Financial Transparency Coalition

Washington — A new report released today from Global Financial Integrity (GFI) on private, non-resident deposits in secrecy jurisdictions finds that the United States, United Kingdom, and the Cayman Islands are the most popular destinations for financial deposits by non-residents. Switzerland, Luxembourg, and Hong Kong also make the top 10 list of destinations.

“This report looks at deposits held offshore by private entities on a country-by-country basis, achieving a level of specificity previously unavailable to the public,” explained GFI director Raymond Baker. “With overall deposits in secrecy jurisdictions currently approaching US$10 trillion, this report measures a sizable chunk of global wealth and helps us to better understand where individuals and corporations are putting their money.”

Privately Held, Non-Resident Deposits in Secrecy Jurisdictions analyzes data from the Bank of International Settlements and the International Monetary Fund to measure total deposits by non-residents in areas considered secrecy jurisdictions under the definition established by the Tax Justice Network.

Notable report findings include:

• Total Current total deposits by non-residents in offshore centers and secrecy jurisdictions are just under US$10 trillion;
• The United States, the United Kingdom, and the Cayman Islands top the list of jurisdictions, with the United States out in front with more than US$2 trillion in non-resident, privately held deposits in the most recent quarter for which data are available (June 2009);
• Contrary to expectations of perceived favorability for deposits, Asia accounts for only 6 percent of worldwide offshore deposits, although Hong Kong is the tenth most popular secrecy jurisdiction by deposits in this report;
• The rate of growth of offshore deposits in secrecy jurisdictions has expanded at an average of 9 percent per annum since the early 1990s, significantly outpacing the rise of world wealth in the last decade. The gap between these two growth rates may be attributed to increases in illicit financial flows from developing countries and tax evasion by residents of developed countries.

The report also contains two case studies of Switzerland and Iceland, which show measurable fluctuations in financial deposits correlated to events in which financial secrecy or overall market solvency were threatened.

“This report shows that offshore deposits are on the rise, and the quantities of money being sent into these jurisdictions are massive,” said Mr. Baker. “The report also helps us to better understand where reporting may be improved to better differentiate between licit deposits and illicit deposits, which will ultimately enable better law enforcement in cases of tax evasion and other financial crimes.”

Privately Held, Non-Resident Deposits in Secrecy Jurisdictions is the second report by GFI economist Ann Hollingshead. Her earlier report, Implied Tax Revenue Loss from Trade Mispricing, was released last month. For copies of either report please visit www.gfip.org or contact Monique Perry Danziger at 202-293-0740 to request a copy or schedule an interview.