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Monday, November 02, 2009

Think Switzerland is the world's most secretive place for banking?

According to the Tax Justice Network based out of Great Britain, the most secretive financial jurisdiction on Earth is actually... the state of Delaware.

Yeah, that Delaware: on the eastern seaboard of these United States! $2.6 trillion was deposited in this country by non-resident citizens and corporations in 2007, with Delaware leading the way...

The survey of laws, practices and size of inflows in 60 jurisdictions found Delaware coming in first, followed by Luxembourg and then Switzerland. The Cayman Islands and the United Kingdom round out the top five.

"While the U.S. has been jumping up and down and saying 'Aha, bad, wicked Swiss banks,' the U.S. is doing exactly the same things as far as non-resident bank account holders," said Sarah Lewis, executive director of the group, based in the U.K.

Switzerland has been the poster child for financial secrecy over the past year. The United State sued Swiss global banking giant UBS AG, which paid a $780 million fine to settle a lawsuit against it by the government. As part of the deal, UBS admitted it actively helped Americans evade U.S. taxes.

The ranking is based on a composite of total offshore activity and measures such as whether a jurisdiction obtains beneficial ownership information about companies and the degree of cooperation in turning over requested financial information.

Delaware is attractive because it does not tax profits realized outside the state and does not require companies to be physically present, according to the Tax Justice Network.

So if I ever win the lottery or write a best-selling novel, I'll know now that I don't need to fly to Europe or the Bahamas to stash my money: I can just drive a few hours north and put it in Delaware :-)