement that “globally, we’re starting to curb the financial secrecy used by Russian oligarchs, and also by tax evaders, corrupt politicians, and organized crime around the world to hide and launder ill-gotten wealth.”

“But the U.S., U.K., Germany, Italy, and Japan cut back that global progress by more than half, fueling financial secrecy instead of fighting it,” Cobham continued. “The G7 must make clear where they stand in the fight against financial secrecy by committing to a global asset register.”

TJN researcher Moran Harari added that “once again, a small club of rich countries setting global rules on finance and tax are found to be the ones most responsible for facilitating financial secrecy and tax abuses.”

“For decades, rich G7 countries courted billionaires, oligarchs, and corporate giants with secrecy loopholes and eyes-wide-shut-regulations,” said Harari. “The regulations they imposed facilitated the robbing of billions from poorer countries’ public purses. And now those same regulations are making it nearly impossible for G7 countries themselves to track down the billions held offshore by sanctioned Russian oligarchs.”

Jake Johnson

Jake Johnson is a staff writer for Common Dreams.

5 comments

  1. Thank you for the insights and information.
    But… What can I/We do about it? Really. From a practical perspective.
    Isn’t the US Government and Media already wholly owned and operated by the Financial-Military-Tech-Pharma-Energy complex?
    Please who me that I am wrong.
    Please.
    Otherwise, where is our power to change this?
    Help needed.

  2. Good Heavens! Look what the self-vaunted “greatest nation” on earth sports – 1)Prison Population by State 2022. The United States has the highest incarceration rate. Additionally, the increasing number of prisoners puts a major strain on state budgets. State prisons spend as high as $69,355 per inmate (the average cost of an inmate in New York).(Worldpopulationreview.com) 2) The highest perpetrator of financial secrecy 3)The U.S. came in at No. 39 on the child flourishing index,(thehill.com) 4)Ranks 1st in military spending – more than the next 5-8 countries combined “Data presented on this list is through 2022. Estimates are made when official data is not available. 1 United States $ 770,000,000,000 2 China $ 250,240,000,000 3 Russia $ 154,000,000,000 4 United Kingdom $ 68,000,000,000 5 Germany $ 50,300,000,000 6 India $ 49,600,000,000 7 Japan $ 47,482,740,000 8 South Korea $ 46,320,000,000 (www.globalfirepower.com) 5) The U.S. has the highest maternal mortality rate among developed countries… the U.S. is the only country not to guarantee access to provider home visits or paid parental leave in the postpartum period.(Commonwealthfund.org) 6) gun ownership and gun deaths: “2017 Pew Research Center study, about four in 10 Americans say they either own a gun or live in a home with guns — the highest level among the nations surveyed. “….Brazil topped the list of the most gun deaths, with a total of 43,200 out of the 250,000 deaths worldwide. The United States had the second-highest number of gun deaths with 37,200.”…[when] “looked at high-income countries and territories with populations of 10 million or more, the U.S. did come out on top [in number of gun deaths.” (Politifact.com) 7) A UN report released last weekend (2018) ranks the United States as the country with the highest poverty rate in the developed world. This explains the social problems facing the country, which, among other phenomena, have increased hatred towards migrants. (popularresistance.org) 8) “US comes in last in health care rankings of high-income countries 2022” (cnn.com) 9) “U.S. now ranks near the bottom among 35 industrialized nations in math PISA 2022 ” (sciencebriefss.com) “Pew Research from 2017 found the US ranked 38th in math and 24th in science when compared against 71 other countries. Only two decades prior, the US’s education system ranked 6th internationally.” (insider.com).
    So – what exactly is “best” about the USA????????

  3. as the pressure mounted on other countries, we subsumed the role of the bankster anon

  4. in a nation of immoral money worshippers—A veritable dictatorship kleptocracy, this surprises anybody?

  5. This has been going on for a long time. do we think that these Oligarchs are going allow laws passed, stopping them from hiding their money. Thomas Picketty said that there are unknown trillions hidden around the world. Look haw Panama has developed, lots of it from offshore money. I lived in Colombia for a long time and the Colombians ( including Escobar) were buysping millions of dollars of American Goods from Panama, and hiding their money there.The US did not complain until coke money was being hiden there,and the US Oligarchy was not getting a “cut” of it. but this will not be controlled until we get Control of Our Government!!

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