Black money was hidden in jurisdictions with regulations that encourage bank secrecy is already the sum of the economies of the US and China. The latest estimates speak of the fact that illicit transfers to these enclaves reached, in 2018, 1.6 trillion dollars, above the Spanish GDP.
The global siege of illicit money is a chimera. Capital evasions continue to flow from one side of the planet to the other everywhere. The hesitant attempts to prevent large individual assets and corporate profits from being subject to the obligation to pay the taxes due to them for their income are not effective. Tax havens, countries that facilitate the laundering of these capitals and territories with lax banking rules and, therefore, prone to swell the long list of jurisdictions with some methodology to the use of financial secrecy, delight investors, companies, and banking entities that they have decided to keep their fortunes or their hidden benefits or benefits safe. That is, their wealth and tax avoidance strategies remain unrelated to the radar of the tax authorities.
With justifications that leave generic appeals that have taken root in society, through the use of tax optimization formulas, as they have been popularized by tax advice from large firms, or as the designation of the head office, in the case of the design of the corporate tax returns, and that determines the nationality of the state coffers that receive their tax obligations. Even though, on many occasions, the choice of location does not usually correspond to the productive activity of the multinationals, the firms that most employ this fiscal engineering alternative, or even to the headquarters in which the large companies are taken. business decisions.
The dimension of this leak is still extraordinary. If at the beginning of the crisis the treasury accumulated by territories with harmful tax practices, which include off-shore enclaves, which also includes regulatory norms favorable to banking secrecy, was 7 trillion dollars, the equivalent of the sum of the economies of Germany and Japan, in dollars of the time, according to the OECD, at present, that number has multiplied by 4.5, up to 32 trillion dollars, which reveals that the accumulation of wealth of illicit or unreported origin is similar to the GDP of the two largest economic powers - US: 20.5 billion dollars and China: 13.4 billion - according to the estimates of the Tax Justice Network; independent organization, born in 2003 with the mission of interceding in governments to produce a "systematic change" that ends both tax havens and privacy in identifying beneficiaries of opaque accounts in places with banking secrecy. At the rate of 1.6 trillion dollars a year, said its experts, with the figures of 2018 leaks in hand. A succulent cake that exceeds the size of the Spanish economy.
In percentage terms, the phenomenon is also more paranormal. While in the prolegomena of the credit crunch caused by the accumulation of toxic financial assets in the banking balance sheets of the entire planet, capital flows in the direction of these territories represented 13% of world GDP, at present, this illicit trade in assets It has come to mean 37.7% of the productive activity of the group of countries that make up the planet and that the IMF values at 84.8 billion dollars at the end of 2018.
The exponential enrichment of the great fortunes all over the world, the sudden rise of business profits in the business cycle that arose, artificially, with official programs of economic and monetary stimulus on behalf of the taxpayers, and the brilliant increase of new rich among the main emerging markets, lies behind this bonanza of global opacity.
Blacklists not recognized globally
One of the most visible obstacles that explain the absence of an international consensus is the absence of mutual recognition of the territories with some type of banking secrecy and/or, with harmful fiscal practices. The last sample button is the one elaborated by the EU at the beginning of February. The White House did not like that in its classification of countries that encourage money laundering, Puerto Rico, a state associated with the American Union, was included. The US Treasury has immediately transferred to Brussels the permission it has granted to US banks to ignore European directives, in an unprecedented transatlantic diplomatic rebuff.
In addition to Puerto Rico, the European Commission, which expanded from 16 to 23 the number of territories that are conniving with the black money, incorporated three other enclaves under the jurisdiction of Washington: Samoa, Guam, and the Virgin Islands. At a time when the scandals in which large European banks have been involved, and Americans, for these crimes have happened without any solution of continuity. "The EU's action is unprecedented," said Jennifer Fowler, of the Brunswick Group consultancy, and former senior Treasury Department official, who admitted that the Trump Administration is concerned that several of its enclaves swell the blacklist of money laundering. of capitals next to countries like Iran, Syria, or North Korea to which their diplomacy has catalogued to them in the last years like failed states.
