IDEAS home Printed from https://ideas.repec.org/p/ces/ceswps/_12086.html
   My bibliography  Save this paper

Bypassing Sanctions: Hide ‘n Seek in Tax Havens?

Author

Listed:
  • Dominika Langenmayr
  • Mikayel Tovmasyan
  • Sebastian Vosseler

Abstract

Are sanctions bypassed by hiding money offshore? Using bilateral data on bank deposits, we compare how offshore deposits from sanctioned versus non-sanctioned countries develop after the U.S. and the EU impose financial sanctions. Sanctions targeting individuals increase offshore deposits, as (potential) targets attempt to hide their funds. Broader financial sanctions reduce offshore (and other foreign) deposits, as money is repatriated. A synthetic control case study of Russia following the annexation of Crimea confirms our main findings, showing a 15% post-sanction increase in offshore deposits. These findings highlight the limits of symbolic sanctions and the need for secondary sanctions and financial surveillance.

Suggested Citation

  • Dominika Langenmayr & Mikayel Tovmasyan & Sebastian Vosseler, 2025. "Bypassing Sanctions: Hide ‘n Seek in Tax Havens?," CESifo Working Paper Series 12086, CESifo.
    • Handle: RePEc:ces:ceswps:_12086
    as

    Download full text from publisher

    File URL: https://www.ifo.de/DocDL/cesifo1_wp12086.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Filip Novokmet & Thomas Piketty & Gabriel Zucman, 2018. "From Soviets to oligarchs: inequality and property in Russia 1905-2016," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 16(2), pages 189-223, June.
    2. Menkhoff, Lukas & Miethe, Jakob, 2019. "Tax evasion in new disguise? Examining tax havens' international bank deposits," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 176, pages 53-78.
    3. Gutmann, Jerg & Neuenkirch, Matthias & Neumeier, Florian, 2023. "The economic effects of international sanctions: An event study," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1214-1231.
    4. Langenmayr, Dominika & Zyska, Lennard, 2023. "Escaping the exchange of information: Tax evasion via citizenship-by-investment," Journal of Public Economics, Elsevier, vol. 221(C).
    5. Jørgen Juel Andersen & Niels Johannesen & Bob Rijkers, 2022. "Elite Capture of Foreign Aid: Evidence from Offshore Bank Accounts," Journal of Political Economy, University of Chicago Press, vol. 130(2), pages 388-425.
    6. Cl'ement de Chaisemartin & Xavier D'Haultf{oe}uille, 2020. "Difference-in-Differences Estimators of Intertemporal Treatment Effects," Papers 2007.04267, arXiv.org, revised Dec 2024.
    7. Alstadsæter, Annette & Johannesen, Niels & Zucman, Gabriel, 2018. "Who owns the wealth in tax havens? Macro evidence and implications for global inequality," Journal of Public Economics, Elsevier, vol. 162(C), pages 89-100.
    8. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    9. Chinn, Menzie D. & Ito, Hiro, 2006. "What matters for financial development? Capital controls, institutions, and interactions," Journal of Development Economics, Elsevier, vol. 81(1), pages 163-192, October.
    10. Gabriel Zucman, 2013. "The Missing Wealth of Nations: Are Europe and the U.S. net Debtors or net Creditors?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 128(3), pages 1321-1364.
    11. Kerim Can Kavakli & Giovanna Marcolongo & Diego Zambiasi, 2023. "Sanction Evasion Through Tax Havens," BAFFI CAREFIN Working Papers 23212, BAFFI CAREFIN, Centre for Applied Research on International Markets Banking Finance and Regulation, Universita' Bocconi, Milano, Italy.
    12. T. Clifton Morgan & Constantinos Syropoulos & Yoto V. Yotov, 2023. "Economic Sanctions: Evolution, Consequences, and Challenges," Journal of Economic Perspectives, American Economic Association, vol. 37(1), pages 3-30, Winter.
