Financial Secrecy
Follow the Money
The US ranks first for financial secrecy as $1.7 trillion in tax goes missing and a UN treaty advances
Financial secrecy enables wealthy individuals and corporations to hide money from tax authorities. This costs countries hundreds of billions in lost revenue every year. The Financial Secrecy Index measures which countries enable this most, and its 2025 rankings hold real surprises.
What Is Financial Secrecy?
Financial secrecy occurs when laws and regulations let people hide wealth from tax and police authorities. It includes weak beneficial ownership disclosure, limited information exchange, and banking or trust laws that shield true owners from scrutiny.
Secrecy jurisdictions, often called tax havens, create these conditions deliberately. The Tax Justice Network estimates between $21 and $32 trillion sits hidden in such jurisdictions worldwide, much of it originating in developing countries that most need the tax revenue.
The Financial Secrecy Index: History and Method
The Tax Justice Network launched the Financial Secrecy Index in 2009, deliberately challenging traditional tax haven blacklists that focused on small island nations while overlooking major financial centres like London, New York, and Frankfurt.
The index combines two components. A secrecy score, from 0 to 100, evaluates laws on beneficial ownership, information exchange, and banking secrecy. A global scale weight measures how much financial business a jurisdiction conducts for non-residents. Multiplying the two produces each country’s FSI value, ensuring major financial centres cannot hide behind technical compliance alone.
The 2025 Rankings: Not the Jurisdictions You’d Expect
The Financial Secrecy Index’s 2025 edition, published June 3, 2025, again names the United States the world’s largest single enabler of global financial secrecy, a ranking many observers find genuinely surprising.
- United States
- Switzerland
- Singapore
- Hong Kong
- Luxembourg
- Germany
- Netherlands
- South Korea
- Guernsey
- Japan
This list looks nothing like a traditional tax haven blacklist. The US ranks first largely due to weak federal beneficial ownership rules and state-level secrecy laws in Delaware, Nevada, and Wyoming, combined with its refusal to fully join international automatic information exchange.
Germany and the Netherlands, both major EU economies, rank sixth and seventh respectively, ahead of many traditional offshore centres like the Cayman Islands and British Virgin Islands. Both cases connect directly to RYB’s own country pages: read more on US, Germany, and Netherlands financial secrecy specifically.
Hong Kong’s fourth-place ranking also matters for RYB readers. It sits alongside mainland China, which ranks twelfth on the same index, a two-tier structure explored further on RYB’s China page.
The 2025 update also flagged a genuine regression. Following a 2022 European Court of Justice ruling that restricted public access to EU beneficial ownership registers, several countries have quietly closed off transparency that had only recently opened up, a step backward the Tax Justice Network specifically tracks.
The Cost of Financial Secrecy
The Tax Justice Network’s State of Tax Justice 2025 report, published November 4, 2025, found the world lost $1.7 trillion in corporate tax over the six years from 2016 to 2021 to profit shifting through tax havens.
US-headquartered multinationals alone accounted for $495 billion of that total, 29% of the global figure. Strikingly, the United States itself was the biggest loser, forfeiting $271 billion of its own tax revenue to its own companies’ profit shifting.
The report ties this directly to US domestic tax policy. Effective corporate tax rates paid by US multinationals fell from 32.9% in 2016 to just 20.8% in 2024, following the 2017 Tax Cuts and Jobs Act, with US tech companies’ effective rates falling even further, to 10.8%.
Public transparency could recover much of this. The report estimates that if governments had made country-by-country corporate tax reports public between 2016 and 2021, as many campaigners demand, countries could have recovered $474.6 billion through deterrence alone.
A related 2025 finding: intellectual property tax breaks, offered by many wealthy jurisdictions to attract corporate investment, cost those countries $29 billion in foregone revenue directly. They also drove an additional $84 billion in annual losses elsewhere, as multinationals shifted profits to claim the discount.
The UN Tax Convention: A Historic Process, Underway
The most significant global reform effort now runs through the United Nations, not the OECD. In August 2024, UN member states voted to begin negotiating a UN Framework Convention on International Tax Cooperation, the first fully global, UN-led tax treaty process.
The United States withdrew from these negotiations entirely on their first day in 2025, stating it would oppose any resulting outcome, and calling on other countries to leave with it. None did. This differs from the eight countries, including the UK and Japan, that oppose the convention’s direction but continue participating in negotiations.
