Forget Panama. The United States is a location you may not think of as a major tax haven of tax evasion, but over the past decade, it has become one of the world’s number one destinations for international money launderers and tax evaders.

Rich people from around the world have hid billions of dollars in U.S. banks and shell companies to avoid paying taxes in their home countries. Drug cartels and terrorist groups have too.

Several U.S. states are notorious for having loose regulations that allow for the establishment of anonymous shell companies, the same type the Panamanian firm Monseck Fonseca sets up for its clients.

Delaware and Nevada are the most notorious and popular destinations, but several other states have adopted similar loose regulations and are also becoming popular destinations for tax evasion and money laundering. These include Wyoming and South Dakota.

The list continues to grow as more states look to attract businesses by offering appealing incentives, including low taxes and loose regulations that make it easy to hide money anonymously. It is a race to the bottom as states compete with each other to profit from shady business dealings.

A recent ranking of the world’s top tax havens placed the United States at number three. This puts it ahead of the Cayman Islands and well ahead of Panama, which ranked 13th.

This is particularly ironic since the United States is a leading advocate for better transparency laws and cracking down on international tax havens. It has pressured numerous countries, including Panama, to tighten their regulations and crack down on money launderers and tax evaders. It passed a law requiring foreign banks to disclose information on Americans holding offshore accounts. But it has no such law requiring U.S. banks to do the same for other countries.

In short, America’s policy on tax avoidance reeks of hypocrisy.

It also fails to address domestic tax evasion, because it’s not just foreigners who are using U.S. states to hide money and evade taxes. Countless U.S. businesses and individuals do too.

This is perhaps the biggest reason why so few Americans have been named in the Panama Papers. There are numerous individuals and companies in states like Nevada and Delaware who offer the exact same services as Monseck Fonseca, and who operate with the same level of secrecy. So there is no reason for Americans looking to hide their money to seek a foreign intermediary.

It is not even be necessary to funnel the money out of the country. Many states allow out of staters to establish private trust funds. They also have privacy laws that allow for these individuals to permanently seal records on their trusts. This means information on who the trusts belong to and how much money they contain is secret.

This enables millionaires and billionaires to hide their fortunes in these out of state trust funds without having to pay taxes on them. South Dakota is particularly notorious for this practice, as the state does not tax trust funds. Anybody wanting to hide money here just has to pay a small fee to the state to set up the fund, where they can then hide millions of dollars without paying any taxes.

A South Dakota banker who specializes in setting up these trusts stated publicly to the media his intention to “make South Dakota the Switzerland of trusts in the United States.” But he has his work cut out of for him as other states compete for this title. In fact, pretty soon it might just be better to call Switzerland the “United States” of Europe.

Feature image via kungfuplaza.com