Yes, there is obviously a difference of emphasis required. I think this understanding of the role of the tax haven as a conduit is incredibly important. What “offshore” means in this context is “not here”. It does not mean a geographical concept. It just means not here. What an offshore tax haven does is record transactions that take place somewhere else—in other words, not here.
Where do they actually take place? Look, there are $400 billion U.S. of assets in Jersey—a U.K. tax haven in all but name—at this point in time. There are only 80,000 people there. Those 80,000 people have not got use for over $5 million of assets each. It's impossible. Therefore, that money is somewhere else. That money is largely in London; it's a conduit to London.
What we require are that the major international financial centres like London, like New York, like Frankfurt, actually have to be much more suspicious about their sourcing of funding. What they're accepting is the assurance of an intermediary that this funding is from an acceptable source, when in fact they have to be much more rigorous about ensuring they really know the client involved.
Unfortunately, when it comes down it, London is at the epicentre of all of this. If you want to find a financial crisis in the world, I'm afraid you've only got to go to the city and there it is. The most-fined banks and the banks with the greatest reputations for money laundering are all based in London.
We've got a problem and we've got to clean up our act, and that requires better regulation and a change in attitude on the part of bankers, because I think it has been far too lax. It also requires us to think very hard about whether deduction of tax at source from these centres when payments are made to tax havens is required. It is on the OECD agenda this week to discuss the relevance between source and residence-based taxation.