"The European listing is problematic because it does not clearly distinguish what type of requirements it requires from the different enclaves to gather reliable information. Operating with a financial institution in Iran presents, in the eyes of the EU, a series of different demands than those required for Guam, for example; it is as if they were moved by different concerns in different territories," says Joshua Kirschenbaum, another former Treasury money-laundering expert.
In its 35-page report, Europe justifies the revision of its list by its Financial Action Force (FATF), an institution created in 1989 by the G-8 to combat this scourge, after six years of investigations, admits that Notable absences persist, such as Russia, but "it is going in the right direction", as Ana Gomes, the Portuguese MEP, points out, one of the most critical voices against tax evasion and black money laundering. "It is not enough, but it is important to know that Europe will continue to add places that are attractive to a tax crime and financial crime," he says.
More specifically, the text echoes the American territories in very strong terms. "They follow different" regulatory "strategies that are" determinants "for laundering illicit capital. Except for Puerto Rico, the other two enclaves are classified as "jurisdictions that do not cooperate" or do enough to combat tax fraud and tax evasion. Gomes also highlights the entry in this list of Saudi Arabia or Panama. "We have set stricter standards to fight practices that act as real lifesavers for organized crime and terrorism," said EU Justice Commissioner Vera Jourova.
However, in latitudes such as Russia, that level of demand seems to be conspicuous by its absence. Above all, after Danske Bank, the largest Danish bank is in the eye of the hurricane of a macro-legal case involving Russian millionaires through its Estonian subsidiary. And that threatens to bring to the forefront other Scandinavian financial entities that, allegedly, performed similar modus operandi. Among others, Svenska Handelsbanken AB, the largest Swedish lender by volume of assets, is under investigation for its dubious business in the three former Soviet Baltic republics. While other European financial giants such as Deutsche Bank also have ongoing processes or the Swedish Swedbank, which Justice pursues to try to discover movements of money laundering worth 230 billion dollars.
This lack of international harmony to face the double scourge of tax evasion and permissive places with money laundering is also reciprocal. Europe has also never liked the identification of 65 countries or jurisdictions of first concern, slang with which the US Department of State, at the request of the Treasury, registers, since 2016, enclaves that "formalize significant amounts of money of criminal origin" and with "serious evidence of criminality." The US study includes from high-risk or geostrategic points of risk for the White House, such as Afghanistan or Iran, to tax havens such as Antigua and Barbuda, the Bahamas or the Cayman Islands, but also to European allies such as Austria, France, Germany, Holland or Spain, and other Anglo-Saxon partners such as Australia, as well as Mexico, Argentina and Brazil. Even Samoa, Guam, and the Virgin Islands.
A lap with the classifications
The constant scuffle between the US, Europe, and other major partners of the G-20, the only forum that could undertake a genuine crusade against financial secrecy and tax allusion. Hence, the best sources of information come from institutions outside the national orbits. One of them is the FATF. Name in English of the Financial Action Task Force (FATF). In its global report in 2018, it adds eight countries to what it considers money laundering: Iran, Angola, North Korea, Ecuador, Ethiopia, Pakistan, Turkmenistan, and Sao Tome and Principe. That adds up to its twenty traditional focuses: Antigua and Barbuda, Azerbaijan, Indonesia, Bolivia, Greece, Kenya, Morocco, Myanmar, Nepal, Nigeria, Paraguay, Qatar, Sri Lanka, Sudan, Trinidad and Tobago, Thailand, Turkey, Ukraine, and Yemen.
Its experts argue that "this list increases the international pressure to undertake serious regulations against money laundering", although, "the rich countries [that run this intergovernmental panel] need to put their house to toughen their demand criteria," warns Anthea Lawson, the analyst at Global Witness, an NGO critical of global corruption, which she accuses of the perpetuity of poverty and the exploitation of the planet's resources. In this regard, the Basel Anti-Money Laundering Index, attached to the International Bank of Payments (BIS) and based in this Swiss city, is also worth mentioning. Tajikistan, Mozambique, Afghanistan, Laos, and Guinea Bissau are its worst rated. In a ranking headed by Finland, Estonia, Lithuania, New Zealand, and Macedonia.
