Offshore Tax Havens & Money Laundering. When (and whether) 2 Become 1

When discussing offshore tax havens, one’s immediate associations could be about money laundering. On the other hand, when discussing money laundering, one could think of… offshore tax havens again.

So, are offshore tax havens laundering “dirty” money? And, is money laundering possible because of the existence of offshore tax havens? Well, could be, but a competent person would definitely answer “No”.

Unfortunately, it often happens that offshore tax havens are used as shelters to promote money laundering and aiding various criminal activities not being detected by national authorities. “Dirty” money obtained by means of drug dealing, counterfeiting, illegal arms sales, smuggling, protection rackets, computer fraud etc. come either in cash or cheque. There’s nearly nothing to do about cash. Large amounts of cash paid by cheque require the payee’s bank account. If “dirty money” is accepted by a financial institution, this, by all means, is money laundering. So, criminals look for the place to make this with a minimal risk – and they would often choose tax havens. Their number is, of course, countable, still, quite big. Just some of them are Gibraltar, the Seychelles, the British Virgin Islands, the Cayman Islands, Anguilla, Bermuda, etc.

But one should not forget that there are many legitimate uses of tax havens. The first (and just one of them) is minimizing or avoiding high taxes in home country. So, there can be legitimate tax avoidance and illegal tax evasion.

But let us not generalize and let us be realistic – it goes without saying that money laundering can occur anywhere in the world. So, sometimes offshore tax havens and money laundering go hand-in-hand and these two can become one. On the other hand, many businessmen going offshore do their legitimate businesses and can never be blamed in money laundering because of choosing offshore. Accordingly, offshore tax havens and money laundering must not be taken as a whole (the criminal “whole”).

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