Professional Documents
Culture Documents
Offshore Financial Centers: Hughes and Macdonald Text
Offshore Financial Centers: Hughes and Macdonald Text
What is an offshore financial center? List some common offshore financial centers by region of the world: What are some common reasons why countries seek to develop themselves as offshore financial centers Arguments Against offshore financial centers What reasons do clients have to become associated with an offshore financial center? Are bank secrecy laws absolute? What two major issues have forced offshore financial centers to moderate their strict bank secrecy laws? How do offshore financial centers maintain secrecy but take action to reduce or eliminate money laundering and the unsavory business elements?
North America
Asia Pacific
Bahrain Cyprus Gibraltar Guernsey Ireland (Dublin) Isle of Man Jersey Liechtenstein Luxembourg Monaco Switzerland
Anguilla Aruba Bahamas Barbados Bermuda British Virgin Islands Cayman Islands Grenada Montserrat Netherlands Antilles Asia/Pacific
Cook Islands Hong Kong Lubuan Island Palau Nieu Singapore Vanuato
Limited energy supplies at high cost Limited raw materials and other natural resources Long distance from raw material and energy sources so secondary manufacturing options are few
The country may possess natural characteristics that make it an ideal offshore financial center:
Political stability Close geographical proximity to wealthy countries Well educated workforce Some natural amenities that make to possible to develop its potential as a tourist attraction A political willingness to pass bank secrecy laws and at the same time be prepared to invest in policing and security infrastructure to assure personal safety and to address the potential to attract unsavory elements.
Low or no taxes Services are provided mainly, but not exclusively, for nonresident clients There are no or few foreign exchange controls Geographical proximity to a major economy and good communications infrastructure A legal regime that upholds bank secrecy A high degree of political stability is also important no one wants to put their money into a country that cannot guarantee personal safety or the ability to extract ones funds.
What are the arguments often cited against offshore financial centers?
They attract unsavory business elements including money launderers and terrorists and dictators and expatriates who have funneled ill-gotten gains to the offshore financial center for their own purposes They help people evade taxes in their own country which means that a disproportionate tax burden is shouldered by the middle-income tax payer effectively undermining sovereignty and tax fairness.
Illegitimate/Illegal Reasons:
Launder money from criminal activities Evade Taxes
In practice nounder the laws in most offshore financial centers, they can be lifted to pursue and investigate criminal activities.
Do some searching of offshore financial centers Switzerland Isle of Man Supervision Commission
In addition, the lifting of bank secrecy can be ordered by the countrys judges if there is proof that the account is a criminal matter.
Under the OECD, The Financial Action Task Force on Money Laundering (FATF) is an intergovernmental body that was set up in 1989 at the G7 economic summit in Paris and is open to most members of the OECD. Its purpose is to develop and promote strategies to combat laundering of the proceeds of criminal activities. In 1990 it implemented 40 recommendations that all countries are encouraged to adopt.
Question 1
What are the key elements that all offshore financial centers share?
Question 1
Key Elements Shared By Offshore Financial Centers
Low or no taxes Services are provided mainly, but not exclusively, for nonresident clients There are no or few foreign exchange controls Geographical proximity to a major economy and good communications infrastructure A legal regime that upholds bank secrecy A high degree of political stability is also important no one wants to put their money into a country that cannot guarantee personal safety or the ability to extract ones funds.
Question 2
What are the advantages and disadvantages of going to an offshore financial center?
Question 3
What factors contributed to the emergence of Switzerland and Luxembourg as important offshore financial centers?
Question 4
Hong Kong and Singapore are major offshore financial centers in Asia. Compare and contrast the development of each city as important offshore financial center
Question 5
What is an International Banking Facility?