However, their ostensible differences in classifications further complicate punishment actions. In a moment of galloping absence from any attempt at global governance, the G-20 has not been the forum called to manage the global economic and financial architecture, and a sudden change of international order, which points to a gradual increase in systemic risks; geostrategic and monetary. Because of the OECD's first list, at the end of the last century, nations like Russia or Israel disappeared immediately, while the Baltic partners of the EU, for example, are among the most commendable in the fight against the laundering of the FATF. Despite being the focus of money laundering of Russian billionaires.
The list of tax havens declared by the EU has also been considerably reduced. Specifically, only 17 enclaves: Samoa and its American enclave, Bahrain, Barbados, Grenada, Guam, South Korea, Macao, Marshall Islands, Mongolia, Namibia, Palau, Panama, Saint Lucia, Trinidad and Tobago, Tunisia, and the Arab Emirates United. From it, the Cayman Islands and Bermuda, territories under British jurisdiction, have disappeared, by magic. And without news from Monaco, Gibraltar, Luxembourg Liechtenstein, or even Switzerland, which Chancellor Angela Merkel herself pointed to when the beneficiaries of tax evasion filtered through anonymous professionals operating in large Swiss investment banks. Europe is covered in its parallel list of territories with "doubtful" in favor of fiscal transparency and that swells 47 places.
For Tax Justice, there is no doubt which is the main harmful jurisdictions. Luxembourg, with more than 3 billion euros of funds of dubious origin, of which almost half, 1.4 billion, have the breastplate of identifying privacy.
The second in importance is the Cayman Islands, which holds 6% of the total banking assets of the planet. It is followed by the British Isle of Man, where corporate, capital, and inheritance taxes are not paid, Jersey, where more than 3 trillion euros per square kilometer of land, and Ireland are deposited, which has allowed technological multinationals such as Apple to elude more than 55 billion euros of tax obligations. Mauritius, a place where companies benefit from extraordinary business tax credits; Bermuda, the tax office of Google and Monaco, which houses the most expensive square meter property in the world, a house of 180 square meters exceeds 1.2 million euros, occupy the sixth, seventh and eighth steps. In a list that closes Switzerland, the most authentic destination of capital, with strict banking secrecy, and the Bahamas, recipient of millionaire funds of Anglo-Saxon origin, especially British.
Some 21 trillion of the 32 that house offshore financial centers have a stopover in tax havens. Tax Justice also highlights other latitudes.
Like Gibraltar, where you only pay for the first $ 90,000 of income. Or the Virgin Islands, which does not tax or taxable bases of people, or capital gains, or inheritance or tax on sales (VAT). It only requires 15% of Companies and 14% of social contributions to workers. Or Hong Kong, which boasts of the tax hook that supposes for the companies the wide deductions on the benefits and the labor personnel. But also American states like Delaware, Nevada, or Wyoming, with more than notable tax advantages and laws of non-taxation to franchises, rents, or the creation of companies, for example.
Bank secrecy indicator
Precisely Switzerland, the US, and the Cayman Islands are, for the Financial Secrecy Index (FSI), one of the most reliable classifications, because not only do they handle indicators on financial secrets, but they compute them together with parameters such as the capital flows that reach those destinations or the economic weight of the territories it analyzes. It is, then, more than a list of tax havens, offshore centers, or countries that encourage money laundering.
In its diagnosis last year, the FSI clarifies that nations such as the US or Germany, despite having a tax burden on companies and individual subjects above the world average, contribute to perpetuating bank secrecy, that Ireland can be considered "the economic goblin" "Apple and prevents initiatives such as the so-called Erosion of the Taxable Base (BEPS) of the OECD can be taken seriously.
Because annually, the US $ 1.6 trillion for the tax engineering of its large multinationals escape from the US Treasury; because Europe allows Apple, the largest company in the world by market capitalization, to evade 13 billion euros for the hyper-protective Irish laws on privacy, or because the City of London launches more than 130 billion dollars a year, says Robert Barrington, director Executive of Transparency International in the United Kingdom.
The IMF has put numbers to the laundering of illicit money of the big emporiums: 12 trillion euros. A lot of hidden capital that makes the OECD BEPS, created in 2013 to homogenize the criteria on global taxation for transfer of profits does not pass into the annals of history as an efficient instrument in the fight against tax avoidance. Because it does not seem like a coincidence that the 500 US corporations keep more than 4 trillion dollars of their profits (similar to the German economy) in low tax jurisdictions.