page_title: Offshore financial centre
section_title: Countermeasures
hierarchical_section_title: Offshore financial centre / Countermeasures
caption_attribution_description: English: HMRC offshore evasion poster February 2014. https://www.gov.uk/government/news/hmrc-campaign-targets-offshore-account-holders-in-fresh-clamp-down-on-tax-evasion
context_page_description: An Offshore Financial Centre or OFC is defined as a country or jurisdiction that provides financial services to nonresidents on a scale that is incommensurate with the size and the financing of its domestic economy. "Offshore" does not refer to the location of the OFC, but to the fact that the largest users of the OFC are nonresident. The IMF lists OFCs as a third class of financial centre, with International Financial Centres, and Regional Financial Centres; there is overlap.
  During April–June 2000, the FSF–IMF produced the first list of 42–46 OFCs using a qualitative approach. In April 2007, the IMF produced a revised quantitative-based list of 22 OFCs, and in June 2018, another revised quantitative-based list of eight major OFCs, who are responsible for 85% of OFC financial flows. The removal of currency and capital controls, the early driver for the creation and use of many OFCs in the 1960s and 1970s, saw taxation and/or regulatory regimes become the main reasons for using OFCs from the 1980s.
context_section_description: Offshore finance became the subject of increased attention since the FSF–IMF reports on OFC in 2000, and also from the April 2009 G20 meeting, during the height of the financial crisis,  when heads of state resolved to "take action" against non-cooperative jurisdictions. Initiatives spearheaded by the Organisation for Economic Co-operation and Development (OECD), the Financial Action Task Force on Money Laundering (FATF) and the International Monetary Fund have had an effect on curbing some excesses in the offshore financial centre industry, although it would drive the OFC industry towards a § Focus on tax for institutional and corporate clients. The World Bank's 2019 World Development Report on the future of work supports increased government efforts to curb tax avoidance.
  Money laundering. In 2000 the FATF began a policy of assessing the cooperation of all countries in programmes against money laundering. Considerable tightening up of both regulation and implementation was noted by the FATF over subsequent years (see generally FATF Blacklist). Most of the principal OFCs strengthened their internal regulations relating to money laundering and criminal financial activities.
  Tax avoidance. Similarly, in 2000 the OECD began a policy of forcing greater compliance by traditional tax havens by increasing the requirements for data sharing and transparency to avoid being included on the OECD's tax haven blacklist. While objections from the U.S. limited the OECD's effect on tax havens, the increased information disclosure enabled tax academics to use more quantitative methods for identifying tax avoidance.
  Financial and banking secrecy. The April 2000 FSF OFC report, which launched the June 2000 IMF OFC initiative, led to a process of increased data disclosure and financial reporting by financial institutions in OFCs.  It also led to more specific clampdowns in the area of bank secrecy, over which the IMF have greater control, and which ultimately removed much of the main distinctions between historical definitions of OFCs and tax havens.
caption: HM Revenue and Customs offshore evasion poster, February 2014
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