The US is the number one enabler for financial secrecy

Financial secrecy came onshore as well, and in a big way. In 2019, the Hudson Institute ranked the United States as the world’s second worst financial-secrecy haven between Switzerland and the Cayman Islands.3 Three years after that, the Tax Justice Network called the United States the world’s number-one enabler of financial secrecy.4 Changes in post-Mao China and the Cold War’s end drove the demand for financial secrecy higher as Chinese and ex-Soviet elites began paying Western lawyers, bankers, and accountants to help hide and launder ill-gotten gains. One estimate put the sum illicitly siphoned out of Russia between 1994 and 2011 at a staggering US$211.5 billion.5 Few appreciate how these trends have grown the financial-secrecy system to such gargantuan proportions, which the economist James S. Henry estimates at more than $50 trillion.6

That the problem posed by the financial-secrecy system has gone largely unnoticed should not be surprising. The system is designed to be opaque to both law enforcement and the public. Only recently have headline-making insider leaks such as the Panama Papers (2016) and Paradise Papers (2017, and possibly a result of hacking rather than leaking) begun to lay bare the system’s workings. Millions of documents became available detailing the offshore dealings of companies such as Apple, Facebook, McDonald’s, and Walt Disney as well as people such as British royals and Wilbur Ross, who was U.S. commerce secretary from 2017 to 2021. The totality of these papers shows massive tax avoidance, the concealment of kleptocratic loot, and the systemic avoidance of the rule of law. In late 2021, the leaking of the Pandora Papers offered evidence of tax avoidance by a slew of individuals ranging from the former International Monetary Fund chief Dominique Strauss-Kahn to Ukraine’s President Volodymyr Zelensky, the latter among thirty-five current or former national leaders alongside about four-hundred lower-ranking officials. It is a safe bet that these leaks, large as they seem, have given us only a keyhole view into a much bigger industry.