Financial Secrecy Index
The Financial Secrecy Index is a qualitative scoring of financial secrecy indicators, weighted by the economic flows of each country.
Confusion
While related to tax havens, the FSI is not a list of tax havens per se, and it does not attempt to estimate actual taxes avoided or profits shifted, unlike the techniques used in compilation of modern tax haven lists. The FSI is therefore more correctly a list of financial secrecy jurisdictions. While having many similarities to tax havens, the FSI produces some results that are very different from established tax haven lists.The FSI showed jurisdictions like the U.S. and Germany, despite high tax rates, are large contributors to global financial secrecy, however, this is often misinterpreted as implying that the US and Germany are "tax havens"; for example, foreign corporates do not move to the U.S. or Germany to avoid tax. The FSI does not capture modern corporate tax havens, such as Ireland, the Netherlands and the United Kingdom, who maintain high levels of OECD–compliance and transparency, but are responsible for the global largest base erosion and profit shifting tax avoidance activity.
For example, Apple's Irish "leprechaun economics" tax restructure in Q1 2015, the largest BEPS transaction in history, remained unknown for years due to Irish data-protection laws. The issue is the scoring by the FSI for some of the most favoured secrecy tools of modern tax havens : the unlimited liability company, trusts, and certain SPV structures, none of which file public accounts in havens like Ireland and the United Kingdom. The FSI focuses on ownership of these tools, versus visibility into the tools. An example of this disconnect, was the EU's €13 billion tax fine on Apple's two Irish ULCs in 2016, who while known, were found by the EU to be avoiding large amounts of Irish tax during the 2004–2014 period.
History
The Financial Secrecy Index started with 60 jurisdictions in 2009, but the latest 2018 FSI now extends to 112 jurisdictions. As well as a ranking table outlining Secrecy Indicators, Global Scale Weights, and FSI Values, the TJN also produces a separate secrecy report on each individual jurisdiction, providing further comment and analysis. The biennial FSI releases are widely reported in the general and financial media, and FSI scores now are seen in EU reports. FSI scores are used as one indicator of the quality of AML/CFT systems in the Basel AML Index, a money laundering and terrorist financing risk assessment tool developed by the Basel Institute on Governance.The 2018 FSI results were released on the Financial Secrecy Index portal, and they update the 2015 FSI results.
Financial Secrecy Index, 2018
One hundred and twelve countries and territories were included in the 2018 Financial Secrecy Index.| Rank | Country or territory | FSI Value | FSI Share | Secrecy Score | Global Scale Weight |
