The Group of Seven industrialized nations and four other countries have released a league table of the world's tax havens, classifying them according to the quality of their financial regulation and supervision.
Hong Kong, Luxembourg, Singapore and Switzerland came out top of the list, judged as having a legal framework, level of supervision and cooperation with other authorities "largely of a good quality and better than in other offshore financial centers," the Basel-based Financial Stability Forum (FSF) said late Thursday.
But more than half of the more than 40 tax havens listed fell into the bottom of the three identified categories, including Belize, the British Virgin Islands, Cyprus, Lebanon, the Dutch Antilles, Panama, the Bahamas and Vanuatu.
This identifies them as "generally seen as having a low quality of supervision and/or being non-cooperative with onshore supervisors, and with little or no attempt being made to adhere to international standards," according to an April FSF report which identified the categories but did not list the members.
According to the FSF which published the outcome of the studies done by a task force on its web site, “the report noted that offshore financial activities are not inimical to global financial stability provided they are well supervised and supervisory authorities co-operate. It noted that some OFCs are well supervised and co-operate with other jurisdictions. At the same time, it concluded that OFCs that are unable or unwilling to adhere to internationally accepted standards for supervision, co-operation, and information sharing create a potential systemic threat to global financial stability.”
The Forum said it had decided to publish the list "in the public interest" to help "encourage all offshore financial centers to take appropriate steps to raise the quality of their supervision and their degree of co-operation as quickly as possible."
It also said that the classification "does not constitute judgments about any jurisdiction's adherence to international standards."
The Financial Stability Forum was created in February 1999 by the G7 countries -- Britain, Canada, France, Germany, Italy, Japan and the United States -- to promote enhanced financial market supervision and surveillance as part of efforts to improve global financial stability in the wake of the Asian and Russian financial crises.
It grouped the G7 nations plus international organizations such as the International Monetary Fund, World Bank, Bank for International Settlements and the Organization for Economic Cooperation and Development.
Australia, Hong Kong, the Netherlands and Singapore have since joined the effort.
The FSF said Thursday that offshore financial activities were not in themselves "inimical to global financial stability" provided they were well-regulated.
But those which were "unable or unwilling to adhere to internationally accepted standards for supervision, cooperation and information sharing create a potential systemic threat to global financial stability.
"Such offshore financial centers constitute weak links in an increasingly integrated international financial system and hinder broader efforts to raise standards of soundness and transparency in the global financial system."
The first group comprises "jurisdictions generally viewed as cooperative jurisdictions with a high quality of supervision, which largely adhere to international standards," according to definitions given in the April report.
Thursday's statement said that this group comprised just four jurisdictions: Hong Kong, Luxembourg, Singapore and Switzerland.
It said that Dublin, Guernsey, Isle of Man and Jersey "are generally viewed in the same light, though continuing efforts to improve the quality of supervision and cooperation should be encouraged in these jurisdictions."
The second group is considered to have a supervisory and cooperation framework in place, but "actual performance falls below international standards, and there is substantial room for improvement."
The FSF list identified these territories as: Andorra, Bahrain, Barbados, Bermuca, Gibraltar, Labuan (Malaysia), Macau, Malta and Monaco.
But by far the largest number of tax havens fell into group three.
The FSF listed these as: Anguilla, Antigua and Barbuda, Aruba, Belize, British Virgin Islands, Cayman Islands, Cook Islands, Costa Rica, Cyprus, Lebanon, Liechtenstein, Marshall Islands, Mauritius, Nauru, Netherlands Antilles, Niue, Panama, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Samoa, Seychelles, the Bahamas, Turks and Caicos, and Vanuatu – (Several Sources)
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