Ethics and governance in the European Financial centers

The Tax Justice Network yesterday launched a major new project called Mapping the Faultlines. This is the biggest and most elaborate research effort ever undertaken to look at how secrecy operates through global financial markets.

As the project brief explains, the Faultlines Project is based on a central contention: that the mechanisms that facilitate illicit financial flows result from the synergistic relationship between tax havens, or as we prefer to call them, secrecy jurisdictions and its Offshore Financial Centres (OFCs). These were defined at the project outset as follows:

1.       Secrecy jurisdictions are the legislative and regulatory spaces provided by states and microstates that encourage the relocation of economic transactions to that domain;

2.       An OFC is the commercial response to the legislative and regulatory environment of a secrecy jurisdiction by those such as accountants, lawyers and bankers seeking to profit from the opportunities the secrecy jurisdiction provides.

This distinction between jurisdictions and services providers who exploit the regulation they create is important, and is a consistent theme of the project albeit that much of the terminology we have used has changed and developed as this project has progressed. The Mapping the Faultlines project has been undertaken by the Tax Justice Network with funding from the Ford Foundation.