TORTOLA, British Virgin Islands (AP) – More than 400,000 companies share a few local addresses in this tiny Caribbean financial center, where their incorporation papers are kept in a gray two-story building.

The vast majority have no employees on the island. All conduct their business elsewhere and many avoid paying taxes back home.

And yet the British Virgin Islands welcomes their business, which provides more than half of the government’s revenue, making it one of the Caribbean’s most prosperous places.

An estimated $7.3 trillion is stashed in offshore financial centers worldwide by corporations and wealthy individuals seeking to shield their operations and lessen their tax burdens.

Now these havens are under scrutiny like never before.

Leaders of the Group of 20 nations meeting in London warned Thursday that countries refusing to share tax information would face tough sanctions. Hammered by the financial meltdown, the world’s richest countries say they are serving notice they won’t tolerate shady offshore operations anymore.

Some of the havens capitalize on secrecy. Others, like the British Virgin Islands, provide incorporation registries so businesses can claim they are based in the islands and avoid taxes in countries where their work is performed.

The amount of money involved in this global shell game is staggering:

• Between 30 percent and 40 percent of global trade is billed outside the country where it actually takes place, the London-based Tax Justice Network said.

• In the United States alone, $100 billion in tax revenues are lost each year due to offshore tax abuse, said U.S. Sen. Carl Levin, who has co-sponsored two bills that would help crack down on havens.

• The Boston Consulting Group estimates that $7.3 trillion flows through offshore financial centers.

In the British Virgin Islands, companies register with the Financial Services Commission, located on a side street across from an office supply store.

A plaque out front declares: “Vigilance, Integrity and Accountability.”

The government insists it cooperates with money laundering probes, but doesn’t have much to share with investigators: financial records aren’t required to be kept on the island, and the incorporation paperwork need not include the identities of shareholders or directors.

Such a relaxed environment has made the British Virgin Islands one of the world’s largest corporate registries. As with Delaware in the United States, a large number of businesses find it a very useful place to incorporate.

“Tax avoidance is perfectly lawful, but governments have an insatiable need for money and that’s the problem,” local attorney Richard Peters said.

The problem, according to the Organization for Economic Cooperation and Development, is that the territory doesn’t divulge enough financial information to tax collectors from other countries.

That has landed the British Virgin Islands on the group’s “gray” list of tax havens that have not substantially implemented an international tax standard.

Four jurisdictions were blacklisted as uncooperative: the Philippines, Uruguay, Costa Rica and the Malaysian territory of Labuan.

One key step to comply – and join the top category that includes the U.S. and UK – is signing at least 12 bilateral agreements on sharing tax information.

Many countries named on these lists have said the distinction is more about politics than compliance with financial laws. Peters, for one, says the practices of the self-governing overseas British territory are as legal as Delaware’s.

Most U.S. states also don’t require businesses to name their owners when they incorporate, a violation of international money laundering standards that has stymied U.S. investigations of tax cheats and other criminals. Although they cooperate with tax investigations, they sometimes have little information to share. One of Levin’s bills would require companies to name their owners; another would add teeth by barring U.S. financial institutions from doing business with jurisdictions or companies that don’t comply with tax investigations.

In the British Virgin Islands, some of the 24,000 people now fear their economic lifeline will disappear. The revenue from registering foreign companies has paid for a community college and a hospital.

Premier Ralph T. O’Neal, a 75-year-old former schoolteacher who leads this archipelago, says it smacks of colonialism when developed nations dictate standards for financial operations, especially when they don’t comply with the rules themselves.

“Why is it that we now in the colonies, because we are still a colony, can’t have a financial center?” O’Neal told The Associated Press in an interview in his office overlooking the slate-blue Sir Francis Drake Channel. “If you are doing something and you are saying I can’t do it, are you saying that I am inferior?”

Blacklisted jurisdictions face the loss of World Bank and International Monetary Fund support. Many Caribbean islands are on the “gray list,” which also includes Monaco, Liechtenstein, Panama, Bermuda and a handful of Pacific islands. These places are to be monitored and could face sanctions for failing to substantially implement the tax standard, the OECD said.

Philippines Trade Secretary Peter Favila said Friday his government would “take the necessary steps to ensure we meet their expectations,” but did not accept any wrongdoing. “It is really up to us to prove them wrong,” he said.

Malaysian Deputy Finance Minister Kong Cho Ha and Costa Rican officials said they were seeking clarification from the OECD, and Uruguayan Finance Minister Alvaro Garcia quickly sent a letter “formally endorsing” the OECD’s standard.

“Uruguay is not a tax haven,” said Garcia, insisting that his country taxes nonresidents and allowing courts to review bank records in cases of suspected tax evasion, drug trafficking or terrorism.

The OECD’s Secretary-General Angel Gurria responded with a statement Friday welcoming Uruguay among “a growing number of nations willing to cooperate in fighting tax evasions and other tax abuses.”

Most tax havens will comply with demands for greater transparency, predicted Dan Alamariu, an analyst at the Eurasia Group political risk consultancy in New York. “They’re small economies and I don’t see what choice they’ll have in the long term.”

O’Neal said his territory has signed new tax agreements with the U.S. and Britain and will work out others with China, Germany and other nations. But he worries that the OECD list will unfairly damage the islands’ financial sector.

He says his government has worked hard to fight illegal activity, for example refusing a request by Texas billionaire R. Allen Stanford – now accused of running a huge Ponzi scheme – to set up an office in the territory.

“I smelled a rat,” he said, a silver-topped black cane at hand.