UNDERSTANDING THE FINANCIAL SECRECY INDEX (FSI) RESULTS
Top 10 Jurisdictions by FSI Value Top 10 Jurisdictions by Secrecy
Secrecy Global Scale Secrecy Global Scale Rank Jurisdiction FSI Value Score Weight Rank Jurisdiction FSI Value Score Weight 1 Switzerland 1589.57 76.45 4.50% 1 Vanuatu 149.27 88.58 0.00099% 2 USA 1298.47 59.83 22.30% Antigua & Cayman 2 Barbuda 54.53 86.88 0.000057% 3 Islands 1267.68 72.28 3.79% 3 Bahamas 429.00 84.50 0.035% 4 Hong Kong 1243.68 71.05 4.17% 4 Paraguay 158.52 84.33 0.0018% 5 Singapore 1081.98 67.13 4.58% 5 Brunei 85.60 84.05 0.00029% 6 Luxembourg 975.92 58.20 12.13% 6 UAE 661.15 83.85 0.14% 7 Germany 768.95 59.10 5.17% 7 Maldives 74.87 81.08 0.00027% 8 Taiwan 743.38 75.75 0.50% 8 Bolivia 94.82 80.35 0.00061% 9 UAE 661.15 83.85 0.14% 9 Kenya 378.35 80.05 0.04% 10 Guernsey 658.92 72.45 0.52% 10 Thailand 550.60 79.88 0.13% Sum of FSI Sum of FSI Share (% of FSI Share (% of FSI Value of 112 Value of 112 jurisdictions) 32% jurisdictions) 8.31% Average Secrecy Score 69.61 Average Secrecy Score 83.35 Sum of Global Scale Weight 58% Sum of Global Scale Weight 0.35%
-The Financial Secrecy Index (FSI) value is obtained by combining the Secrecy Score (how secretive a jurisdiction is) with the Global Scale Weight (how big a financial centre is, in terms of financial services offered to non-residents). -While all jurisdictions should become fully transparent, the goal of the Financial Secrecy Index is to draw attention at where action is needed the most.
-If focus were on secrecy only: Most tax haven blacklists focus only on secrecy (or worse, only on tax rates). If the FSI followed the only-secrecy approach, the top 10 jurisdictions would of course have the highest secrecy (an average of 83.35/100). However, this would mean little in global terms. These 10 highly secretive jurisdictions represent only 0.35% of all the financial services provided to non-residents. So, if these 10 jurisdictions (Vanuatu, Antigua, Bolivia, Paraguay, etc.) became fully transparent, the global impact would be negligible. We could hardly say that the world became more transparent.
-When focus is on FSI results: The Financial Secrecy Index, by combining secrecy and the Global Scale Weight (actual use of the tax haven or “secrecy jurisdiction”), shows that the top 10 jurisdictions aren’t as secretive as the most secretive ones (an average secrecy score of 69.61/100 vs 83.35/100– but still very far from 0 secrecy!). However, given their large Global Scale Weight, these 10 jurisdictions represent close to 60% of all global financial services provided to non-residents (the real target of tax havens). So, if Switzerland, the US, Cayman, Hong Kong, Singapore, Luxembourg, etc. became more transparent, the global impact on transparency would be felt everywhere. -Is the Financial Secrecy Index merely penalizing big financial centres, no matter how secretive they are? No. The FSI value uses a formula to combine the Secrecy Score with the Global Scale Weight that ultimately involves multiplying each other. A jurisdiction with perfect transparency would have a Secrecy Score = 0. Anything multiplied by 0 equals 0. So, even if a jurisdiction had 99% of Global Scale Weight, if it also had perfect transparency (Secrecy Score = 0), its FSI value would also be 0, so it would be at the bottom of the Financial Secrecy Index ranking.
-Does the Financial Secrecy Index ranking reflect the relationship between jurisdictions? Not necessarily. The ranking shows which jurisdiction is worse (higher in the ranking) than another, but it doesn’t show by how much it is worse. In order to show that, we can use the FSI Share, which is the FSI Value of every jurisdiction as a % of the total FSI Value of all 112 jurisdictions – a way to compare the FSI Value of different jurisdictions.
The FSI Share (the “secrecy actually provided in the world”) is the sum of all the FSI values of all 112 jurisdictions = 31,710.65 (we take this as 100%). Then we calculate the FSI Share of a particular jurisdiction in relation to the total.
For example, the Top 10 jurisdictions by FSI Value involve 32% of all the FSI Share, while the Top 10 jurisdictions by Secrecy, involve only 8.3% of all the FSI Share (that’s why it makes more sense to focus primarily on the top 10 jurisdictions by FSI value!).
Switzerland’s FSI Value or FSI Share (secrecy actually provided) is 96 times larger than that of Montserrat, with the lowest FSI Value and FSI Share Montserrat The FSI Share
Top 10 by FSI Value
The pie includes the FSI Value of each jurisdiction, expressed as a % of the total