Offshore financial centre

In most cases, the term offshore financial center (literally of offshore financial center, financial center beyond the coast) sites, which are characterized by low taxes, a high degree of privacy and confidentiality ( no disclosure of information on financial transactions and ownership ) and a minimum financial market regulation and supervision (see also tax haven ). Resident banks and other financial institutions to wrap a large part of their business from abroad and the transactions and investment totals are extremely large compared to the volume of sales of the local real economy.

Many offshore financial centers are located on small islands. In most cases, there are former British colonies or dependencies, whence originated the name ( translated as beyond the coastal region, ie lying in international waters ). However, offshore is not geographically, but rather legal today to understand in this context: the financial centers outside the usual legal standards.

Economic structure

Important location factors in offshore centers are low or no taxes, a low level of regulation, a good bank secrecy, a relatively high level of education, little corruption, legal security and political stability.

The financial sector is in offshore financial centers, at least in the visibility of the dominant factor. Located include banks, insurance companies (for example, self- insurers ), trusts or funds for asset management. Also, onshore company founded companies that handle parts of their business to reduce, for example, liability risks, but also to conceal criminal activities and to minimize tax payments.

Further, there are individuals who manage in offshore financial centers assets, usually with the aim to avoid the higher tax rates in their home countries. The legal certainty and stability of the sites is compared to many emerging and developing countries high, which means that wealthy individuals and companies often manage their finances here.

Approximately 6-8 % of the world 's assets are managed according to OECD estimates in offshore locations.

The economic structure of the different locations, however, is very different. For example, while in Vanuatu the cliché of a tax haven with a high proportion of shell companies (see also letterbox Bank) corresponds to a few material held there business activities, locations are as Luxembourg (after Switzerland is one of the major centers of private banks in Europe) or Bermuda ( especially in the area reinsurance active) now complex sites that have formed in their markets important cluster.

A little-noticed area of business activities in offshore locations is the registration of vessels ( Panama, Bahamas) and aircraft (Bermuda, Cayman Islands ). For vessels especially the evasion of labor regulations plays a role. Aircraft are registered in offshore locations where airlines from developing or emerging countries need neutral ground to work with banks from developed countries in financing.

Problem of offshore financial centers

Proponents of offshore financial centers emphasize their important role in the international monetary system in which they develop special instruments, for example, allow by their liberal laws on risk management. Also, they are important as regulators that prevented that governments could raise taxes too far.

The main criticisms are offshore financial centers, especially as tax havens, which favor in combination with their rigid bank secrecy tax evasion in other countries. The NGO Tax Justice Network estimates the lost through offshore financial centers, tax revenues at $ 255 billion per year worldwide about. The tax revenues that go to the United States lost in this way is estimated to be about $ 70 billion.

The problem is the lack of transparency but also in connection with money laundering activities that are funded by this. Yearly be washed according to an estimate by the IMF world 2-5 % of GNP.

In addition, the financial centers due to their poor financial supervision in the criticism, because they threaten the stability of the financial market according to many experts. As a well-known examples can apply here the failures of the Meridian International Bank in 1995, or the collapse of Bank of Credit and Commerce International (BCCI ). Also offshore financial centers is ascribed an important role in the emergence of various currency crises of the 90s.

Also in other scandals such as the Crises of Parmalat, Tyco and Enron played offshore financial centers from which statements were manipulated to play a role.

Government initiatives

In response to the various problems of offshore financial centers in the late 90 three initiatives were launched by the OECD:

• The Financial Stability Forum (FSF ), which deals mainly with the dangers of financial centers for the stability of the world financial system
• The Financial Action Task Force ( FATF), which seeks to prevent money laundering in the sites (since 2001 also increasingly the financing of terrorist organizations)
• The harmful tax initiative, which focuses on the negative consequences of tax evasion and possibilities of cooperation between industrialized countries and offshore financial centers.

The Financial Stability Forum has made a difference in a report from 2000, 42 offshore financial centers in three categories:

• I.: places to their size, a good infrastructure and a solid legislation and have relatively relatively well cooperate with international institutions. These included:

Hong Kong, Switzerland, Singapore and Luxembourg. However, come at least in the vicinity of these standards also Guernsey, Isle of Man, Jersey and the Republic of Ireland.

• II: Although the level of legal regulations in this category is higher than in the third group, however, they are still characterized as problematic as the countries of the first group. These countries include:

Andorra, Bahrain, Barbados, Bermuda, Gibraltar, Labuan (Malaysia), Macao, Malta and Monaco.

• III:. Infrastructure, the legal regulations and cooperation with international institutions is least pronounced in this group. This group includes:

Anguilla, Antigua and Barbuda, Aruba, Belize, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Cyprus, Lebanon, Liechtenstein, Marshall Islands, Mauritius, Nauru, the Netherlands Antilles, Niue, Panama, St Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Samoa, Seychelles, the Bahamas, the Turks and Caicos Islands and Vanuatu.

Also, the FATF published a list of countries that were not cooperative in the fight against money laundering from the perspective of the organization. A total of 23 countries were identified as problematic:

Bahamas, Cayman Islands, Cook Islands, Dominica, Israel, Lebanon, Liechtenstein, Marshall Islands, Nauru, Niue, Panama, Philippines, Russia, St. Kitts and Nevis, St. Vincent and the Grenadines, Egypt, Guatemala, Hungary, Indonesia, Myanmar, Nigeria, Grenada and Ukraine ( blue font: countries that do not appear in the list of the FSF).

These lists of countries referred to special arrangements have been subjected. Frequently, for example, contracts with banks in OECD countries were no longer allowed. The lists are now seen as a success: the FSF took off his list back in 2005; the FATF removed on 13 October 2006 Myanmar was the last country of his list.

The offshore centers responded to the new policy, however, not only with better regulation. Some countries saw the cost of adapting their systems to be too high, and retired from the business of offshore banking. These were Nauru, Tonga and Niue. Other countries suffered significant losses due to the introduction of new regulatory mechanisms. After Vanuatu banks had committed to offering at least one full-time job, the number of banks fell from 35 to 7

Information on harmful tax initiative: see tax haven.

Non-governmental initiatives

In addition to attempts by the state, there are also from various NGOs initiatives with the aim to regulate offshore locations effectively. Mentioned here is in particular the Tax Justice Network, which deals exclusively with tax evasion. Even Oxfam is involved in tax evasion. In Germany 's Attacking prominently. Again, the employment is with tax evasion in the center.

In the so-called offshore leaks reported in April 2013 international media from a record with 130,000 names of people who should have invested their assets in tax havens.