    13. Felbermayr, Gabriel & Morgan, T. Clifton & Syropoulos, Constantinos & Yotov, Yoto V., 2021. "Understanding economic sanctions: Interdisciplinary perspectives on theory and evidence," European Economic Review, Elsevier, vol. 135(C).
    14. Ahn, Daniel P. & Ludema, Rodney D., 2020. "The sword and the shield: The economics of targeted sanctions," European Economic Review, Elsevier, vol. 130(C).
    15. Kirill Borusyak & Xavier Jaravel & Jann Spiess, 2024. "Revisiting Event-Study Designs: Robust and Efficient Estimation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(6), pages 3253-3285.
    16. Ashok Kaul & Stefan Klößner & Gregor Pfeifer & Manuel Schieler, 2022. "Standard Synthetic Control Methods: The Case of Using All Preintervention Outcomes Together With Covariates," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 40(3), pages 1362-1376, June.
    17. Pavel Dovbnya, 2020. "Announcements of Sanctions and the Russian Equity Market: An Event Study Approach," Russian Journal of Money and Finance, Bank of Russia, vol. 79(1), pages 74-92, March.
    18. Dreger, Christian & Kholodilin, Konstantin A. & Ulbricht, Dirk & Fidrmuc, Jarko, 2016. "Between the Hammer and the Anvil: The Impact of Economic Sanctions and Oil Prices on Russia’s Ruble," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 44(2), pages 295-308.
    19. Niels Johannesen & Gabriel Zucman, 2014. "The End of Bank Secrecy? An Evaluation of the G20 Tax Haven Crackdown," American Economic Journal: Economic Policy, American Economic Association, vol. 6(1), pages 65-91, February.
    20. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    21. Lisa De Simone & Rebecca Lester & Kevin Markle, 2020. "Transparency and Tax Evasion: Evidence from the Foreign Account Tax Compliance Act (FATCA)," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 58(1), pages 105-153, March.
    22. Morteza Ghomi, 2022. "Who is afraid of sanctions? The macroeconomic and distributional effects of the sanctions against Iran," Economics and Politics, Wiley Blackwell, vol. 34(3), pages 395-428, July.
    23. Johannesen, Niels, 2014. "Tax evasion and Swiss bank deposits," Journal of Public Economics, Elsevier, vol. 111(C), pages 46-62.
    24. Jørgen Juel Andersen & Niels Johannesen & David Dreyer Lassen & Elena Paltseva, 2017. "Petro Rents, Political Institutions, and Hidden Wealth: Evidence from Offshore Bank Accounts," Journal of the European Economic Association, European Economic Association, vol. 15(4), pages 818-860.
    25. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2015. "Comparative Politics and the Synthetic Control Method," American Journal of Political Science, John Wiley & Sons, vol. 59(2), pages 495-510, February.
    26. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    27. Sun, Liyang & Abraham, Sarah, 2021. "Estimating dynamic treatment effects in event studies with heterogeneous treatment effects," Journal of Econometrics, Elsevier, vol. 225(2), pages 175-199.
    28. Alberto Abadie, 2021. "Using Synthetic Controls: Feasibility, Data Requirements, and Methodological Aspects," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 391-425, June.
    29. Mirkina, Irina, 2018. "FDI and sanctions: An empirical analysis of short- and long-run effects," European Journal of Political Economy, Elsevier, vol. 54(C), pages 198-225.
    30. repec:hal:pseose:halshs-01053616 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Langenmayr, Dominika & Zyska, Lennard, 2023. "Escaping the exchange of information: Tax evasion via citizenship-by-investment," Journal of Public Economics, Elsevier, vol. 221(C).
    2. Dominika Langenmayr & Lennard Zyska, 2021. "Avoiding Taxes: Escaping the Exchange of Information: Tax Evasion via Citizenship-by-Investment," Working Papers 204, Bavarian Graduate Program in Economics (BGPE).
    3. Jeanne Bomare & Matthew Collin, 2025. "When Bankers Become Informants: Behavioral Effects of Automatic Exchange of Information," Working Papers 033, EU Tax Observatory.
