The Patterns of Elites Who Conceal Their Assets Offshore

Summary

Billionaires, oligarchs, and other members of the uber rich, known as “elites,” are notorious for use of offshore financial systems to conceal their assets and mask their identities. Understanding the transnational offshore finance networks that they utilize has long been a challenge given the secrecy involved.But a new Dartmouth study reveals there are distinct patterns associated with the offshore system, which are specific to where a wealthy person comes from. The quality of the governance in the home country of an elite is also tightly associated with the patterns.The findings are published in PLOS One.The researchers examined elites’ offshore secrecy behavior in 65 countries using public data from the Offshore Leaks Database maintained by the International Consortium of Investigative Journalists—the most comprehensive database on offshore finance, which includes nearly 3,000 billionaires, heads of states, celebrities, and others—and the World Justice Project Rule of Law Index, which rates countries on their “rule of law” and is used by the World Bank and financial ratings agencies to benchmark data.“By combining the two datasets using machine learning and social network analysis, we were able to identify the different types of offshore strategies that are used,” says lead author Herbert Chang ’18, an assistant professor of quantitative social science at Dartmouth.The team calculated metrics such as to what extent elites from a country conceal their identity, the percentage of their assets that they place in offshore centers, such as the British Virgin Islands, and how much they diversify their assets, including across “blacklisted jurisdictions.” Blacklisted offshore centers operate outside the confines of the normal financial system and are known for not disclosing information about assets to foreign governments.“One of the goals of the study was to conduct a quantitative analysis that was purely based on the network behavior of elites and their offshore behav...