| 1 | 1,589.57 | 5.01% | 76 | 4.50% | |
| 2 | 1,298.47 | 4.09% | 60 | 22.30% | |
| 3 | 1,267.68 | 4.00% | 72 | 3.79% | |
| 4 | 1,243.68 | 3.92% | 71 | 4.17% | |
| 5 | 1,081.98 | 3.41% | 67 | 4.58% | |
| 6 | 975.92 | 3.08% | 58 | 12.13% | |
| 7 | 768.95 | 2.42% | 59 | 5.17% | |
| 8 | 743.38 | 2.34% | 76 | 0.50% | |
| 9 | 661.15 | 2.08% | 84 | 0.14% | |
| 10 | 658.92 | 2.08% | 72 | 0.52% | |
| 11 | 644.41 | 2.03% | 72 | 0.51% | |
| 12 | 625.84 | 1.97% | 77 | 0.27% | |
| 13 | 623.92 | 1.97% | 61 | 2.24% | |
| 14 | 598.81 | 1.89% | 66 | 0.90% | |
| 15 | 550.60 | 1.74% | 80 | 0.13% | |
| 16 | 502.76 | 1.59% | 69 | 0.38% | |
| 17 | 490.71 | 1.55% | 78 | 0.11% | |
| 18 | 438.22 | 1.38% | 65 | 0.38% | |
| 19 | 429.00 | 1.35% | 85 | 0.04% | |
| 20 | 426.31 | 1.34% | 61 | 0.71% | |
| 21 | 425.84 | 1.34% | 55 | 1.75% | |
| 22 | 424.92 | 1.34% | 68 | 0.24% | |
| 23 | 423.76 | 1.34% | 42 | 17.37% | |
| 24 | 404.44 | 1.28% | 61 | 0.55% | |
| 25 | 404.18 | 1.27% | 52 | 2.52% | |
| 26 | 387.94 | 1.22% | 51 | 2.66% | |
| 27 | 378.35 | 1.19% | 80 | 0.04% | |
| 28 | 372.58 | 1.17% | 60 | 0.51% | |
| 29 | 361.16 | 1.14% | 64 | 0.26% | |
| 30 | 353.89 | 1.12% | 68 | 0.14% | |
| 31 | 335.11 | 1.06% | 72 | 0.07% | |
| 32 | 316.62 | 1.00% | 52 | 1.16% | |
| 33 | 314.06 | 0.99% | 59 | 0.36% | |
| 34 | 313.55 | 0.99% | 63 | 0.19% | |
| 35 | 310.41 | 0.98% | 56 | 0.56% | |
| 36 | 281.83 | 0.89% | 73 | 0.04% | |
| 37 | 278.58 | 0.88% | 70 | 0.05% | |
| 38 | 277.29 | 0.87% | 80 | 0.02% | |
| 39 | 275.29 | 0.87% | 73 | 0.04% | |
| 40 | 269.81 | 0.85% | 65 | 0.09% | |
| 41 | 254.14 | 0.80% | 49 | 0.92% | |
| 42 | 248.68 | 0.78% | 64 | 0.09% | |
| 43 | 246.25 | 0.78% | 69 | 0.04% | |
| 44 | 244.36 | 0.77% | 51 | 0.61% | |
| 45 | 242.85 | 0.77% | 52 | 0.55% | |
| 46 | 240.86 | 0.76% | 78 | 0.01% | |
| 47 | 232.30 | 0.73% | 66 | 0.06% | |
| 48 | 230.95 | 0.73% | 74 | 0.02% | |
| 49 | 223.47 | 0.70% | 72 | 0.02% | |
| 50 | 216.44 | 0.68% | 56 | 0.18% | |
| 51 | 215.40 | 0.68% | 57 | 0.15% | |
| 52 | 213.89 | 0.67% | 48 | 0.77% | |
| 53 | 212.97 | 0.67% | 44 | 1.56% | |
| 54 | 203.55 | 0.64% | 45 | 1.01% | |
| 55 | 195.65 | 0.62% | 57 | 0.11% | |
| 56 | 195.04 | 0.62% | 78 | 0.01% | |
| 57 | 188.79 | 0.60% | 61 | 0.05% | |
| 58 | 178.56 | 0.56% | 56 | 0.10% | |
| 59 | 168.78 | 0.53% | 69 | 0.01% | |
| 60 | 168.64 | 0.53% | 62 | 0.04% | |
| 61 | 166.12 | 0.52% | 53 | 0.15% | |
| 62 | 158.52 | 0.50% | 84 | 0.00% | |
| 63 | 152.55 | 0.48% | 77 | 0.00% | |
| 64 | 151.63 | 0.48% | 55 | 0.08% | |
| 65 | 151.06 | 0.48% | 77 | 0.00% | |
| 66 | 149.27 | 0.47% | 89 | 0.00% | |
| 67 | 148.20 | 0.47% | 61 | 0.03% | |
| 68 | 148.05 | 0.47% | 76 | 0.00% | |
| 69 | 147.09 | 0.46% | 72 | 0.01% | |
| 70 | 145.10 | 0.46% | 53 | 0.09% | |
| 71 | 142.23 | 0.45% | 53 | 0.09% | |
| 72 | 139.69 | 0.44% | 60 | 0.03% | |
| 73 | 138.00 | 0.44% | 49 | 0.16% | |
| 74 | 132.73 | 0.42% | 55 | 0.05% | |