Negotiations have since progressed through four sessions, with the fourth concluding in New York on February 13, 2026, moving countries toward a consolidated “zero draft” of the treaty text and its two early protocols, covering cross-border services taxation and dispute resolution.
A fifth session is scheduled for August 3-14, 2026, with a final convention text targeted for adoption by the UN General Assembly by late 2027. Decision-making uses a hybrid model: two-thirds majority for substantive protocol matters, simple majority for procedural questions, a structural win for developing countries who make up the bulk of UN membership.
A parallel development complicates the picture. While UN negotiations proceeded openly, a number of governments reportedly reached a closed-door “side-by-side” arrangement at the OECD, exempting US multinationals from elements of the existing global minimum tax framework, a fragmentation the Tax Justice Network has flagged as a direct threat to the UN process’s credibility.
Reform Efforts Beyond the UN Convention
Several other mechanisms aim to reduce financial secrecy, with mixed results. The OECD’s Common Reporting Standard requires automatic exchange of financial account information, though the US has never fully joined it. EU anti-money-laundering directives strengthen beneficial ownership rules, but implementation still varies significantly by member state.
Beneficial ownership registers have expanded in many jurisdictions, though public access to them has narrowed since the 2022 EU court ruling described above. Corporate transparency laws have passed in several countries, but enforcement frequently lags well behind the legislation itself.
Why This Matters for Global Development
Financial secrecy harms developing countries disproportionately. They lose more tax revenue relative to their budgets than wealthy nations, and have fewer resources to pursue sophisticated multinational tax avoidance schemes through their own courts and tax authorities.
This connects directly to RYB’s coverage of Official Development Assistance. As traditional donor countries cut aid budgets, the revenue lost to financial secrecy each year dwarfs the cuts themselves, revenue that could otherwise fund the same health, education, and infrastructure programmes aid is meant to support.
The connection to the Sustainable Development Goals runs through SDG 16, on strong institutions, and SDG 17, on global partnerships and financing for development. A country cannot mobilise domestic resources effectively, a core SDG target, while simultaneously ranking among the world’s top secrecy enablers.
Looking Forward
The UN Tax Convention represents the clearest test of whether global tax reform can move beyond OECD-led processes that developing countries have long argued underrepresent their interests. Its August 2026 fifth session, and the target 2027 adoption date, will show whether momentum holds.
The US’s full withdrawal from that process, contrasted with its continued dominance atop the Financial Secrecy Index, illustrates a consistent pattern: the country most responsible for global financial secrecy is also the most resistant to multilateral reform addressing it.
Public country-by-country reporting offers the clearest near-term opportunity for recovering lost revenue, worth an estimated $474.6 billion over six years by the Tax Justice Network’s own modelling, without requiring any new international agreement at all.
RYB will track the UN Tax Convention’s fifth session in August 2026, the Financial Secrecy Index’s next update, and how these dynamics play out across the country pages already covering the US, Germany, the Netherlands, and China. This page will be updated as new data and negotiating outcomes emerge.
Sources and References
- Tax Justice Network, Financial Secrecy Index, full rankings — fsi.taxjustice.net/full-list
- Tax Justice Network, Indexes & Tools — taxjustice.net/indexes-tools
- Tax Justice Network, “2025: The year tax justice became part of the world’s problem-solving infrastructure” — taxjustice.net
- Tax Justice Network, “The State of Tax Justice 2025” — taxjustice.net
- Tax Justice Network, “$475bn lost to US-backed global gag order shielding corporate tax cheaters” — taxjustice.net
- Tax Justice Network, “UN tax convention advances toward zero draft as closed-door OECD deal casts long shadow” — taxjustice.net
- Tax Justice Network, UN tax convention topic page and live updates — taxjustice.net/topics/un-tax-convention
- Eurodad, “United States walks out of UN Tax Convention process” — eurodad.org
IISD, “Inside the UN Tax Convention Negotiations” — iisd.org - UN DESA, “UN negotiations enter key phase for fairer global tax system” — un.org
- UN Financing for Sustainable Development Office, Fourth Session documentation — financing.desa.un.org/unfcitc
- Transparency International, “New Index Ranks U.S. #1 in Offering Financial Secrecy to the Criminal and Corrupt” — us.transparency.org
- RYB, Official Development Assistance (ODA) — redyellowblue.org/finance/oda/
- RYB, Tax Havens — redyellowblue.org/finance/tax-havens-offshore-world/