According to a new report on Privately Held, Non-Resident Deposits in Secrecy Jurisdictions the United States is the country with the largest amount of private, non-resident, deposits. Cayman Islands takes second, upholding its commonly held reputation as a tax haven often used to avoid paying taxes own by wealthy people. Switzerland comes in 9th.
The countries with the most private, foreign deposits in billion of $US.
| Country | June 2008 | June 2009 | |
|---|---|---|---|
| 1 | United States | $2,899 | $2,183 |
| 2 | Cayman Islands | $1,515 | $1,550 |
| 3 | United Kingdom | $1,796 | $1,534 |
| 4 | Luxembourg | 588 | 435 |
| 5 | Germany | 494 | 426 |
| 6 | Jersey | 544 | 393 |
| 7 | Netherlands | 413 | 316 |
| 8 | Ireland | 273 | 276 |
| 9 | Switzerland | 289 | 274 |
| 10 | Hong Kong | 325 | 268 |
Since 2001 deposits in the Cayman Islands have more than tripled, while those in the UK have close to tripled and in the USA they have a bit more than doubled.
- Total Current total deposits by non-residents in offshore centers and secrecy jurisdictions are just under US$10 trillion;
- The United States, the United Kingdom, and the Cayman Islands top the list of jurisdictions, with the United States out in front with more than US$2 trillion in non-resident, privately held deposits in the most recent quarter for which data are available (June 2009);
- Contrary to expectations of perceived favorability for deposits, Asia accounts for only 6 percent of worldwide offshore deposits, although Hong Kong is the tenth most popular secrecy jurisdiction by deposits in this report;
- The rate of growth of offshore deposits in secrecy jurisdictions has expanded at an average of 9 percent per annum since the early 1990s, significantly outpacing the rise of world wealth in the last decade. The gap between these two growth rates may be attributed to increases in illicit financial flows from developing countries and tax evasion by residents of developed countries.
The report is an interesting read and provides some background on the banking practices often used in concert with wealthy people avoiding paying taxes. As you may we recall we noted that rich USA tax evaders tried to sue to hide their illegal activities from the Department of Justice. As far as I know those rich thieves have not been put in jail. I guess stealing tens and hundreds of thousands of dollars from the United States of America, by rich people, is not seen as important (either that or brides work to make sure the way rich people steal isn’t punished) say compared to some teenager stealing from a store.
Related: Government Debt Globally as Percentage of GDP 1990-2008 – USA, China and Japan Lead Manufacturing Output in 2008 – Oil Consumption by Country in 2007
A lack of data limited the accuracy of this paper and prevented us from analyzing offshore deposits by country of origin. GFI recommends that the international community improve data collection by implementing the following changes.
First, the BIS should publish the locational banking statistics vis-Ã -vis the non-bank, non-government sector (that is, private sector deposits) in the same manner it publishes the consolidated banking statistics. Were this data available, this paper would not have needed to create a proxy system to estimate the private share of total deposits and our analysis would have been more accurate.
Second, we recommend that the BIS further break down private non-resident deposits by country of origin. Specifically, a researcher should be able find the amount of holdings, for example, of Nigerian residents in Switzerland. These changes would drastically improve data on the offshore industry, helping researchers to better understand the market and would inform policy makers in decision making as they pursue tax evaders and improve collection. Without this data, researchers cannot estimate or understand the offshore industry with a high degree of accuracy and policy makers cannot make informed decisions on improved tax collection efforts.
Why are their so many deposits in the USA? I would imagine lots of it is from people hiding it from taxes in their home country. But it can also just be that people want to diversify their assets. Even with the problems in the USA banking system it can still be viewed as a good location to hold cash. And while the dollar may well have many factors pointing to a decline it might be the other major currencies are even worse off which may mean the dollar doesn’t decline (or if it does that it declines only a bit). It certainly isn’t for good interest rates over the last few years.
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