New Zealand has edged out Singapore to take top spot for ease of doing business in the World Bank’s latest rankings, but money laundering experts warned the honor masked the darker side of the Pacific nation’s vulnerability as a channel for illegal funds.
In its annual “Doing Business” report released on Tuesday, the World Bank cited tax improvements as a key reason for moving New Zealand to the top spot from its previous runner-up position, Reuters reported.
The country also topped the Bank’s indicator on ease of company formation, a particularly worrisome aspect for anti-money laundering efforts and one that had recently raised some alarm bells given the use of shell companies to launder funds.
New Zealand-registered companies were among a network of opaque firms that were used to dupe Chinese investors out of millions of dollars in a pyramid scheme called ‘EuroFX’ reported by Reuters earlier this year.
New Zealand also came under fire this year when the Panama Papers showed the country’s shell companies and trusts were touted as a secretive way to channel funds around the world, including for tax avoidance purposes.
“You want a jurisdiction that has a clean reputation, but doesn’t ask many questions when you’re setting up a company there,” said Jason Sharman, an Australia-based money laundering expert and co-author of the book ‘Global Shell Games’.
New Zealand scored the highest worldwide in five of the 10 indicators that the World Bank looks at, such as starting a business, dealing with construction permits, registering property and getting credit, CNNMoney reported.
The United States slipped down one place in the overall table, from seventh to eighth. It was ranked highly for getting credit and dealing with insolvent firms—but it suffered from a pretty poor rating for starting a business (51st worldwide).
The three places that have most improved their business environment through recent reforms are Brunei, Kazakhstan and Kenya, the report said.
The worst rated economy worldwide is Somalia, which wasn’t included in last year’s rankings. The war-ravaged East African nation scores particularly badly for paying taxes (the World Bank says no such practice exists in Somalia) and protecting minority investors.
Here are the top 1 to 10: New Zealand; Singapore; Denmark; Hong Kong; South Korea; Norway; United Kingdom; United States; Sweden and Macedonia.
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