Offshore banking centres: Cleaning up offshore
There are still offshore banking centres that cater for the sleazier end of the market, but most of these are new. The others would have us believe they've grown respectable in their old age. Jules Stewart reports.
Offshore banking is a lucrative business. It's estimated that the sector manages some $2.1 trillion in assets, and business is growing at up to 15% a year. Not surprisingly, then, new centres are seeking to snatch a piece of the action from established centres such as Switzerland and the Channel Islands, and newer - but now respectably regulated - island jurisdictions such as the Bahamas and the Cayman Islands.
Established centres, including some European ones, have not always been as choosy as they are now about whom they deal with - that's in part how they built up their operations. But would-be newcomers are finding that this time-honoured path into offshore banking has in the past few years turned into a legal and political minefield. Western governments are cracking down on offshore money laundering, especially of funds from drug trafficking, which has been the primary attraction for some of the racier jurisdictions that have set up shop in the past few years.
According to one banker the Cayman Islands, a British dependency, started offshore activities in the 1960s with "a fairly lax" regulatory regime. Today the Caymans are the world's fifth biggest financial centre, with over 550 registered banks.