Switzerland is slipping down in a ranking of financial secrecy and has been overtaking by an old and mighty rival.
Switzerland is no longer the biggest enabler of financial secrecy in the world, according to the «Financial Secrecy Index 2020» compiled by the tax justice network. The home of private banking has slipped to third place behind Cayman and the U.S. and isn’t top of the list for the first time since 2011.
«The U.S. has overtaken Switzerland in a global ranking of countries most complicit in helping individuals to hide their finances from the rule of law – but Cayman has leapfrogged both to rank as the worst offender,» said the tax justice network. «Financial secrecy around the world is decreasing as a result of recent transparency reforms. On average, countries on the index reduced their contribution to global financial secrecy by 7 per cent.»
Automatic Exchange of Information
Switzerland’s lower secrecy score is partly due to the increase in the number of countries with which it automatically exchanges information with under the common reporting standard. Also, there was a reduction in the volume of financial activity conducted in the country by non-residents.
The overtaking of Switzerland by the U.S. is more than only a tad ironic given the role the U.S. judiciary played in breaking Swiss banking secrecy. The world’s largest financial market had a higher secrecy score mainly because New Hampshire passed a new law that allows the establishing of non-charitable private foundations without the need for disclosure.
Hedge Fund Activities in Cayman
The ascent in the ranking by Cayman «points to major risks emanating from its hedge fund industry, which uses companies, trusts and limited partnerships that are cloaked in secrecy,» said the tax justice network.
The network started out in the U.K. but has grown to be a global organization pushing for tax justice. The index is a biennial report and was published for the sixth time.
