From the Lava Jato scandal to the Panama and Paradise Papers, time and again we’ve seen how offshore territories - often known as secrecy jurisdictions or tax havens - play a key role in facilitating the illicit flow of money across borders.
Some of the most notorious of these are among Britain’s Overseas Territories.
In fact, if counted together, the United Kingdom and its Overseas Territories and Crown dependencies would top the Financial Secrecy Index, given the staggering scale of their undisclosed financial activities.
But, fortunately, this could soon change.
On 1 May 2018, the UK Parliament voted in favour of requiring any British Overseas Territory that has not already done so to introduce public registers that reveal the individuals behind companies based there by the end of 2020.
This is a major victory in the fight against cross-border corruption.
Why does it matter?
In 2015, research by Transparency International UK (TI-UK) found that shell companies registered in secrecy jurisdictions were involved in more than three quarters of corruption cases involving property that were investigated by London’s Metropolitan Police. Of these companies, nearly 80 per cent were registered in the UK’s Overseas Territories, like Bermuda, the Cayman Islands and the British Virgin Islands, or in Crown dependencies, like the Isle of Man or Channel Islands.
Last year, TI-UK identified £4.4 billion worth of property in the UK bought with suspicious wealth. Of the companies used for these transactions, nearly half are based in the British Virgin Islands.
And just last week, a BBC Panorama investigation conducted together with TI-UK and the Organized Crime and Corruption Reporting Project (OCCRP) published details of a Ukrainian crime gang that purchased eight luxury properties in London using companies registered in the British Virgin Islands.
More progress needed
Even while celebrating this week’s ruling in the UK, it is important to note that the Crown dependencies are not yet affected.
More widely, our report published in April looked into precisely this problem of opaque beneficial ownership systems, focusing on how far G20 countries in particular have gone in removing the anonymity that allows criminals and the corrupt to hide their identity behind shell companies. The world’s leading economies still have a lot of work to do to live up to their own principles. None apart from the UK have public registries of beneficial ownership for companies operating within their borders.
The UK’s tough new stance on offshore financial secrecy should inspire others to follow suit
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We're calling for a law change in the British Virgin Islands and the Cayman Islands to staunch the flow of dirty money.