Method and Concepts
This page provides background information about the extensive data and reports produced. We aim to be as objective as possible and to present our data in a consistent format, to make it easier to compare one jurisdiction with another.
This database is the result of over a year of desk-based research by a dedicated team. Generally, it displays information available on the secrecy jurisdictions surveyed as of December 31, 2014, with some exceptions. The main exception is the data on treaties for information exchange upon request, whose cut-off date is 31 May, 2015 in order to reflect most recent developments. For each data report we used up to 204 criteria.
The database covers information on the legal, administrative, regulatory, and tax structures of the secrecy jurisdictions. It uses multiple sources, including the OECD Global Forum peer review reports (where available); the US State Department’s Narcotics Control publication (US-INCSR); anti-money laundering assessments by the Financial Action task Force and others; the IMF’s financial sector assessment program and offshore financial centre-assessment program, as well as private sector sources including from the International Bureau of Fiscal Documentation (IBFD). We also used websites and directly analysed laws and regulations from the secrecy jurisdictions concerned. All this was complemented by our own survey of jurisdictions, concluded in February 2015, involving requests for information to the relevant finance ministries and financial intelligence units (The questionnaires sent are available here and here).
Since each data source has differing objectives and layouts, combining them is a major undertaking.
The full database is here.
The assessment process: a higher standard
We believe that the standards and assessment procedures used by bodies such as the Organisation for Economic Cooperation Development (OECD) and the Global Forum are too lenient.
For example, the OECD's Global Forum on Taxation might commend a jurisdiction for requiring companies to file beneficial ownership information with a government authority but then they might note – often only between the lines – that this is not required of "non-resident" companies; it may also omit revealing what percentage of companies are non-resident. More fundamentally, the Global Forum checks merely whether or not corporate service providers have certain relevant information at their disposal, but we apply a higher standard: we require such information to be submitted to a government authority and updated appropriately. For a comprehensive critical appraisal of OECD's Global Forum, read our "Creeping Futility" Report.
We always assess a jurisdiction based on the ‘lowest common denominator" principle. So for example, if a jurisdiction offers three types of companies, two of which are required to publish financial statements online, but the third is not, then we award no transparency credit.
We first thoroughly checked all publicly available data sources, and contacted the Finance Ministry of the jurisdiction concerned. If they did not respond with satisfactory data, or it was of dubious quality, we registered the data as unknown. For the purposes of the calculation of the 15 Key Financial Secrecy Indicators, such absence of data translated into a (negative) secrecy rating. The reason is straightforward: country governments did have a chance to provide this information via the questionnaires, and if they chose not to answer, and are not making such fundamental information easily available and accessible, the country deserves to be assessed as secretive on this particular issue until the contrary is proven.
Given the sheer scale of this project, we have occasionally had to use reasoned judgement. Where this has happened, we have sought to be fully transparent about our criteria and reasons. In addition to references to all sources used, the database therefore also includes a substantial amount of notes and supporting information.
The full document on the methodological background of the 15 Key Financial Secrecy Indicators (KFSIs) can be downloaded here.
Identifying secrecy jurisdictions, and the "secrecy spectrum"
In our first FSI project in 2009 we consulted eleven different lists of tax havens compiled by others (such as the IMF, OECD, or Financial Action Task Force) to draw up our own list of 60 secrecy jurisdictions.
In 2011, however, we took a broader approach. We added 13 new jurisdictions to our previous list, based on two criteria. Four jurisdictions - Botswana, Ghana, Guatemala and San Marino - were found to be offering secrecy facilities even though they were not our previous list of 60. Nine others had large financial centres - so we decided to run the numbers on them to see how they scored. These were Canada, Denmark, France, Germany, India, Italy, Japan, Korea, and Spain.
In 2013, we have included all jurisdictions from 2011, plus an additional 9 jurisdictions, two of which were chosen based on indications that secrecy services are offered (Dominican Republic and New Zealand), and seven were added based on their scale of financial services exports (Australia, Norway, Brazil, Sweden, Russia, Saudi Arabia and South Africa).
