Tax havens, offshore financial centres and the current sanctions regimes

Author(s):

Norman Mugarura ( Precious Ashton Law Associates Ltd Barking United Kingdom of Great Britain and Northern Ireland ) ( London United Kingdom of Great Britain and Northern Ireland )

Citation:

Norman Mugarura, (2017) "Tax havens, offshore financial centres and the current sanctions regimes", Journal of Financial Crime, Vol. 24 Issue: 2, pp.-, doi: 10.1108/JFC-01-2016-0008

Downloads:

The fulltext of this document has been downloaded 51 times since 2017

Abstract:

Purpose

The paper is to articulates the complexities posed by tax havens and Offshore Financial centres (OFCs) in the global fight against financial crimes such as tax avoidance and money laundering. It suggests possible measures to mitigate the effect of tax avoidance on economic development of countries especially less developed poor countries. Data was evaluated based on examples and case studies drawn in different countries to demonstrate how illicit proceeds of crime are spirited out of countries for safe custody in tax haven jurisdictions around the globe. There is a need for harmonization of international tax and anti-money laundering laws to close regulatory loopholes which make OFCs attractive to money launderers and corrupt political leaders around the globe.

Design/methodology/approach

Data was evaluated using examples and case studies drawn tax havens OFCs in newspaper reports to demonstrate how illicit proceeds of crime are spirited out of countries for safe custody in tax haven jurisdictions around the globe. The author also carried out a scoping review of the literature to delineate the correlation between tax haves, OFCs and the growth in financial crimes such as tax avoidance and money laundering.

Findings

There is a close correlation that bank secrecy laws in offshore financial centers fuel the growth of financial crimes such as tax avoidance and money laundering around the globe. The findings also suggest that while imposition of sanctions on countries which transgress international financial regulatory regimes is an essential component in the international efforts against financial crimes, they need to be enforced on all states so that they are not seen as politicized and subsequently undermined.

Research limitations/implications

It is important that states work in tandem to initiate desired regimes to address financial crimes but enunciating regimes alone cannot generate a far reaching impact unless they are enforced against all transgressing states.

Practical implications

The paper has practical implications for states, people, governments, oversight institutions, markets and other stakeholders because unravels varied issues relating to tax avoidance, money laundering and policies that need to be adopted to address these challenges.

Originality/value

The issues explored in this paper help to highlight the challenges posed tax havens, offshore financial centres on economic development of countries. While, the paper was undertaken by the review of primary and secondary data, it offers important contributions that could potentially enhance the fight against tax avoidance.

Publisher:

Emerald Group Publishing Limited

Copyright:

© Emerald Group Publishing Limited 2017
Published by Emerald Group Publishing Limited