What is a secrecy jurisdiction?
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The Tax Justice Network prefers the term ‘secrecy jurisdiction’ although we sometimes use it interchangeably with the term ‘tax haven’ – depending on which aspect we want to emphasise. For the Financial Secrecy Index we generally prefer to use secrecy jurisdiction. We sometimes use the term ‘offshore financial centre’ too. There is no generally agreed definition of what tax havens or secrecy jurisdictions are: the phenomenon has many different aspects and no single definition can capture them all. For the purposes of the index, we employ the following working definition:
For a more detailed exploration of the themes, see an article we published in Economic Geography, as well as a book chapter written by Markus Meinzer, and Richard Murphy’s Finding the Secrecy World. A ranking of jurisdictions by secrecy score is provided on the right. The Financial Secrecy Index focuses on secrecy (escape from disclosure) but these jurisdictions also often offer escape from tax, from financial regulation, from criminal laws, from corporate governance rules, from inheritance rules, and more. The offshore system is an interconnected ecosystem of different jurisdictions offering different mixes of these escape facilities and the various different flavours of secrecy. We have also found that secrecy jurisdictions tend to be captured states, where offshore financial services tend to be deliberately ring-fenced and insulated from domestic political opposition. Relevant laws and approaches to the industry are created by small numbers of professional insiders in the jurisdiction in collaboration with offshore financial services interests from elsewhere, with the civil service often providing little more than a rubber-stamping service. Most of our narrative reports for the larger secrecy jurisdictions find the captured state phenomenon to be relevant, as does the Tax Justice Network’s research into the Finance Curse. The business model of these places is the product of two apparently conflicting offerings or incentives to international owners of financial capital. The first is to convince them that the jurisdiction is safe, trustworthy, and law-abiding. The second is to convince many of them that they will tolerate and protect law-breaking dirty money or abusive behaviour. Crudely put, the offshore offering is a message to the world's capital that "we will not steal your money, but we will turn a blind eye if you've stolen someone else's." This perspective helps explain the apparent paradox that jurisdictions such as Switzerland or the UK are regularly ranked among the so-called cleanest and least corrupt in international corruption rankings – while also harbouring oceans of dirty money. Geography: the five groupings Consider first how many rich Nigerians are likely to stash their wealth in Zurich – and then consider how many rich Swiss are likely to stash their wealth in Lagos. The answer is obvious. Secret capital almost always flows from poor to rich countries: overwhelmingly, the secrecy jurisdictions are located in rich countries. We loosely describe five main groupings (click on the countries to access their special reports outlining the histories and political economy of their offshore sectors.
See also the Politics of Secrecy for further insights into what the offshore system is.
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Ranking by secrecy score only Our main index is created by mathematically combining a secrecy score with a weighting. This ranking, however, strips out the weighting component and ranks jurisdictions by their secrecy score alone. Commercial users must purchase a licence to use this data. Click here for more information.
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