Today, after years of pressure by the UK government, an agreement appears to have been reached with the leaders of the British Overseas Territories and Crown Dependencies that they will aim to create central registers of who really owns the companies set up in their jurisdictions.

By incorporating a company in an offshore jurisdiction the identity of the true owners of companies can be kept secret, which is a gift for money launderers and tax evaders. Our research shows that over 75% of UK properties under investigation as the proceeds of international corruption were held by offshore companies and that over 36,000 properties are held anonymously in London by offshore companies. When the World Bank reviewed 213 cases of grand corruption that took place between 1980 and 2010, more than 70% of the cases relied on anonymously-owned companies help to obscure what they were doing. Out of all the corporate entities set up to help the corrupt in these cases, corporate structures within the UK and the UK’s Overseas Territories were the most commonly used by the corrupt.

However, this agreement today allows the Overseas Territories to duck creating a central register if they can claim ‘they have similarly effective systems’ and also falls short of giving immediate access to the information to law enforcement authorities, let alone the public. The agreement is a welcome step, but it is a very small step. While it should put pressure on other secrecy jurisdictions like Delaware and Lichtenstein, it falls well short of the EU and UK standard for corporate transparency.

Rachel Davies, Acting Head of Advocacy and Research at Transparency International UK, said:

“Under this agreement, British Overseas Territories may be able to avoid creating a central register and – even if they did create a central register – it won’t be accessible to private sector due diligence professionals and other legitimate interests in order to actually discover suspicious transactions. If these professionals – who are the first line of defence against dirty money – do not have access to the information about the true owners of companies, then it will prevent adequate money laundering checks being carried out and stop effective reporting of suspicious transactions to police in the first place.”

“At the very least, the British Overseas Territories and Crown Dependencies should meet the standard set under EU anti-money laundering rules. These rules mean that all legitimate interests and competent authorities across the EU have timely access to company beneficial ownership information. The key, as always, will be delivery. We would like to see the UK Government clearly set out when today’s agreement is going to be reviewed to see how the overseas territories actually implement these commitments.”

***ENDS***

Notes:

• Joint Ministerial Council Communique - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/481961/Overseas_Territories_Joint_Ministerial_Council_2015_Communique.pdf
• Joint report by Christian Aid, Global Witness, Tax Justice Network, Transparency International UK on corporate transparency in the overseas territories  http://www.transparency.org.uk/publications/the-uks-corruption-problem/
• Joint NGO letter to Prime Minister on beneficial ownership http://www.transparency.org.uk/publications/public-letter-to-david-cameron-on-beneficial-ownership/

Contact:

Dominic Kavakeb

Communications Manager, Transparency International UK

Dominic.kavakeb@transparency.org.uk

0203 096 7695/ 07964 560 340