Germany climbs back into top 10 in global financial secrecy ranking
Germany is not typically considered a safe haven for people wanting to evade detection or taxation. However, according to a new ranking, the federal republic is actually one of top 10 countries in the world that are complicit in helping people hide their wealth from the rule of law.
The Financial Secrecy Index 2022
Germany has risen up the latest edition of the Tax Justice Network’s Financial Secrecy Index to claim seventh place in 2022, after dropping to 14th in 2020. The annual index is a ranking of countries that conceal and facilitate banking secrecy, anonymous company and real estate ownership, money laundering, tax evasion and the evasion of sanctions.
Each country is given a score according to how much each country’s financial and legal system allows individuals to hide and launder money from all around the world. The scores are calculated on the basis of how much financial secrecy is permitted by banks and the government, and the volume of financial services the country provides to non-residents.
The 2022 ranking, published ahead of a meeting of G7 finance ministers concerning sanctions against Russian oligarchs, calls on nations to “bring law and accountability to the trillions in “lawless wealth” held secretively offshore by wealthy individuals” and accuses G7 countries of “undermining global transparency” with their tax and legal systems.
Germany falls in ranking over transparency laws
Germany climbed seven places from its result in 2020, landing once again in the top 10 with an overall ranking of seventh. The main cause of the deterioration of Germany’s score, according to the report’s authors, is the “underwhelming implementation of new transparency laws” passed in 2020, requiring owners of businesses, trusts and partnerships to register their information. The Tax Justice Network accused Germany of falling “dangerously short” on tackling the use of trusts to hide wealth and assets from the rule of law.
Restrictions put in place since 2020 hindering public access to information, and an increase in the volume of financial services it supplies to non-residents, also pushed the federal republic back into the top 10.
US declared world’s most complicit country in aiding financial secrecy
This year’s ranking is topped by the US, which has beaten Switzerland to be named the country most complicit in aiding financial secrecy, earning the worst rating ever recorded in the ranking’s history. The Tax Justice Network said that this development is “at odds with US President Joe Biden’s commitments and efforts to tackle global financial secrecy.”
“Globally, we’re starting to curb the financial secrecy used by Russian oligarchs, and also by tax evaders, corrupt politicians and organised crime around the world to hide and launder ill-gotten wealth,” said Alex Cobham, chief executive at the Tax Justice Network. “But the US, UK, Germany, Italy and Japan cut back that global progress by more than half, fuelling financial secrecy instead of fighting it.”
According to the 2022 Financial Secrecy Ranking, the top 10 worst nations in the world for financial secrecy are:
- United States
- Hong Kong
- United Arab Emirates
- British Virgin Islands
For more information on the report, visit the Tax Justice Network’s website.