A recent article in ‘The Economist’ discussed the ever challenged and disputed existence of the offshore financial centre. The article took a brief look back at the history of offshore tax havens and the continual knocks it takes on the chin. It notes that in the aftermath of the September 11th 2001 terroritst attacks on America, the offshore market came under attack itself for supposedly helping to finance terrorism. After the 2007/8 financial crisis hit they were seen as a cause and as a dangerous entity. Robert Mathavious, the BVI’s financial regulator, recalls predictions after the OECD’s 1998 crackdown that only half a dozen havens would survive. The article also mentions that there were fears in the 1970s that America would strangle Cayman by cutting off air and commercial links. Yet the offshore market is still standing…these allegations, setbacks and times of panic never succeded in dismantling the offshore financial centre.
And now, as campaigns for greater transparency in the offshore market gather force, will it eventually lead to the demise of tax havens? Or will it continue to battle and ensure its survival as it always has done? One thing is for sure according to the article – America’s FACTA and the FACTA-lites elsewhere are here to stay…so is the pressure for more clarity and regulation of offshore service providers. The challenge is for offshore financial centres to adapt, take the challenges on the chin again and move forward.
The article is summarised by this statement ‘Offshore financial centres will always be controversial, but they will stay in business’.
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