Financial Crime World

Tax Havens Dominate List of Foreign Accounts Held in Australia

A staggering 7.1 million accounts held by foreign tax residents were found to be parked in Australian financial institutions, with a total value of $241 billion.

Top 10 Countries with Largest Average Account Balances

According to the latest data from the Australian Taxation Office (ATO), the top 10 countries with the largest average account balances are all so-called “secrecy jurisdictions”, where taxes are low or non-existent and local laws protect the identity of the people who really own the assets.

  • The Marshall Islands: topped the list, with an average account balance of $2.9 million and 164 accounts, adding up to a total of nearly half a billion dollars in Australian financial institutions.
  • Other countries on the list include Jersey, Cayman Islands, Bermuda, Antigua and Barbuda, Guernsey, and Gibraltar.

Serious Risks of Money Laundering and Tax Evasion

Tax experts warn that the prevalence of tax havens on the list highlights serious risks of money laundering and tax evasion. “There are serious risks that some of the money is being laundered through Australia,” said Mark Zirnsak, a tax expert with the Uniting Church in Australia.

Need for Reform to Anti-Money Laundering Laws

Critics argue that more needs to be done to prevent tax evasion and money laundering. “We need a public register of the beneficial ownership of companies and trusts so financial institutions can know who they are really dealing with and fulfill their obligations to prevent money laundering,” said Mr Zirnsak.

Additionally, there is a need for reform to Australia’s anti-money laundering laws. “We also need reform to our anti-money laundering laws so that businesses and professionals that set up companies and trusts are required to report suspicious matters to AUSTRAC,” said Mr Zirnsak.

The data also reveals that most of the money reflects real business and human links, with significant amounts held by residents of countries such as:

  • United States
  • China
  • UK
  • Singapore
  • New Zealand

However, the disproportionate prevalence of tax havens on the list highlights the need for reform to Australia’s anti-money laundering laws.

International Common Reporting Standards Reforms

The data detailing foreign accounts with Australian financial institutions has only been produced since 2018, as part of international common reporting standards reforms pushed by the Organisation for Economic Co-operation and Development (OECD) and adopted here through legislation passed in 2016.