For the FSI 2015, six countries were added because of their share in the global market of offshore financial services was in the Top 40 (in the data for the FSI 2013 - China, Finland, Mexico, Taiwan*, Venezuela*, Turkey). Seven countries were added because of indications of secrecy or financial centre ambitions (Bolivia*, Chile, Gambia*, Macedonia, Montenegro*, Paraguay*, Tanzania*). In addition to this, for the FSI 2015, we have also included all OECD members, following various publications about the role these countries play in absorbing and facilitating illicit financial flows (Czech Republic, Estonia, Greece, Iceland, Poland, Slovakia, Slovenia).
While the countries marked with an asterisk (*) were assessed for the FSI 2015, they were not ultimately given a ranking due to data availability constraints. See FSI Methodology section 2.2 for further details.
With this approach, we emphasize the existence of a ‘secrecy spectrum’ in which jurisdictions are rated according to how ‘secretive’ they are, and somewhat de-emphasise the notion of a clear-cut binary choice of being, or not, a ‘secrecy jurisdiction.’ The question of whether or not a location is a ‘secrecy jurisdiction’ cannot be answered simply by yes or no, but is significantly a question of intensity.
We still think the terms ‘secrecy jurisdiction’ and ‘tax haven’ are useful, however. What is a secrecy jurisdiction? The Tax Justice Network does not want to offer a hard and fast definition, but we do offer the following form of words as a useful way of thinking about the phenomenon:
"A secrecy jurisdiction provides facilities that enable people or entities escape or undermine the laws, rules and regulations of other jurisdictions elsewhere, using secrecy as a prime tool."
Other descriptions and definitions exist, however, and these can also be useful. For a more detailed exploration of the themes, see our short document What is a secrecy jurisdiction? and Richard Murphy’s longer technical document Finding the Secrecy World.
Methodology on our 15 Secrecy Indicators
About 46 of the 204 criteria employed in our database were used to construct 15 different secrecy indicators (KFSIs). The choice of our indicators is necessarily subjective – but an objective list does not exist, and never will. We aimed to produce the next best thing: a list that is plausible, comprehensive, transparent and as short as possible.
Our indicators are designed to provide clear pointers for policy change to help jurisdictions become more transparent.
The 15 indicators are as follows (shown in no particular order):
- Banking secrecy: Does the jurisdiction have banking secrecy?
- Trust and Foundations Register: Is there a public register of trusts/foundations, or are trusts/foundations prevented? This applies both to local trusts and foundations, as well as to local management of foreign trusts.
- Recorded Company Ownership: Does the relevant authority obtain and keep updated details of the beneficial ownership of companies?
- Public Company Ownership: Does the relevant authority make details of ownership of companies available on public record online for free, or for less than US$10/€10?
- Public Company Accounts: Public Company Accounts: Does the relevant authority require that company accounts are made available for inspection by anyone for free, or for less than US$10/€10?
- Country-by-Country Reporting: Are all companies required to publish country-by-country financial reports?
- Fit for Information Exchange: Are resident paying agents required to report to the domestic tax administration information on payments to non-residents?
- Efficiency of Tax Administration: Does the tax administration use taxpayer identifiers for analysing information efficiently, and is there a large taxpayer unit?
- Avoids Promoting Tax Evasion: Does the jurisdiction grant unilateral tax credits for foreign tax payments?
- Harmful Legal Vehicles: Does the jurisdiction allow cell companies and trusts with flee clauses?
- Anti-Money Laundering: Does the jurisdiction comply with the FATF recommendations?
- Automatic Information Exchange:Automatic Information Exchange: Does the jurisdiction participate fully in multilateral Automatic Information Exchange via the Common Reporting Standard?
- Bilateral Treaties: Does the jurisdiction have at least 53 bilateral treaties providing for information exchange upon request, or is it part of the European Council/OECD convention?
- International Transparency Commitments: Has the jurisdiction ratified the five most relevant international treaties relating to financial transparency?
- International Judicial Cooperation: Does the jurisdiction cooperate with other states on money laundering and other criminal issues?
If you disagree with FSI data or scoring
We believe we have applied our methodology consistently and transparently, disclosing the underlying, fully referenced and cross-checked data. Nonetheless, given the complexity and sensitivity of the work, it is likely that disputes may arise.
We are committed to addressing any issues, and warmly welcome engagement. If you believe that our data, or our scoring, contains errors, please contact us. The clearer and more detailed an explanation you are able to provide, the more easily we can consider the issue and respond accordingly. Thank you!