| 75 | 128.92 | 0.41% | 73 | 0.00% | |
| 76 | 127.89 | 0.40% | 55 | 0.05% | |
| 77 | 125.26 | 0.40% | 75 | 0.00% | |
| 78 | 123.63 | 0.39% | 73 | 0.00% | |
| 79 | 119.36 | 0.38% | 59 | 0.02% | |
| 80 | 118.58 | 0.37% | 58 | 0.02% | |
| 81 | 115.90 | 0.37% | 78 | 0.00% | |
| 82 | 107.57 | 0.34% | 54 | 0.03% | |
| 83 | 107.44 | 0.34% | 71 | 0.00% | |
| 84 | 105.66 | 0.33% | 75 | 0.00% | |
| 85 | 105.03 | 0.33% | 69 | 0.00% | |
| 86 | 101.89 | 0.32% | 73 | 0.00% | |
| 87 | 98.08 | 0.31% | 77 | 0.00% | |
| 88 | 94.82 | 0.30% | 80 | 0.00% | |
| 89 | 91.38 | 0.29% | 54 | 0.02% | |
| 90 | 86.30 | 0.27% | 75 | 0.00% | |
| 91 | 85.60 | 0.27% | 84 | 0.00% | |
| 92 | 82.93 | 0.26% | 78 | 0.00% | |
| 93 | 79.47 | 0.25% | 51 | 0.02% | |
| 94 | 74.87 | 0.24% | 81 | 0.00% | |
| 95 | 68.85 | 0.22% | 62 | 0.00% | |
| 96 | † | 62.02 | 0.20% | 77 | 0.00% |
| 97 | 58.75 | 0.19% | 47 | 0.02% | |
| 98 | 54.53 | 0.17% | 87 | 0.00% | |
| 99 | 52.64 | 0.17% | 63 | 0.00% | |
| 100 | 44.97 | 0.14% | 75 | 0.00% | |
| 101 | 44.61 | 0.14% | 77 | 0.00% | |
| 102 | 39.76 | 0.13% | 61 | 0.00% | |
| 103 | 39.45 | 0.12% | 69 | 0.00% | |
| 104 | 35.32 | 0.11% | 42 | 0.01% | |
| 105 | 35.05 | 0.11% | 66 | 0.00% | |
| 106 | 34.51 | 0.11% | 77 | 0.00% | |
| 107 | 27.86 | 0.09% | 65 | 0.00% | |
| 108 | 26.32 | 0.08% | 67 | 0.00% | |
| 109 | 24.31 | 0.08% | 64 | 0.00% | |
| 110 | 21.52 | 0.07% | 78 | 0.00% | |
| 111 | 21.38 | 0.07% | 70 | 0.00% | |
| 112 | 16.53 | 0.05% | 78 | 0.00% |
† Dominica abandoned the JCPC in March 2015
Methodology
The process starts with the collation of a large database of 20 qualitative factors that look at "Secrecy Indicators", which are a jurisdiction's ownership registration, legal entity transparency, tax and financial regulation and international co-operation and treaties, to assess how secretive it is. The higher the SI score, the more secretive the jurisdiction to financial activities. The highest 2018 SI score was 89 for Vanuatu, and the joint lowest was 42 for the United Kingdom and Slovenia. To understand the scale of the contribution of jurisdictions, these SI scores are adjusted by a "Global Scale Weight", which is quantitatively estimated from IMF Balance of Payments data, to get the "FSI Value". In this way, jurisdictions with very high SI scores but small financial flows, can be compared with jurisdictions with lower SI scores but bigger financial flows. The largest global financial centres as well a major conduit ofcs feature high on this list.Since Financial Secrecy Index has been created on purpose to measure contribution of jurisdictions to the global problem of financial secrecy, the FSI value represents the secrecy score for each jurisdiction weighed by the size of each jurisdiction's share of the global market for financial services provided to non-resident clients:
where is Global Scale Weight of jurisdiction and is Secrecy Score of jurisdiction.
