Taking into account how much financial secrecy a country’s laws allow and how much financial services it supplies to residents of other countries, the Tax Justice Network calculates a financial secrecy index which for Luxembourg is relatively good—55/100. Photo: Matic Zorman / Maison Moderne

Taking into account how much financial secrecy a country’s laws allow and how much financial services it supplies to residents of other countries, the Tax Justice Network calculates a financial secrecy index which for Luxembourg is relatively good—55/100.  Photo: Matic Zorman / Maison Moderne

Despite making progress in transparency, Luxembourg ranked fifth in the Tax Justice Network’s financial secrecy ranking, meanwhile the US topped the chart by some distance.

The tax advocacy group consisting of researchers and activists labelled the grand duchy a “moderately secretive jurisdiction that is a major offshore destination” in its report. It highlights that Luxembourg is responsible for 2.36% of the world’s financial secrecy while the US were far ahead with 5.74% followed by Switzerland (3.43%) and Singapore (3.43%).

Taking into account how much financial secrecy a country’s laws allow and how much financial services it supplies to residents of other countries, the Tax Justice Network calculates a financial secrecy index which for Luxembourg is relatively low—55/100.  The lower the rating, the less secretive a jurisdiction is. While the index represents how much financial secrecy a jurisdiction allows, a country may be responsible for a far bigger amount of illicit capital than the index suggests due to a larger quantity of financial activity.

“Panama is more secretive than the UK but the UK is used far more often as a destination for offshore wealth, making the UK a bigger supplier of secrecy in practice,”

This appears to be the case for Luxembourg as well with its financial secrecy index being better than any of the countries in the top 12. The grand duchy posted good scores in the Wealth Ownership category, assessing whether a jurisdiction publishes beneficial and/or legal ownership information of real estate assets online, likely due to the country’s beneficial owners register. It was in a bid to create more accountability and transparency in relation to the people behind companies registered in Luxembourg.

Luxembourg has progressed in recent years according to the Tax Justice Network reducing its supply of financial secrecy by 5% due to an 8.5% drop in financial services provided to non-residents. The tax advocacy group estimates that the grand duchy has been responsible for $63.3m of final exports of financial services compared to $144.3m by the US.

Luxembourg’s score was negatively affected by low performance in international legal cooperation category which measures the extent to which a jurisdiction participates in international transparency commitments along the guidelines of the Financial Action Task Force.

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