Top 10 Countries with the Highest Levels of Financial Secrecy

The effectiveness of safeguarding information about asset ownership, corporate structures, and financial transactions involving non-residents is a critical consideration for entrepreneurs interested in offshore business development. In an era of heightened global efforts to combat money laundering and tax evasion, many countries are implementing reforms. Yet, major global economies continue to play a substantial role in maintaining financial secrecy.

The Financial Secrecy Index (FSI), developed by the Tax Justice Network, provides a comprehensive assessment of financial secrecy levels across global jurisdictions. Let’s delve into the changes in this index, the leading countries, and the impact of financial secrecy on the global financial landscape.

Ranking of Countries by Financial Secrecy Levels

The Financial Secrecy Index ranks jurisdictions based on an analysis of their legal and financial systems, focusing on mechanisms that ensure financial secrecy. The index also highlights laws and practices that governments could reform to reduce secrecy in their countries.

In 2022–2023, the United States ranked first, significantly increasing the availability of confidential financial services. Compared to previous years, the U.S. offered nearly twice the level of secrecy as Switzerland, which came in second place.

The evaluation of a jurisdiction’s financial secrecy level relies on 20 key criteria that measure the transparency of its financial system. These include factors such as:

• Availability of a public registry of corporate ownership and mechanisms for monitoring annual reports of limited liability companies.
• Existence of a centralized registry for property and valuable assets.
• Banking secrecy laws imposing criminal penalties for disclosing banking information.
• Transparency of tax-related legal proceedings, with public access to case details.
• Identification of beneficial owners who control corporate structures.
• Tax incentives for individuals acquiring citizenship or residency through financial means.
• Accessibility of national financial reporting used for international information exchange.
• Availability of unregistered securities and bearer shares.
• Public access to statistics on cross-border financial activities.
• Government measures to prevent tax evasion and compliance with Financial Action Task Force (FATF) anti-money laundering standards.

The index evaluates countries using two main metrics:

1. Financial Secrecy Level: Rated on a scale from 0 to 100, where 100 indicates complete secrecy.
2. Volume of Financial Services Available to Non-Residents: This measures the extent of financial activities accessible to non-residents.

The combined score determines a country’s overall contribution to global financial secrecy.

Top Countries by Financial Secrecy Levels

United States of America

The U.S. was a leader in the financial secrecy ranking for 2023. This fact is, to some extent, connected with the country’s refusal to be a part of international frameworks, such as the OECD’s Common Reporting Standard (CRS). That is the country that claims complete transparency did not join the automatic information exchange initiative. It means that the U.S. legal system is favorable for non-residents as they can avoid tax liabilities and protect their assets.

And even though the Biden administration made a lot of effort to fight against global financial opacity, the U.S. itself remains a country where you can receive confidential financial services. The country has a secrecy score of 67, which reflects inadequate regulation of trusts, the absence of requirements for mandatory registration for company beneficial owners, and limited control of corporate ownership.

Switzerland

Switzerland ranks second on the Financial Secrecy Index, maintaining its long-standing tradition of strict banking secrecy. While the country has introduced reforms to enhance transparency, its secrecy score remains high at 70.

Swiss mechanisms for anonymous ownership of companies and trusts continue to attract wealthy clients seeking to protect their assets from regulations in other jurisdictions. Although Switzerland has improved transparency in sectors like mining and adopted legal entity identifiers, banking secrecy remains a cornerstone of its financial system.

These attributes make Switzerland a preferred destination for those who value confidentiality in financial transactions and asset ownership.

Singapore

The third place on the index is taken by Singapore, which marks its noticeably higher role in the international financial system. It has a secrecy score of 67, which is sufficient for non-residents who are interested in the flexibility of corporate structures, anonymous asset ownership, and offshore financial services.

The financial system in Singapore is still evolving, and it still has to make some changes to comply with global transparency standards. Its growing volume of financial services for non-residents cements Singapore’s position as a major financial secrecy hub in Asia.

Other Countries

There are some other countries, such as Luxembourg, Hong Kong, and the UAE, whose ranking in the Financial Secrecy Index is very high. These are the jurisdictions that ensure the highest possible confidentiality level for non-residents so the latter can own assets anonymously and rest assured that the information on beneficiaries will be restricted for third parties.

• Luxembourg (ranked 5th) remains a prominent offshore center, attracting businesses and individuals with its robust financial secrecy laws.
• Hong Kong and the UAE provide flexible banking secrecy regulations, anonymous trusts, and corporate ownership structures, ensuring a high level of financial confidentiality for non-residents.

The Bigger Picture

The Financial Secrecy Index highlights that despite global transparency efforts, many jurisdictions continue to offer high levels of financial confidentiality and asset protection for non-residents.

How We Can Help

Our team of experts specializes in tax planning, offshore business registration, and opening bank accounts in high-secrecy jurisdictions. We’re here to help you manage your assets effectively and minimize tax risks, all while staying compliant with current legislation. Contact us to learn more about optimizing your financial strategy.