The United States needs to do much more to crack down on offshore tax evasion and financial opacity.
It should impose clear sanctions on the territories that allow rogue financial institutions to operate. Promoting financial opacity pays off for places like the British Virgin Islands, Panama and the Cayman Islands where hundreds of thousands of shell companies are domiciled.
Concrete sanctions, such as trade tariffs, would change the incentives of these havens, and ultimately reduce evasion and create greater accountability. Sanctions should only be lifted once these territories have proved that they have correctly identified the owners who benefit from the companies incorporated on their territory — the "beneficial owners." Why do we even enable an outsized financial industry to exist in the British Virgin Islands if there’s evidence that it is used to facilitate crimes of all sorts? Continue…