Overall Guernsey received a score of 65, putting it among all of the places studied in the report.
Guernsey Score Breakdown
Guernsey, ranked at 21st position on the 2011 Financial Secrecy Index, has been assessed with a secrecy score of 65 out of 100. This places it in the mid-range of the secrecy scale. Guernsey accounts for less than 1% of the global market for offshore financial services, making it a relatively small player compared to other secrecy jurisdictions.
When assessing Guernsey’s performance on the 15 Key Financial Secrecy Indicators (KFSIs), it becomes evident that there are several areas where the jurisdiction falls short of acceptable international standards.
1. Banking secrecy: Guernsey does not adequately curtail banking secrecy, indicating that it lacks transparency in this area.
2. Trusts and Foundations Register: Guernsey does not put details of trusts on public record, indicating a lack of transparency in the registration of trusts and foundations.
3. Recorded Company Ownership: Guernsey does not maintain company ownership details in official records, indicating a lack of transparency in this aspect.
4. Public Company Ownership: Guernsey does not require that ownership details of companies be put on public record, further contributing to the lack of transparency.
5. Public Company Accounts: Guernsey does not require that company accounts be available for inspection by anyone for a fee of less than US$10, indicating a lack of transparency in this regard.
6. Country-by-Country Reporting: Guernsey does not require companies listed on a national stock exchange to comply with country-by-country financial reporting, indicating a lack of transparency in this area.
7. Fit for Information Exchange: Guernsey does not require resident paying agents to report to the domestic tax administration information on payments to non-residents, highlighting a limitation in the efficiency of tax and financial regulation.
8. Efficiency of Tax Administration: Guernsey does not use appropriate tools for effectively analyzing tax-related information, indicating a lack of efficiency in tax administration.
9. Avoids Promoting Tax Evasion: Guernsey avoids promoting tax evasion through a tax credit system.
10. Harmful Legal Vehicles: Guernsey allows harmful legal vehicles, indicating a potential loophole in the legal framework.
11. Anti-Money Laundering: Guernsey partly complies with international anti-money laundering standards.
12. Automatic Information Exchange: Guernsey participates fully in Automatic Information Exchange.
13. Bilateral Treaties: Guernsey has few tax information sharing agreements complying with basic OECD requirements, indicating a limited commitment to broad information exchange.
14. International Transparency Commitments: Guernsey has partly ratified relevant international treaties relating to financial transparency.
15. International Judicial Cooperation: Guernsey partly cooperates with other states on money laundering and other criminal issues.
Overall, Guernsey’s secrecy indicators highlight a need for improvement in transparency and international cooperation. Addressing these shortcomings is crucial for Guernsey to play a full role in the modern financial community and to prevent illicit financial flows originating from tax evasion, aggressive tax avoidance practices, corrupt practices, and criminal activities.
About Taxation and Finance Transparency
Financial transparency refers to the clarity and openness with which financial institutions, including countries, reveal information related to their financial activities. It encompasses aspects such as public access to information about banking secrecy, company ownership, public company accounts, and other related financial dealings. The significance of financial transparency lies in its potential to curb illicit financial activities, including tax evasion, money laundering, and other corrupt practices. Without transparency, these opaque financial environments can inadvertently or intentionally support the concealment of funds, leading to lost revenues for governments and skewing economic fairness. The assessment of financial transparency is typically based on a set of Key Financial Secrecy Indicators. These indicators serve as benchmarks to evaluate how well a jurisdiction adheres to international transparency standards, shedding light on areas of strength and pointing out facets that need improvement.