Did blacklisting hurt the tax havens?

Abstract

Purpose

The purpose of this paper is to test the widely‐held assumption that blacklisting, such as that practiced by the Organization for Economic Cooperation and Development (OECD) and the Financial Action Task Force (FATF), affects the volume of financial activity associated with a tax haven.

Design/methodology/approach

ARIMA (autoregressive integrated moving average) analysis is used to explore changes across eight measures of in banking‐associated activity that occurred when a tax haven was placed on, or removed from, one FATF and two OECD blacklists.

Findings

The results are highly varied. Most importantly, no substantial and consistent impact of blacklisting on banking investment in and out of the tax havens was found across 38 jurisdictions.

Practical implications

The role of “speech acts” – unconnected with other developments in the havens or foreign actions beyond rhetoric – may not be as important for tax haven investment as previously thought.

Originality/value

No rigorous and comprehensive study has previously been done of this important question.

Citation

Kudrle, R.T. (2009), "Did blacklisting hurt the tax havens?", Journal of Money Laundering Control, Vol. 12 No. 1, pp. 33-49. https://doi.org/10.1108/13685200910922633