Report Shows Tax Havens Not Prominent In Money-Laundering

Tax-News.com, New York

16 January 2002

Washington-based Center for Freedom and Prosperity Foundation today released a study, based on government data, demonstrating that there is no link between so-called tax havens and money laundering. Andrew Quinlan, President of the Center, remarked, "This new study uses State Department, CIA, IRS and FATF findings to show conclusively that countries with low tax burdens and financial privacy are not any more likely to be money laundering centers than high-tax countries. In fact, it shows the opposite. Dirty money is more likely to be laundered in high-tax countries because that is where the illegal activity is most likely to occur."

The report, entitled "U.S. Government Agencies Confirm That Low-Tax Jurisdictions Are Not Money Laundering Havens," is written by Heritage Foundation tax expert Daniel J. Mitchell.

The CFP Foundation study finds that the State Department, Central Intelligence Agency, and Internal Revenue Service each independently assess whether countries are money laundering centers and/or have systems that make them vulnerable to dirty money. All of these government agencies - as well as the OECD's Financial Action Task Force - conclude that tax havens do not attract a disproportionate share of the world's criminal loot. Indeed, the reports indicate that dirty money is far more likely to be laundered in high-tax nations.

"This paper puts an end to the malicious stereotype that low-tax jurisdictions attract a disproportionate share of the world's dirty money. It is time for politicians from high-tax countries to set aside their shameful demagoguery and put crime-fighting ahead of extra-territorial tax grabs," said Daniel Mitchell.

The full report can be found on the Center for Freedom and Prosperity's web page at: http://www.freedomandprosperity.org/Papers/blacklist/blacklist.shtml

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