According to special report has issued on 22 July by Tax Justice Network A Global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($20 trillion) of wealth offshore - as much as the US or European Union GDPs and nearly Us & Chinees GDPs together in 2010- This report has been prepared by James Henry, former chief economist at consultancy McKinsey and an expert on tax havens. The study was related to tax evasion , which was produced by campaign group the Tax Justice network, looked at the amount of money which has been moved to low-tax or tax-free jurisdictions. The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardising their source.Money laundry is part of Crime and Crime and corruption is worked into the fabric of capitalism. Corruption reaches its most frenzied peak at the height of economic booms, when everyone's trying to get rich. Speculation drives up stocks, and profits. Books are doctored to hide problems so that the good times can continue to roll. When the bubble bursts, the most egregious scandals are exposed.
Illegal arms sales, smuggling, and the activities of organised crime, including for example drug trafficking and prostitution rings, can generate huge amounts of proceeds. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits and create the incentive to "legitimise" the ill-gotten gains through money launderingThe report's author, former McKinsey consultancy director James Henry, estimated that at least $US21 trillion has been moved beyond the reach of home country tax authorities, representing lost tax revenues worth up to $US280 billion. These amounts , equivalent to the combined gross domestic product of the United States and Japan, was conservative, adding that up to $US32 trillion may have found its way into." It is funny that Today, most financial institutions globally, and many non-financial institutions, are required to identify and report transactions of a suspicious nature to the financial intelligence unit in the respective country. For example, a bank must verify a customer's identity and, if necessary, monitor transactions for suspicious activity. This is often termed as KYC - "know your customer". This means, to begin with, knowing the identity of the customers, and further, understanding the kinds of transactions in which the customer is likely to engage. By knowing one's customers but recent report by the US Senate had lurid details about how global bank HSBC allegedly helped drug lords launder money through tax havens. The Senate report should be compared with the insipid white paper on black money that the Indian government tabled in Parliament a few years ago. Generally in this situation the bank manager says" Excuse me" and then everything would be finish!! "Lord Green, the Trade Minister, has said he has 'regrets' over the failure of HSBC to tackle money laundering during his time in charge of the bank. -CNN News_There are various estimates about how much Indian money is lying in foreign tax havens. Political leaders have come up with astronomical numbers, but there are more careful estimates to work with as well. A new report published this week by the Tax Justice Network says that between $21 trillion and $32 trillion has been stashed offshore by around 10 million of the richest people in the developing world. Of this, $9.8 trillion is owned by 91,186 individuals. The report is authored by James Henry, a former McKinsey economist, who has calculated the cumulative capital flight since the 1970s from 139 poor and middle-income countries. According to a report released Sunday by the UK-based Tax Justice Network, Koreans have hidden around 800 billion dollars in overseas tax havens over the past 4 decades. This puts Korea in the third place after China and Russia. And according to statistics from the Export-Import Bank of Korea, as of this March, Koreans have invested 24 trillion won or roughly 21 billion U.S. dollars in 35 tax havens since 1968.
The largest investments were made in Singapore, followed by Malaysia, the Cayman Islands, Bermuda and the Philippines. Of the around 200 billion dollars invested overseas by Koreans during that period, one-tenth was in tax-free jurisdictions. In addition, the number of paper companies set up by local businesses was nearly 5-thousand by the end of last year.
An official from the Korea Customs Service says that as the investments made in tax havens could be seen as part of tax-efficiency planning, the number of illegal wealth transfers done to avoid taxation could have increased as well.
In fact, the size of illegal money transfers to other countries uncovered by the KCS saw a ten-fold increase to 130 million dollars in 2010, from around 14 million dollars in 2007.
The number of cases of money laundering also increased by 11 times in the same period, to reach 80 million dollars in 2010. There are the usual suspects in the list of the Top 20 losers -China, Russia, Indonesia, Kazakhstan, Venezuela, Brazil, Nigeria, Ivory Coast, among others. The big surprise is Singapore; the capital flight from the city state is an estimated $169 billion .Henry says that most traditional analyses of capital flight are based on microeconomic explanations, or by looking at why individuals choose to take money offshore. Rich citizens take money out of their country because they want to diversify their portfolios, they prefer to invest (sometimes back in their own countries) through more efficient Western banks, or because they anticipate devaluations and tax changes. The loss of capital to havens hurts government tax collections. Some countries have seen capital flight that is in excess of their foreign debt, which means that they are actually net creditors. The fact that unofficial agencies such as Global Financial Integrity and Tax Justice Network can come up with detailed studies about the extent of capital moved to tax havens means that governments are just not doing enough to track such money and put pressure on the banks that help to move it across borders. The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Mr Henry's calculations, £6.3 trillion of assets is owned by only 92,000 people, or 0.001 per cent of the world's population - a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.The most finding orf Tax Justic Network are as:
· Top 50 Private banks alone collectively managed more than $ 12.1trillion in cross -border invested assets for private clients
· The three private banks handling the most assets offshore on behalf the global super rich are UBS, Credit Suisse and Goldman Sachs
· The number of the global super rich who have amassed a $ 21 Trillion offshore fortune is fewer than 10 million people .Of theses less than 100,000 people worldwide own 9.8 trillion of wealth hold offshore.
· Mostly countries has ben under study in this case are low-middle income countries ,traditional data shows aggregate external debts of #4.1 trillion at the end of 2010 .But take their foreign reserves and unrecorded offshore private wealth into account, and the picture reserves: they had aggregate net debts of minus US # 10.1 - 13.1 trillion .In the other word , these countries are big net creditors.Unfortunitly , their assests are held by a few wealthy individual , while their debts are shouldered by their ordinary people through their government.
I remember that leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008 but according to this report their decision was not active till now!.
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