This paper uses account data leaked from an Isle of Man bank to investigate the characteristics of individuals and firms that store their money in tax havens.
Economist - World Bank
Former Rubenstein Fellow - Global Economy and Development Program, Brookings
Using internal documents that assign the ultimate ownership of companies and trusts that held deposits at the bank, I establish three things: First, most customers are from rich countries and are likely to be from the upper end of the income and wealth distributions of those countries.
Second, I show that a non-negligible amount of offshore wealth is connected to a small number of political elites (so called politically-exposed persons). On average, these accounts have substantially higher balances and are more likely to receive payments from other tax havens, which is consistent with politically-exposed persons having access to more resources than the average offshore client while also desiring to obscure that ownership.
Finally, I show that a substantial proportion of bank deposits are obscured from publicly-available statistics published by the Bank of International Settlements which are commonly used to measure offshore wealth. When I correctly assign deposits to their ultimate beneficial owner, offshore bank deposits owned by residents of tax havens drops by up to 32 percent and deposits held by residents of non-havens doubles. I conclude with recommendations on how reporting requirements need to change to improve the ability of regulators and the research community to detect and counter illicit finance.
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