Secrecy Indicator Scores
Secrecy Scores are based on Key Financial Secrecy Indicators, which measure secrecy in different dimensions, such as ownership registration, legal entity transparency, integrity of tax and financial regulation and international standards and cooperation. Secrecy Score for each jurisdiction is obtained by taking the arithmetic average of the 20 Key Financial Secrecy Indicators:| Dimension of secrecy | Key Financial Secrecy Indicator | What is measured |
| Ownership Registration | Banking secrecy | Existence and availability of relevant banking information, the possibility of imprisonment or custodial sentencing for breaching banking secrecy. |
| Ownership Registration | Trusts and Foundations Register | Completeness and availability of information on all trusts and private foundations. |
| Ownership Registration | Recorded Company Ownership | Сompleteness and relevance of information regarding both legal and beneficial ownership. |
| Ownership Registration | Other Wealth ownership | Ownership transparency of real estate and of valuable assets stored in freeports. |
| Ownership Registration | Limited Partnership Transparency | Completeness and availability of information regarding legal and beneficial ownership and annual accounts of limited partnerships. |
| Legal Entity Transparency | Public Company Ownership | Completeness and availability of information on legal and beneficial ownership for all available types of companies with limited liability. |
| Legal Entity Transparency | Public Company Accounts | Accessibility of annual accounts of all available types of companies with limited liability. |
| Legal Entity Transparency | Country by Country Reporting | Completeness of financial information on global action on a country-by-country basis published by the companies listed on the stock exchanges or incorporated in a given jurisdiction. |
| Legal Entity Transparency | Corporate Tax Disclosure | Requirements for filling CbC reports by multinational corporations and accessibility of all unilateral cross-border tax rulings. |
| Legal Entity Transparency | Legal Entity Identifier | Requirements for usage and updating Legal Entity Identifier. |
| Integrity of tax and financial regulation | Tax Administration Capacity | Capacity of jurisdiction to collect and process data for investigating and ultimately taxing large taxpayers and high-net-worth individual. |
| Integrity of tax and financial regulation | Consistent Personal Income Tax | Complexity of Personal Income Tax regime and rules on citizenship/residency acquisition. |
| Integrity of tax and financial regulation | Avoids Promoting Tax Evasion | Whether a jurisdiction includes worldwide capital income in its income tax base and if it grants unilateral tax credits for foreign tax paid on certain foreign capital income. |
| Integrity of tax and financial regulation | Tax Court Secrecy | Openness of a jurisdiction's judicial system in civil and criminal tax proceedings. |
| Integrity of tax and financial regulation | Harmful Structures | Availability of large banknotes, unregistered bearer shares, series LLCs or protected cell companies and trusts with flee clauses. |
| Integrity of tax and financial regulation | Public Statistics | Availability of relevant statistical datasets about jurisdiction's international financial, trade, investment, and tax position. |
| International Standards and Cooperation | Anti-Money Laundering | Extent of compliance with the recommendations of the Financial Action Task Force. |
| International Standards and Cooperation | Automatic Information Exchange | Whether jurisdictions have signed the Multilateral Competent Authority Agreement and engage in a pilot project to assist developing countries. |
| International Standards and Cooperation | Bilateral Treaties | Level of jurisdiction's participation into efficient information exchange relationships conforming to the ‘upon request’ standard developed by the OECD and the Global Forum. |
| International Standards and Cooperation | International Legal Cooperation | Extent to which a jurisdiction participates in international transparency commitments and engages in international judicial cooperation on money laundering and other criminal matters. |
Global Scale Weights
Global Scale Weights represent the relative importance of each jurisdiction regarding its share of offshore financial services activity in the global total and measure a potential for each jurisdiction to contribute to the global problem of financial secrecy. GSW is defined as a proportion of the export value of financial services of each jurisdiction represented in FSI in the aggregated export value of financial services in 231 jurisdictions where export values were established.For the 154 jurisdictions, data on exports of financial services provided by IMF's Balance of Payments Statistics has been used. For the remaining 77 jurisdictions, the export value of financial services has been received by extrapolating from data on stocks of internationally held financial assets.