Global Financial Integrity

Russian Foreign Direct Investment and Tax Havens

It can be tough to impose economic sanctions against Russian citizens if you can’t find their money. Russia’s very complex relationship with tax havens could make this more difficult.

It is also tough to try to pinpoint exactly how much Russian money is being held in tax havens due to the fact that a lot of it isn’t reported to Russian officials/international organizations like the IMF (that’s the whole point of hiding your money in a tax haven).

The amount that is actually reported is pretty jaw-dropping. Approximately 61% of Russia’s $403 billion in outward Foreign Direct Investment (FDI) is held in tax havens:

Just to be clear, FDI is any amount of investment in a entity which gives the investor some  control over that entity’s operations. So, if a Russian billionaire incorporates an entity in Cyprus (often these entities in tax havens are just bogus “shell” entities), and invests $1,000,000 into the entity, that will show up in the FDI statistics.

Event Recap: Global Shell Games, Experiments in Transnational Relations, Crime, and Terrorism

On Friday, Global Financial Integrity hosted professors Michael Findley and Daniel Nielson to talk about their new book, Global Shell Games, Experiments in Transnational Relations, Crime, and Terrorism.

The book follows their ground-breaking paper, Global Shell Games: Testing Money Launderers’ and Terrorist Financiers’ Access to Shell Companies, which was published in 2012. The authors approached nearly 4,000 services in over 180 countries in a random assignment experience designed to measure how difficult it was to convince a corporate service provider or law firm to create a shell company without proper identification.