    4. Arne Henningsen & Guy Low & David Wuepper & Tobias Dalhaus & Hugo Storm & Dagim Belay & Stefan Hirsch, 2024. "Estimating Causal Effects with Observational Data: Guidelines for Agricultural and Applied Economists," IFRO Working Paper 2024/03, University of Copenhagen, Department of Food and Resource Economics.
    5. Enea Baselgia, 2025. "The Compliance Effects of the Automatic Exchange of Information: Evidence from the Swiss Tax Amnesty," CESifo Working Paper Series 11615, CESifo.
    6. Niklas Potrafke & Luisa Dörr & Klaus Gründler & Tuuli Tähtinen & Luisa Dörr, 2025. "Female Leaders and the Representation of Women in Government," CESifo Working Paper Series 11851, CESifo.
    7. Hoang Ha Nguyen Thi & Alfons Weichenrieder, 2023. "Tax Haven Welfare and the Crackdown on Secrecy: Evidence from Night Light Emissions," CESifo Working Paper Series 10721, CESifo.
    8. Jerg Gutmann & Matthias Neuenkirch & Florian Neumeier, 2024. "Political Economy of International Sanctions," Research Papers in Economics 2024-07, University of Trier, Department of Economics.
    9. Roth, Jonathan & Sant’Anna, Pedro H.C. & Bilinski, Alyssa & Poe, John, 2023. "What’s trending in difference-in-differences? A synthesis of the recent econometrics literature," Journal of Econometrics, Elsevier, vol. 235(2), pages 2218-2244.
    10. Jeanne Bomare & Ségal Le Guern Herry, 2022. "Will We Ever Be Able to Track Offshore Wealth? Evidence from the Offshore Real Estate Market in the UK," Working Papers hal-03811306, HAL.
    11. Apeti, Ablam Estel & Edoh, Eyah Denise, 2024. "Economic sanctions and sovereign debt default," European Journal of Political Economy, Elsevier, vol. 85(C).
    12. Jeanne Bomare & Ségal Le Guern Herry, 2022. "Will We Ever Be Able to Track Offshore Wealth? Evidence from the Offshore Real Estate Market in the UK," SciencePo Working papers hal-03811306, HAL.
    13. Justin C. Wiltshire, 2023. "Walmart Supercenters and Monopsony Power: How A Large, Low-Wage Employer Impacts Local Labor Markets," Department Discussion Papers 2304, Department of Economics, University of Victoria.
    14. Jeanne Bomare & Ségal Le Guern Herry, 2022. "Will we ever be able to track offshore wealth? Evidence from the offshore real estate market in the UK," Working Papers 004, EU Tax Observatory.
    15. Enea Baselgia, 2023. "The Compliance Effects of the Automatic Exchange of Information: Evidence from the Swiss Tax Amnesty," Working Papers 019, EU Tax Observatory.
    16. Casi, Elisa & Spengel, Christoph & Stage, Barbara M.B., 2020. "Cross-border tax evasion after the common reporting standard: Game over?," Journal of Public Economics, Elsevier, vol. 190(C).
    17. Alstadsæter, Annette & Casi, Elisa & Miethe, Jakob & Stage, Barbara M. B., 2023. "Lost in Information: National Implementation of Global Tax Agreements," Discussion Papers 2023/22, Norwegian School of Economics, Department of Business and Management Science, revised 27 Sep 2024.
    18. Silvia Marchesi & Giovanna Marcolongo, 2023. "Knockin' on H(e)aven's door. Financial crises and hidden wealth," Working Papers 518, University of Milano-Bicocca, Department of Economics.
    19. Annette Alstadsæter & Bluebery Planterose & Gabriel Zucman & Andreas Økland, 2022. "Who Owns Offshore Real Estate? Evidence from Dubai," Working Papers 001, EU Tax Observatory.
    20. Jeanne Bomare & Ségal Le Guern Herry, 2022. "Will We Ever Be Able to Track Offshore Wealth? Evidence from the Offshore Real Estate Market in the UK," SciencePo Working papers Main hal-03811306, HAL.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_12086. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klaus Wohlrabe (email available below). General contact details of provider: https://edirc.repec.org/data/cesifde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.