However, tax havens are not a Caribbean construct but a European one. The amount of money laundering through these countries pales in comparison to the money laundering EU cities. In fact, whistleblowers and investigative journalists, through the Panama Papers, Paradise and Pandora, have revealed the true origins of the proceeds of crime and where laundered or “dirty” money actually resides. Financial secrecy prevails through corporations, trusts and other offshore vehicles, artificial labyrinths designed both to avoid and evade taxes, or to launder the proceeds of drug and human trafficking, arms trafficking, bribery or fraud. Opaque money ultimately equals opaque power. If dirty money is allowed to flow unhindered in the financial system, the cancer of corruption spreads, global growth stagnates, and inequality and inequality escalate. Financial secrecy – enabled by bankers, lawyers, accountants and real estate agents – has pushed “dark” money into a national security issue. In the global fight against corruption, Caribbean nations such as Trinidad and Tobago are being blacklisted in a highly discriminatory move. The Financial Action Task Force (FATF) is the global standard-setting body for anti-money laundering (AML), countering the financing of terrorism (CFT) and countering the proliferation trade in weapons of mass destruction. The FATF, with 39 jurisdictions, holds a comprehensive list of high-risk states with AML/CFT deficiencies. Bank secrecy is nothing short of reprehensible – a fig leaf in the shameful role bankers play in facilitating tax evaders and allowing corruption to flourish However, the EU has decided that this is not good enough for them and has turned against some of the economically weaker countries in the world to assert their superiority. The European Commission, through a contrived process, created two blacklists: one for countries it believed were not in compliance with international tax standards, and one for “third countries with weak anti-money laundering and anti-terrorist financing regimes.” Following the Paradise Papers, the EU’s code of conduct group blacklisted 17 countries. Pierre Moscovici, commissioner for economic affairs, said: “The adoption of the EU’s first blacklist of tax havens marks a key victory for transparency and fairness… We must step up the pressure on listed countries to change their ways. Blacklisted jurisdictions must face consequences in the form of dissuasive sanctions… No one should get a free pass.” A banner with the portraits of Chinese Communist Party leader Xi Jinping and then-British Prime Minister David Cameron at the entrance to the regional headquarters of Panama-based law firm Mossack Fonseca in Hong Kong, April 2016. Photo: Kin Cheung/AP The 17 countries on the EU tax blacklist included: American Samoa, Barbados, Grenada, Guam, South Korea, Macau, Marshall Islands, Namibia, Palau, Saint Lucia, Samoa, Trinidad and Tobago and the UAE. No European countries are listed. everyone got a free pass. In February 2019, the EU published an updated version of its AML/CFT list, which included Guam, Puerto Rico, the US Virgin Islands, the Bahamas, North Korea, Ghana, Iran, Iraq, Libya, Nigeria, Pakistan, Panama, Samoa, Sri Lanka, Syria and Yemen. Only 12 of these countries are on the FATF list. Věra Jourová, European Commissioner for Justice, said that “dirty money from other countries must not find its way into our financial system… Dirty money is the lifeblood of organized crime and terrorism.” What Jourová did not say was that other nations’ dirty money should not be allowed to mix with Europe’s dirty money. Because again not a single European country was registered. The US Treasury questioned the substance of the EU list and its flawed methodology and stated that US financial institutions would not consider the list in their anti-money laundering policies. The amount of money laundering through these countries is small compared to that of Europe’s money laundering cities This year, the EU identified jurisdictions with strategic deficiencies in their AML and CFT regimes that pose significant threats to the financial system, “high-risk third countries” such as Barbados, the Cayman Islands, Haiti , Iran, Jamaica, Jordan, Morocco, Myanmar, Nicaragua, Pakistan, Panama, Philippines, Syria, Trinidad and Tobago, Uganda, Vanuatu, Yemen, Zimbabwe. So where are the UK, Switzerland, China, Hong Kong, India, Russia and Ukraine? Where is Venezuela, a narcotic state? Where is the Netherlands, a country where a parliamentary inquiry found billions of dollars are laundered and tax evasion costs billions in lost revenue? Why is not a single EU member state or its most influential trading partners listed? The Tax Justice Network in a 2020 report revealed that tax abuse by multinationals and individuals cost countries $427 billion a year in lost revenue. The five most responsible jurisdictions, he said, were the British overseas territory of the Cayman Islands, the United Kingdom, the Netherlands, Luxembourg and the . The war in Ukraine has highlighted the vast amount of dirty money parked in EU cities. The UK is slowly “fast-tracking” legislation to target money laundering by foreign oligarchs after Russia invaded. However, the elites of both these countries are guilty of corruption and have contributed to the depletion of development resources. Why isn’t it on the lists? Professional services firms have for years created a haven in the UK for dirty money. London has become financial ground zero for kleptocrats, providing opportunities for foreign elites to turn their vast sums of corrupt profits and ill-gotten wealth into mansions, stocks, shares, yachts and sports teams. Denmark, Germany and Switzerland were complicit, as seen in recent banking scandals that demonstrate how dirty money from kleptocracies travels through the arteries of Western financial systems and becomes their lifeblood. Loopholes continually exploited by professional actors undermine anti-corruption policing and erode both the legal system’s ability to assess corruption risks and the integrity of institutions. The Pandora papers, along with the Panama Papers and the Paradise Papers, have revealed the true origins of the proceeds of crime and where laundered or “dirty” money is actually parked. Photo: Loïc Venance/AFP/Getty Images What will Europe’s banking czars do to stop the flow of ill-gotten gains? In the context of how corruption affects global development, banking secrecy is nothing short of reprehensible – a fig leaf in the shameful role bankers play in facilitating tax evaders and allowing corruption to flourish while starving developing countries of basic tax revenue. MPs and legislators are equally responsible for dragging their feet to protect private interests in clear cases of corruption. In the EU, the self-appointed compliance god of tax evasion, AML and CFT is nothing short of financial intimidation and hypocrisy. The FATF and the OECD, the international tax authority, have already subjected these vulnerable countries to various procedures. The FATF ensures that all states are subject to a rigorous peer review methodology that examines the legal framework for combating illicit financing as well as how effectively they are implemented. The European Commission’s strangely blind process for developing its lists stands in stark contrast to the comprehensiveness of the FATF. All the countries on the European blacklists are small and relatively underdeveloped. Most are territories or former European colonies with a small GDP. The amount of money laundering through these countries is small compared to that of the money laundering cities of Europe. For example, blacklisted Trinidad and Tobago has lengthy and strict procedures just for opening a bank account. Even buying a sim card requires photo ID and proof of address. So the ease with which money can be embedded in these countries and moved through financial institutions is much less than in Europe’s financial centers like London. But it is easier to punish these small developing states, as they are economically weak, with no material impact on Europe. The EU does not depend on these countries for oil and gas, food or technology. But their blacklisting hurts their economies as international companies shift their business elsewhere. Add in a shrinking and aging population, Covid, years of hurricane damage and climate change… The result is deepening debt, currency devaluations and negative growth. The effect of the EU blacklists is that the global tax system prioritizes the wishes of the wealthiest companies and individuals.
