CHAMPAIGN, Ill. — The burgeoning offshore finance industry and the complex legal arrangements that underpin it — including those that normalize secrecy, corporate power and tax injustice — make island paradises such as Puerto Rico and the British Virgin Islands politically disposable, yet indispensable to the world economy, according to the new book “Islands of Exception: Law, Empire and Offshore Finance in the Caribbean” (Cambridge Elements, 2026).
Author José Atiles , the director of the Center for Global Studies and a professor of sociology who also holds appointments in political science and Latina/Latino studies at the University of Illinois Urbana-Champaign, examines the evolution of offshore finance, global tax governance and grassroots resistance to this prominent but shadowy financial sector.
According to the author, the offshore economy exploits island territories’ existence in a colonial state of exception — a malleable reality in which these islands and their inhabitants are neither fully inside nor fully outside the legal order, and their sovereign nations, at their discretion, decide which laws, regulations and constitutional provisions apply to them.
According to Atiles, the offshore economy operates through the mechanism of inclusive exclusion — legal and political processes that present a façade of local autonomy while maintaining a strategic separation between the offshore finance centers and the imperial or metropolitan powers that govern them.
“This separation operates as a sovereignty veil behind which Global North states, corporations, wealthy individuals and financial services industries stand, shielding themselves from legal liability and public accountability,” Atiles wrote.
“Although they are often perceived as being outside the law, these tax havens are not,” Atiles said. “They are included in the constitutional law of their governing states through exclusion and all of these legal carve-outs that limit citizenship, taxation, financial accountability, democratic oversight and environmental and labor regulations.” The primary architects and beneficiaries of these arrangements are the United States and the United Kingdom, he said.
“Faced with structural constraints such as limited natural resources and industrial capacity, officials in these island territories embraced offshore finance centers as a development strategy,” Atiles said. “The legal and political economic structures imposed by the colonial state of exception have propelled these jurisdictions to establish regimes that serve global capital — with the expectation that they might capture a fraction of the capital passing through their territories.”
But the stark reality is that colonial governments’ use of their limited autonomy to engage in strategic accommodation has only maintained their existing subordination and class disparities while supporting extractive capitalism that primarily benefits the Global North powers, multinational corporations and global elites, Atiles said.
Atiles examines how this exceptionality facilitated corporations’ emergence as “super individual(s)” — the privileged actors of the offshore world. Increasingly, the international legal system and regional courts have granted the corporate citizen an enriched citizenship with rights, immunities and privileges that are denied to most people. Moreover, the corporate citizen is a vehicle for reproducing class domination that concentrates power and legal privilege in the hands of the owners and shareholders hidden behind the corporate veil, Atiles said.
“Although ordinary citizens face increased surveillance, taxation and exclusion, corporate citizens move freely, rewrite obligations and exercise authority without meaningful democratic accountability,” he wrote. “(Offshore financial centers) exemplify this condition: (They are) legally constituted zones where the logic of inclusive exclusion sustains an extractive global order to the detriment of its own populations.”
Corporate citizens’ and wealthy individuals’ increasing demands for greater levels of secrecy, wealth concealment and tax avoidance are the drivers of new technologies and financial tools such as cryptocurrency. Accordingly, offshore financial centers across the Caribbean were reconfigured and jurisdictions invested heavily to attract these various forms of digital capital and their investors or entrepreneurs as physical or virtual residents. Sites such as the Cayman Islands offered incentives such as cryptocurrency transactions free from capital gains, income and other taxes, Atiles wrote.
Colonial officials also reconfigured their legal regimes and created crypto-special economic zones — environments that allow crypto assets to operate with limited regulatory oversight. The Puerto Rican government aggressively promoted incentives such as extensive tax exemptions for blockchain operations, online exports, cloud-based services and other technologies to attract investors, developers and venture capitalists. Atiles examines how U.S. tax policy, including the 2017 Tax Cuts and Jobs Act, played a pivotal role, accelerating Puerto Rico’s transformation into a crypto island.
“Crypto assets reinforce the central function of (offshore financial centers) to shield wealth from democratic control, redistribute risk onto the public and displace political contestation into spaces of exception,” Atiles wrote.
“It’s important to keep in mind that there have been multiple efforts to regulate and eliminate the offshore financial economy and tax havens,” Atiles said. “Currently we are seeing one of the most important efforts to do so — the United Nations Convention on Taxation and the Organization for Economic Development and Cooperation, which is attempting to create a minimum global tax. That’s really important because it tells us a story of global efforts to regulate offshore finance and tax avoidance. And yet many of the places that serve as our offshore financial centers — such as the Cayman Islands, Puerto Rico and British Virgin Islands — are excluded from those discussions and do not have representation in the UN.”
Atiles explores the findings of numerous scholars who identified ways in which cryptocurrencies and similar financial technologies exploit these lightly regulated environments, catalyzing tax evasion by undermining the global tax structure and facilitating fraud. Under the guise of decentralization and innovation, blockchain technologies and cryptocurrencies have been used to extract land, resources and data from vulnerable populations and territories, scholars contend. These activities, called crypto-colonialism, are replicating imperial patterns of dispossession across the Global North and South, Atiles wrote.
“Offshore finance centers are not designed to serve the local population or to actually foment economic development for the people of Puerto Rico, the Cayman Islands or the British Virgin Islands. These jurisdictions are being excluded from the wealth that is being produced or transferred by these industries,” Atiles said.
“Any meaningful effort to confront global financial injustice must begin with a reckoning with empire — its legacies, legal forms and operative institutions. As Puerto Rican grassroots movements make clear: Decolonization is a necessary precondition for dismantling the colonial offshore economy. Ultimately, we ought to dismantle the empire to abolish the paradise.”