Reported by Matei Rosca

The United States has fallen behind other developed countries in curbing financial secrecy, surpassing Switzerland as the “international banking center of choice for corrupt transactions,” according to a new report from the University of Sussex.

The findings, based on data that spans four decades and more than 70 jurisdictions, provide “an unprecedented view of how the structure of different types of illicit global financial networks have evolved” in response to changing regulations, the report said.

The researchers identified several long-term trends, including the U.S.’s transformation into a financial transparency scold — and scourge.

Over the past two decades, Washington has successfully lobbied its peers to reform their financial systems while failing to implement similar measures at home, the researchers said.

The U.S. has “been very aggressive at imposing unilateral financial transparency in other places, especially Switzerland, but it really hasn’t reciprocated in banking information exchange,” Daniel Haberly, a professor of human geography at the university who led the research, told ICIJ. “It’s got fairly high financial secrecy, but it also seems to have pretty lax anti-money laundering compliance on top of that.

Starting around 2013, the researchers said, there was a notable uptick in the use of U.S. bank accounts in bribery cases recorded under the U.S. Foreign Corrupt Practices Act, a law meant to prevent corrupt payments to foreign officials. By comparison, the use of Swiss bank accounts in FCPA cases declined, the report said.

In addition to becoming a more popular conduit for the proceeds of corruption, the U.S. has also become a hub for shell companies, Haberly added, citing states such as Delaware and Florida that have made it easy to set up corporate entities without disclosing the true owners.

As a result, the U.S. in 2022 climbed to the top of advocacy group the Tax Justice Network’s global ranking of “countries most complicit in helping individuals to hide their wealth from the rule of law, earning the worst rating ever recorded since the ranking began in 2009.”

Haberly said another factor in the U.S.’s poor scores on financial secrecy and anti-money laundering compliance was the country’s failure to adopt the Organisation for Economic Co-operation and Development’s Common Reporting Standard for the automatic exchange of information about financial accounts between jurisdictions. 

Read full report: https://www.icij.org/news/2024/08/us-lags-on-financial-transparency-compared-to-other-developed-nations-researchers-say/