The US state of Delaware was ranked first on the Financial Secrecy Index, released this week by the US-based Tax Justice Network.
“Most ordinary people would never consider this jurisdiction alongside Bermuda, Monaco and Grand Cayman as a secrecy jurisdiction,” the Network’s blog stated. “Yet (Delaware’s) opacity score is as bad as the Cayman Islands’ score, and the sheer scale of operations places it well ahead of the rest.”
Index compilers noted that Nevada and Wyoming were also highly secretive, but Delaware’s sheer volume of active companies – 695,000, including half the companies publicly traded on the US stock exchange – assured the tiny northeastern state its first-place ranking.
Luxembourg Second and…
After Delaware, the Index listed Luxembourg in second place, followed by Switzerland, Cayman Islands and London. Down the list are places traditionally referred to as tax havens, such as Jersey (#11), Panama (#19) and the Bahamas (#33).
“What we wanted to do was match together the information on opacity, which in some tiny places is basically absolute, there is no openness no transparency at all, and match that with the volume of financial flows going through a place, to get some clear information as to how they contribute to the total financial secrecy that exists in the world’s financial system,” said TJN advisor Richard Murphy in a statement.
Among TJN’s concerns about financial secrecy is that it gives rise to risks of corruption, money laundering and hiding the proceeds of crimes like insider dealing, drug trafficking, human trafficking and piracy.
US Bill Would Cut Secrecy
A US Senate committee, meanwhile, is holding a hearing Thursday on a bill that would cut down on secrecy by requiring states to collect the names of corporations and companies formed under state laws, and to make those names available should law enforcement give a state a subpoena or summons. Among the cases to be heard Thursday will be that of Viktor Bout, an arms trafficker who used at least a dozen US corporations formed in Texas, Delaware and Florida to conduct his business.
“It should worry everyone that our state incorporation laws allow people like Viktor Bout to acquire U.S. corporations without having to divulge their ownership,” said Sen. Carl Levin (D-Michigan), who introduced the bill, in a statement. “Not only does our failure to get owner names make it easier for wrongdoers to use the corporate form for illegal purposes, but it makes it more difficult for the United States to press other nations to reform their secrecy practices.”
--Beth Kampschror
