As has been noted in the section entitled ‘Finding the Secrecy World’, there are many jurisdictions that that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain that is designed to undermine the legislation or regulation of another jurisdiction. They do in addition create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so. Their appeal to those seeking to hide illicit financial flows is obvious as a result.
Having a definition of secrecy jurisdictions is one thing, identifying them in practice is something quite different. This task was, however, a key element within this project. We thought it essential that we identify sufficient potential secrecy jurisdictions so that we could then appraise the facilities they provided so that we might determine with greater accuracy the role they played in assisting illicit financial flows.
There was an obvious ‘chicken and egg’ problem in doing this. We could either search all jurisdictions in the hope of identifying those characteristics that might suggest some were secrecy jurisdictions or we could establish a list of those places that were by consensus considered tax havens / secrecy jurisdictions and appraise the financial services environments of those places to see what they had in common.
We chose the second approach, largely because we are not the first to tackle this issue and plenty had before us both sought to define what either tax havens of offshore financial centres might be – and then list those places they thought had those characteristics. For reasons noted in this report, we had problems with many of the definitions offered by all those others. There were, however. Sufficient such exercises to allow us to use them as a data set from which conclusions could be drawn.
Twelve listings in all were used, dating from 1982 to 2007. These were prepared by academics, regulatory agencies of various sorts, legislators, civil society groupings and those promoting tax haven use. The sheer variety of sources did, we hoped, add credibility to the likely findings. This, we think, was the case.
It was this process that resulted in our selection of almost all the jurisdictions we chose to study, in principle those appearing on 4 or more lists being in the survey sample. We made just one small exception: those countries that had opted for the withholding option under the European Savings Tax Directive rather than for information exchange were added if they had not otherwise qualified since in our opinion this was clear indication of secrecy jurisdiction status.
