The Financial Secrecy Index (FSI) is a report published by the controversial advocacy organization Tax Justice Network (TJN) which ranks countries by financial secrecy indicators, weighted by the economic flows of each country.[a]

It looks at how wealthy individuals and criminals can hide and launder money using the country's legal and financial systems. Automatic information interchange and beneficial ownership registration were among the ranking criteria. According to TJN, an estimated US$21 to US$32 trillion in untaxed or minimally taxed private financial wealth is held in secrecy jurisdictions (tax havens) around the world.[1] Yet, the report attracted criticism of its veracity and the numbers quoted for glaring material errors and misstatements: most of the offshore financial centres referred to do not have any secrecy laws; large sectors of the monies flowing through OFCs are indeed taxed monies or are reported ofr tax purposes via CRS and FATCA.

The report claims to be a measure of each jurisdiction's contribution to the worldwide financial secrecy using qualitative and quantitative data.

To create a secrecy score for each jurisdiction, qualitative data based on laws, regulations, cooperation with information exchange mechanisms, and other verified data sources is used. Many of the assumptions and premises are misleading or incorrect. Even TJN's founders had so much difficulty with the fundamentally misleading reports coming out that they resigned.

The secrecy countries with the highest rankings are said to be less transparent in the operations they host, less engaged in sharing information with other national authorities, and less compliant with international money-laundering laws. A secrecy jurisdiction is more appealing for channeling illegal money flows and hiding criminal and corrupt activities due to its lack of openness and unwillingness to engage in efficient information exchange.[2]

After that, quantitative data is used to generate a global scale weighting for each jurisdiction based on its percentage of global offshore financial services activity. They did this by using publicly available data on each jurisdiction's international financial services trade. They employ the International Monetary Fund approach to extrapolate from stock measures to obtain flow estimates when incomplete data is required. The jurisdictions with the highest weighting are those that play the most important role in the market for non-resident financial services.[2]

A jurisdiction with a substantial proportion of the offshore financial sector but low opacity may earn the same overall ranking as a smaller but more secretive jurisdiction. The rating takes into account not only which countries are the most secretive, but also magnitude (the amount to which a jurisdiction's secrecy is likely to have a worldwide impact).[2]


While related to tax havens, the FSI is not a list of tax havens per se, and it does not attempt to estimate actual taxes avoided or profits shifted, unlike the techniques used in compilation of modern tax haven lists. The FSI is therefore more correctly a list of financial secrecy jurisdictions. While having many similarities to tax havens, the FSI produces some results that are very different from established tax haven lists.[3][4]

The FSI showed jurisdictions like the U.S. and Germany, despite high tax rates (excluding certain zero tax states within them), are large contributors to global financial secrecy,[5] however, the US and Germany are rarely discussed politically or in the media as "tax havens".[6][7] The FSI does not capture modern corporate tax havens, such as Ireland, the Netherlands and the United Kingdom, who they say maintain high levels of OECD–compliance and transparency, but are responsible for the global largest base erosion and profit shifting (BEPS) tax avoidance activity.[8] The report by the EU[9] and commentary on the UK's Companies House data highlight that the purported transparency is meaningless where the data held is of low quality.

For example, Apple's Irish "leprechaun economics" tax restructure in Q1 2015, the largest BEPS transaction in history, remained unknown for years due to Irish data-protection laws. The issue is the scoring by the FSI for some of the most favored secrecy tools of modern tax havens (or Conduit OFCs): the unlimited liability company ("ULC"), trusts, and certain SPV structures (e.g. Irish QIAIFs), none of which file public accounts in havens like Ireland and the United Kingdom.[10][11] The FSI focuses on ownership of these tools (e.g. is the owner of a ULC recorded), versus visibility into the tools (e.g. is the ULC paying tax). An example of this disconnect, was the EU's controversial €13 billion tax fine on Apple's two Irish ULCs in 2016,[b] who while known, were found by the EU to be avoiding large amounts of Irish tax during the 2004–2014 period. The EU's action remains hotly disputed by Apple,[12] who claim that the EU has made serious errors and misstatements, and that tax had been paid in the US on the very same profits that the EU claims should have been paid in Ireland.


The biennial FSI releases are widely reported in the general[13][14] and financial media,[15][16] and FSI scores now are seen in EU reports.[17]

See also

Explanatory notes

  1. ^ Because of the weighting of the financial secrecy indicators, the FSI is often mislabeled as a quantitative index; however it is a qualitative index.
  2. ^ Apple Sales International ("ASI"), and Apple Operations Europe ("AOE")


  1. ^ Kably, Lubna (19 February 2020). "Financial Secrecy Index: Cayman Island ranks first, Switzerland drops two places". The Times of India. Retrieved 28 April 2022.
  2. ^ a b c "Financial Secrecy Index 2020 Methodology". Coffers EU Horizon 2020 Project.
  3. ^ "Leading economies blamed for fiscal secrecy by Tax Justice Network". Financial Times. 30 October 2009.
  4. ^ "Lifting the Veil - An index of financial secrecy". The Economist. 6 November 2013.
  5. ^ "U.S.The mega-haven". The Economist. 5 November 2015.
  6. ^ Jesse Drucker (27 January 2016). "The World's Favorite New Tax Haven Is the United States".
  7. ^ Swanson, Ana (5 April 2016). "How the U.S. became one of the world's biggest tax havens". The Washington Post. Retrieved 23 April 2016.
  8. ^ "Ireland is the world's biggest corporate 'tax haven', say academics". The Irish Times. 13 June 2018. New Gabriel Zucman study claims State shelters more multinational profits than the entire Caribbean
  9. ^ "Texts adopted - Lessons learnt from the Pandora Papers and other revelations - Thursday, 15 June 2023". Retrieved 29 June 2023.
  10. ^ "New report: is Apple paying less than 1% tax in the EU?". Tax Justice Network. 28 June 2018. The use of private 'unlimited liability company' (ULC) status, which exempts companies from filing financial reports publicly. The fact that Apple, Google and many others continue to keep their Irish financial information secret is due to a failure by the Irish government to implement the 2013 EU Accounting Directive, which would require full public financial statements, until 2017, and even then retaining an exemption from financial reporting for certain holding companies until 2022
  11. ^ "Ireland's playing games in the last chance saloon of tax justice". Richard Murphy. 4 July 2018. Local subsidiaries of multinationals must always be required to file their accounts on public record, which is not the case at present. Ireland is not just a tax haven at present, it is also a corporate secrecy jurisdiction.
  12. ^ "Apple argues disputed €13.1 billion is being paid in tax to the United States". The Irish Times. Retrieved 29 June 2023.
  13. ^ Pegg, David (30 January 2018). "UN urged to launch global effort to end offshore tax evasion". The Guardian. Retrieved 22 March 2019.
  14. ^ "Australia a safe haven for illicit funds, but Switzerland the world's worst". Sydney Morning Herald. 31 January 2018.
  15. ^ "Report Says U.S. Is World's Second-Biggest Tax Haven". Bloomberg News. 30 January 2018.
  16. ^ "U.S. Becomes World's Second-Biggest Tax Haven". The Wall Street Journal. 30 January 2018.
  17. ^ "Offshore activities and money laundering: recent findings and challenges" (PDF). EU Parliament. March 2017. p. 41.