Provision of hidden offshore services at record high level

In spite of new financial legislation, the demand for financial concealment products and services remains high. The offshore world is flourishing as never before. Since this topic receives little structural attention from the government or investigative authorities, Jan van Koningsveld researched the offshore world in general and offshore companies in particular. His dissertation contains the first description of the manner and scale on which the abuse of offshore companies is taking place.

One fourth of bank balances offshore

Van Koningsveld’s research shows that the offshore service sector has succeeded worldwide in concealing assets, identities and cash flows from tax authorities, other regulators and investigative agencies. This is taking place on an unprecedented scale. At the end of 2013, a total of around 5.565 trillion euros were held in offshore accounts at various banks. This is around one fourth of total global bank balances. It can be assumed that these offshore assets have only been partially declared, if at all, to the tax authorities in their owner’s country of residence.

Real estate sector

In the Netherlands, offshore companies appear to play an important role in financial economic crime, although the extent of this cannot be established with certainty. The use of such companies has penetrated the real estate sector, primarily in relation to organized crime, drug crime, and economic crime. Figures from the land registry show that, at the end of 2013, offshore companies had invested a total of 5.3 billion euros in real estate.

Both the quantity and size of assets held by private individuals with a disposable income of over one million dollars are also increasing. The greater the assets, the more likely it is that they will be held offshore. At the end of 2013, there were around 173,000 high-net-worth individuals in the Netherlands with combined assets of 437 billion euros. Around one third of these assets are held offshore.

Van Koningsveld’s research also shows that offshore companies are involved in 54% of all criminal investigations. It is also worth noting that the Dutch Public Prosecution Department almost never prosecutes offshore companies.

Attention and approach

In spite of its extensive and structural importance, there continues to be very little attention paid to the offshore world. An integrated offshore vision is lacking and there is not enough reliable data that can be used to identify evaded tax obligations or money laundering that could be attributed to the improper use of offshore companies. That is why Van Koningsveld argues in favor of developing greater knowledge that can contribute to preventing and combatting abuse, such as by establishing a national knowledge center.

Jan van Koningsveld is a lawyer with an extensive background in investigation, including as a tax investigator for the Dutch Fiscal Information and Investigation Service (1985-2010). He studied law at VU University Amsterdam and completed postdoctoral studies in Criminal Tax Law at the University of Amsterdam and Customs Law at Leiden University. Van Koningsveld works as a director, researcher, and trainer at his own company, the Offshore Knowledge Center (OKC) in Almere.