Canadians have been investing increasing amounts of money in offshore financial centres while direct investment in the United States has slowed, Statistics Canada reported today.

Reported Canadian assets held in offshore financial centres (OFCs) – many of them in the Caribbean – increased eight-fold between 1990 and 2003, to $88 billion from $11 billion, the agency said.

These centres include countries that are often referred to as “tax havens”, StatsCan said.

Switzerland, with its tradition of banking confidentiality, was also a significant destination for Canadian capital.

In all, Statistics Canada said, offshore financial centres received more than one-fifth of all reported Canadian direct investment abroad in 2003 – double the proportion 13 years earlier.

Among them, the largest growth in Canadian direct investment during this time occurred in Barbados, Bermuda, the Cayman Islands, the Bahamas and Ireland. By 2003, these five were among the 11 nations with the most Canadian assets.

Meanwhile, the United States got a smaller proportion of Canadian direct investment – money to finance new enterprises, acquire existing companies or fund foreign affiliates, as opposed to portfolio holdings of paper assets such bonds or shares representing less than 10% of a foreign company.

The average annual growth rate of Canadian direct investment in offshore financial centres was 18%, compared with 8% in the United States and 14% in other countries, StatsCan found.

By 2000, Canadian companies held less than half of their foreign direct assets in United States.

Of the $88 billion in Canadian-owned assets held in offshore financial centres in 2003, the financial sector held $72 billion, StatsCan said.