By: Carlos I.

The globalisation has brought many positive effects for society, for example the easing of transit and communication and the relative decrease of transaction costs for international cooperation, to name just a few. The internationalisation of the financial system is a huge piece of this globalist scenario, however with its development, some principal counterweights came to arise. One of them is that on money laundering which, while being widely used in perspectives and applications, it can be resumed as “an illegal activity that makes large amounts of money generated by criminal activity…, appear to have come from a legitimate source” (Chen, 2024). Within money laundering, there are many strategies to follow based on the source, the amount to clean and the possibility for fraction the deal, one of them for example is smurfing. this papers aims to provide a concise , yet strong, analysis on many tax havens that exist here and there in order to provide a route of destinies for smurfs in banking to keep their money safe from the social and legal systems that rule our societies (note the irony on helping smurfs hiding their mischievous booty)

The colloquial term “Smurf” is used specifically within banking circles in order to address a money launderer who in order to avoid legal scrutiny regarding profit, breaks large transactions into small ones. Smurfing, as an activity, is therefore a money laundering technique that consists on breaking large amounts of cash (liquid) into multiple smaller transactions, with the aim of moving these smaller transactions over many other accounts in different banks, cities and even countries in order to avoid regulation which comes specially with big amounts of cash. But the question here is, even though it is true that its difficult to trace many small transactions, there should still be a path or a common destiny where our curious and interesting smurfs put their money, what place or places could they be?

These places are of a variety of shapes, sizes and names. However, the requirements for these places may narrow them to what we know as a tax haven. A tax haven is a jurisdiction that have low or zero tax liability for businesses and individuals towards their bank deposits. In simple terms, it’s a country that allows individuals and corporations to avoid or escape rule of law, principally that of the countries from where they reside or operate. This makes tax havens popular and attractive for those who desire to have as little relation as possible with the law regarding their profits. Its true that there are many tax havens in the world but we do not really get to know those who are not mentioned and due to their reserved status might be “THE PLACE” if you are looking for where to transfer some millions of euros and keep your money

safe.

On this paper I will be glad to present to you 5 options to where to save your booty, while tax havens has been a popular topic, with these options offered here I have tried to bring you some popular but keeping them in niche, less popular but still very efficient for your “smurfy-deed”.

Mauritius

One of the most prominent financial centres in the Indian Ocean and mentioned by some clients, an easy and reliable option for opening an account. It’s tax regime attracts foreign investors due to the easiness to open an account, their double taxation avoidance agreements (DTAAs), a considerable low corporate tax of 15%, no capital gains tax, some benefits the financial institutions provide, e.g. airport lounges, international portfolio management, private client activities. Consider that while it’s true that the process of opening an account in Mauritius can be easy as a resident, this does not impede foreigners to open an account. The main requirements for opening an account for non-residents of the island are : your passport, proof of residence in your home country, bank reference and a professional resume. Regarding the amounts, do not worry my dear smurfs, the minimum in order to open an account here is of $ 100,000 USD. An amazing option indeed, plus the official language of the country is English which makes paperwork and phone calls easier for everyone. Mauritius therefore is an interesting option and a strong competition due to its profile of a strong, first world infrastructure and top-class service making it a hub between Africa and India.

Mauritius Island

British Virgin Islands

This jurisdiction located east of Puerto Rico which comprises around 50 islands, islets and cays has been one of the most attractive tax havens in the world. It’s legal structure has been designed to attract offshore investors providing them with beneficial tax and financial privileges to foreigners and nationals. Importantly, the BVIs signed in 2017 the Common Reporting Standards which makes them be a compliant jurisdiction that has never been blacklisted at least by the FATF (Financial Action Task Force). It incorporates nearly 40% of the world’s offshore companies and according to Offshore Protection, “has formed over 600,000 companies” (Offshore Protection,2025). Within its benefits you can find strong privacy laws, no corporate tax, no estate tax, no inheritance tax and no sales tax or value-added tax. Keep in mind that on paper, they adhere to the AML (Anti-Money Laundering) regulatory standards, some events have made the BVIs up to regulation ( e.g. the Panama Papers).

Soper’s Hole in Tortola, Alamy, Johanna Booth, 2024

Seychelles

This beautiful archipelago in the Indian Ocean, which until 1503 was inhabited but then discovered by Vasco de Gama, Portuguese “adventurer”, is a high-reliant tourism island which due to its political and economic history has, unfortunately, developed a quite tarnished reputation. With this I’m not telling you not to go but instead I present the when to go. It is true that many advisors might recommend you not to make deals there, however, Seychelles must be seen as a last resource offshore banking option for those who are looking for a “few or no questions asked” option. Due to this, internationally Seychelles is seen as a red flag but it seems that this status is gradually changing. What you can get here is low government fees, solid secrecy policy, rapid expanding network of DTAAs, zero corporate tax for offshore companies, Foreign-source income exemptions. While the reputation of Seychelles is not the best one, its profile as a global tax haven keeps improving so it would be worth it to keep an eye on them.

