Switzerland, despite bank settlements with the United States to disclose tax evaders, remains a top refuge for financial secrecy, according to a new international ranking of tax haven countries.
Switzerland is the world leader in financial opacity, only grudgingly conforming with disclosure agreements among developed countries while courting tax evaders in developing nations, said a report released on Monday by the nonprofit, nonpartisan Tax Justice Network.
Steeped in a long tradition of bank secrecy, Switzerland has recently signed information sharing agreements as part of a reporting program with the Organization for Economic Co-operation and Development. But these efforts have been "ineffective," the report said.
Switzerland's "widespread involvement in the administration and use of trusts, foundations and offshore companies remain a major barrier to tackling tax evasion and illicit financial flows," the report said.
U.S. authorities continue to pursue Swiss banks for hiding U.S. clients' assets. Credit Suisse Group AG (CSGN.VX) said this summer it is under a grand jury investigation.
UBS AG (UBS.N) (UBSN.VX) in 2009 paid $780 million to settle a Justice Department investigation.
The United States ranked fifth, behind Switzerland, the Cayman Islands, Luxembourg and Hong Kong among the most secretive nations.
U.S. law allows foreigners to earn income from property that can be kept secret from the tax and criminal authorities in their home countries, the report found.
"Financial secrecy provided by the U.S. has caused untold damage to the ordinary citizens of foreign countries, whose elites have used the U.S. as a bolt-hole for looted wealth," the report said.
The United States ranked first among tax havens in the advocacy group's last report from 2009. The methodology was changed this year to account for how egregious a country's secrecy is considered, with less emphasis on the size of its economy.
The report highlighted concerns with UK jurisdictions.
The English Channel islands of Jersey and Guernsey, which are Crown Dependency jurisdictions and ranked seventh and 21st respectively, have become bastions for financial secrecy.
In all, 10 secrecy jurisdictions on the list are either British Crown Dependencies or British Overseas Territories, like the Cayman Islands and Bermuda, which ranked second and 12th, respectively.
The British network of tax havens has been "among the most important reasons for the reach and power of the City of London," the report said.
(Reporting by Patrick Temple-West, editing by Matthew Lewis)Copyright 2011 Thomson Reuters. Click for Restrictions.