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OVER THE PAST 30 years, the number of offshore zones offering financial services proliferated. The growth of the offshore financial sector is routinely attributed to increased financial regulations, and higher taxes imposed on account holders in industrial countries. To avoid the scrutiny of regulators and lower tax burdens, Western firms and wealthy individuals relocated significant portions of their financial activities to offshore markets, which promise enhanced secrecy and client confidentiality with financial transactions conducted through offshore entities.

By some estimates, more than half of the global financial transactions pass through offshore centers, and nearly 20 percent of total private wealth is invested in offshore financial centers. Offshore financial centers also routinely offer an array of tax and regulatory incentives for non-resident investors. For individuals with significant ...

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