OFC Meter

Figure 1: Network of countries, linked based on ownership between its firms. Node color is proportional to the country's sink-OFC value. Node size is proportional to the country's conduit-OFC value.

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Figure 2: Example of a global corporate ownership chain (left), a country chain (top right) and sink/conduit scores (bottom right). Example may not reflect current corporate structure.

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The current research presents results based on one snapshot of the global ownership network. We plan to re-compute the list of OFCs on a yearly basis.

What is an OFC?

An Offshore Financial Center (OFC) is a jurisdiction (often a country) that provides corporate and financial services to non-resident companies on a scale that is incommensurate with the size of its economy. Traditionally, OFCs are assumed to be small, low-tax jurisdictions in remote location. In practice, determining which countries are in fact OFCs is nontrivial and as such a highly debated topic.

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Our research

Without making any a priori assumptions about jurisdictions possibly involved, we employ a data-driven method based on network analysis to identify OFCs. Our data covers over 77 million ownership relations, which together form a large network in which value flows from subsidiaries to shareholders. From it we extract millions of global corporate ownership chains (see Figure 2). The resulting fine-grained insight allows us to not only see where value originates and ends up, but also exactly where it originated. This allows us to identify two types of OFCs:

• Sink-OFC: a jurisdiction in which a disproportional amount of value disappears from the economic system.
• Conduit-OFC: a jurisdiction through which a disproportional amount of value moves toward sink-OFCs.

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Our results

Figure 1 visualizes the results in a country-level network. The resulting ranking of in total 24 sink and 5 conduit OFCs is as follows:

Sinks (24)

VG	British Virgin Islands	5235	MH	Marshall Islands	100	BZ	Belize	38
TW	Taiwan	2278	MT	Malta	100	GI	Gibraltar	34
JE	Jersey	397	MU	Mauritius	75	AI	Anguilla	27
BM	Bermuda	374	LU	Luxembourg	71	LR	Liberia	17
KY	Cayman Islands	331	NR	Nauru	67	VC	St. Vincent & Grenadines	14
WS	Samoa	277	CY	Cyprus	62	GY	Guyana	14
LI	Liechtenstein	225	SC	Seychelles	60	HK	Hong Kong	14
CW	Curacao	115	BS	Bahamas	40	MC	Monaco	11

The sink-OFC number indicates roughly how much more value sinks in this country as compared to what should sink in it based on the size of its economy. For example, in the British Virgin Islands, over 5000 times too much value ends.

Conduits (5)

	Country	Value out	Value in	Factor out	Factor in
NL	Netherlands	740 billion	380 billion	18.6	22.5
GB	United Kingdom	380 billion	130 billion	3.1	2.4
CH	Switzerland	220 billion	27 billion	6.9	2.0
SG	Singapore	72 billion	22 billion	5.1	3.8
IE	Ireland	64 billion	33 billion	5.9	7.2

The conduit-OFC number indicates roughly how much more value is channeled in and out of this country towards a sink, as compared to what should based on its economy's size. For example, roughly 20 times too much value is routed through the Netherlands.

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