Mahé Island

Labuan (Malaysia)

Labuan is a small set of islands near Borneo in Malaysia, which has become one of the favourite jurisdictions in Asia since Malaysia made it an international offshore financial centre. In Labuan there are two main types of offshore companies which can incorporate: trading and non-trading companies. Non-trading offshore companies pay zero tax on foreign-earned income and trading companies pay 3% on their net profit up to a maximum tax of 20,000 Malaysian ringgit per year (something like 4,700 USD). The benefits of having an account here are the minimal tax rates, low registration fees, high degrees of confidentiality for offshore companies and offshore account holders, its location allows users access to Middle Eastern and Asian markets, Labuan’s “free-port” condition meaning no import or export duties on traded goods and a general good reputation worldwide. Nonetheless, you must consider that the minimum authorised capital is $10,000 so no big deal, however, the annual fees are a bit high if we compare them to other jurisdictions, here you’ll have to pay around $1,200 USD. Labuan is the financial hub for business operating in the Asia-Pacific region seeking tax-efficient structures which you’ll for sure get in this beautiful island.

Labuan Main Town

Nevis

Nevis is well-known (by those who know) that is one of the world’s most secretive offshore financial havens. Located in the Caribbean, Nevis offers a full tax exemption on worldwide income for offshore companies, no income, capital gains or inheritance taxes and a strong asset protection laws with a high level confidentiality. Nevis stands out from other tax havens due to its layered approach to privacy and asset protection, in other words Nevis is a champion in privacy shields that have not changed even under international transparency pressure. The benefits of Nevis are a top level asset protection and privacy, complete exception from taxation on offshore income, so no corporate taxes, income taxes, capital gains taxes, no wealth, inheritance or estate tax which creates a strategic and significant advantage for estate planning and wealth preservation. Interestingly enough, Nevis offers citizenship through its Citizenship by Investment Program. Summarising, Nevis is on the top of financial havens, its renowned strong privacy laws and asset protection structures makes it the favourite for many. Their Limited Liability Companies (LLCs) is popular for asset protection and estate planning, and due to this Nevis has been used by high-net-worth individuals for wealth preservation and by entities seeking confidentiality.

Nevis Island

The environment of tax havens has been under strong scrutiny by various international regulation frameworks. Their presence has been debated by economists, politicians and many international actors as it seems they represent a source of policy inefficiency and economic inequality. The tone in this paper is ironic, it is not my intention to motivate money laundering but to demonstrate the loops and wholes that exist in the financial world. Money launderinghas been defined in many ways yet there cannot be a one definition as this practice involves a wide number of activities that are difficult to catalogue or to legally embrace. Taking into consideration the influential role of the private sector and specifically corporations, the definition of money laundering must also include certain corporate activities that may not be considered as criminal yet must be catalogued as illegal. My point with this is that while focusing on the important big classical criminal activities (i.e. drug trafficking, human trafficking, bribery and corruption, fraud and organised crime profits) the legal organs leave some loops that are used by corporations to keep on utilising strategies to move profits into tax havens.

Sources

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https://www.investopedia.com/terms/s/smurf.asp.

2. Investopedia. “Money Laundering.” Investopedia. Accessed April 21, 2025.

https://www.investopedia.com/terms/m/moneylaundering.asp.

3. WithPersona. “The Most Mind-Blowing Money Laundering Statistics of 2022.” Persona Blog. Accessed April 21, 2025. https://withpersona.com/blog/the-most-mind-blowing-money-laundering-statistics-of-2022.

4. Investopedia. “Tax Haven.” Investopedia. Accessed April 21, 2025.

https://www.investopedia.com/terms/t/taxhaven.asp.

5. Nomad Capitalist. “Banking in Mauritius.” Nomad Capitalist. Accessed April 21, 2025.

https://nomadcapitalist.com/finance/offshore/banking-in-mauritius/.

6. The Wandering Investor. “The Pros and Cons of Opening a Bank Account in Mauritius

as a Non-Resident.” The Wandering Investor. Accessed April 21, 2025.

https://thewanderinginvestor.com/offshore-banking-for-individuals/the-pros-and-

cons-of-opening-a-bank-account-in-mauritius-as-a-non-resident/.

7. Offshore Protection. “Mauritius Tax Haven.” Offshore Protection. Accessed April 21, 2025. https://www.offshore-protection.com/mauritius-tax-havens.

8. Offshore Protection. “British Virgin Islands (BVI) Tax Haven.” Offshore Protection. Accessed April 21, 2025. https://www.offshore-protection.com/bvi-british-virgin-islands-tax-havens.9. Offshore Protection. “Seychelles Tax Haven.” Offshore Protection. Accessed April 21, 2025. https://www.offshore-protection.com/seychelles-tax-havens.

10. Nomad Capitalist. “Banking in Seychelles.” Nomad Capitalist. Accessed April 21, 2025. https://nomadcapitalist.com/finance/offshore/banking-in-seychelles/.

11. Offshore Protection. “Labuan Offshore Tax Haven.” Offshore Protection. Accessed April 21, 2025. https://www.offshore-protection.com/labuan-offshore-tax-haven.

12. Offshore Protection. “Nevis Tax Haven.” Offshore Protection. Accessed April 21, 2025. https://www.offshore-prote