Offshore Financial Centres. Submission to Treasury Committee, House of Commons.

Picciotto, Salomone (2008) Offshore Financial Centres. Submission to Treasury Committee, House of Commons. House of Commons, London.

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Abstract

OFCs are an endemic source of risk, by their very nature as providers of services to non-residents. They have become designer jurisdictions, whose laws and regulations are crafted to facilitate avoidance and evasion of the laws and regulations of other countries. Policy towards them has been fatally compromised by attempting to distinguish between legitimate and illegitimate uses of offshore. Attempts have been made especially since 1998 to develop a more coordinated international approach towards improved regulation of the offshore system, but these have several limitations and flaws. In practice, the procedure for monitoring of compliance with financial supervision standards is enabling OFCs which are found largely compliant with such standards to represent the process as conferring on them a general seal of approval. It was also mistaken for the campaign against tax havens to be led by the OECD and directed at small OFCs, since OECD countries are themselves divided on the issue, and many of them (including the UK and US) are deeply involved with the offshore system. Hence, they have been rightly portrayed as hypocritical bullies. It is clearly time for a new approach to phase out the offshore system, based on concerted action between all relevant regulatory authorities, nationally and multilaterally. The UK is in a key position to take the lead.