Malta slips down financial secrecy index
It grades each country’s legal and financial system with a secrecy score out of 100 where a zero out of 100 is full transparency and a 100 out of 100 is full secrecy.
The country’s secrecy score is then combined with the volume of financial activity conducted in the country by non-residents to calculate how much financial secrecy is supplied to the world by the country.
Thus a highly secretive jurisdiction that provides little to no financial services to non-residents, like Samoa (ranked 86th), will rank below a moderately secretive jurisdiction that is a major world player, like Japan (ranked seventh).
Malta was given a secrecy score of 62/100, which is two points below the average score.
Its worst scores were in the transparency of trust and foundation ownership, transparency of real estate and other asset ownership, corporate tax disclosure and promotion of its tax structures.
In all these categories, Malta was awarded the highest secrecy score, 100/100.
On the other hand, Malta fared well when it came to the international standards and cooperation criteria, including the automatic exchange of information, antimoney laundering legislation, bilateral treaties and international cooperation.
Tax Justice Network chief executive Alex Cobham told The Times of Malta the country slipped down the rank because it was among the minority of jurisdictions that increased their secrecy score, bucking the global trend towards greater transparency.
Mr Cobham said the change was a small one, with some EU-led improvements in company registration outweighed by poorer evaluations in several indicators, including how Malta’s tax treaties may promote tax evasion elsewhere.
“At the same time, Malta’s share of the global market in financial services exports fell, perhaps because of the reputational damage caused by the shocking murder of investigative journalist Daphne Caruana Galizia and the government’s extraordinary mishandling, at best, of the response.
The TJN is now calling for sanctions against countries including the UK, US and the Cayman Islands for “backsliding” on transparency since 2018, just as other countries around the world became more open due to reforms such as automatic sharing of information about non-resident taxpayers.
The campaign group’s director and founder, John Christensen, said the UK’s poor showing raised serious concerns about how its policies around financial transparency would evolve after leaving the EU.
“The UK showed the world true leadership in 2016 by being the first country to adopt a public beneficial ownership register [for domestic companies] – now that progress has been thrown in reverse,” he said. “The UK’s surge up the financial secrecy index raises serious concerns about the UK’s post-Brexit strategy to turn the City of London into a ‘Singapore-on-Thames’.”