The UK just made it harder for the corrupt to hide their wealth offshore

The UK just made it harder for the corrupt to hide their wealth offshore

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

Image: Creative Commons, Unsplash, Anders Wideskott  

For any press enquiries please contact press@transparency.org

Latest

Support Transparency International

Austria’s Strache affair and the undue influence toolkit

A week ago, German newspapers published evidence of the former Vice-Chancellor of Austria and a colleague apparently negotiating corrupt deals with the purported niece of a Russian oligarch close to President Vladimir Putin. The scandal illustrates the tools and methods used by those who wish to enrich themselves from public funds and advance private interests over the public good.

Why corruption matters in the EU elections

What voters should know as they head to the polls.

Four ways the G20 can take the lead on anti-corruption

The globalisation of world trade and finance has been accompanied by an internationalisation of corruption. The G20 Anti-Corruption Working Group therefore has the potential to be a very important partner in the fight for a more just world.

Venezuela: Se necesitan instituciones sólidas para abordar la delincuencia organizada

La corrupción en las más altas esferas del Gobierno venezolano ha causado inestabilidad social y económica extrema y ha debilitado a las instituciones estatales que deberían proteger a la ciudadanía. Las redes de delincuencia organizada actúan con impunidad en todo el país.

Venezuela: Strong institutions needed to address organised crime

Corruption in the top echelons of the Venezuelan government has led to extreme instability and weak state institutions, and allows organised crime networks to act with impunity all across the country.

The trillion dollar question: the IMF and anti-corruption one year on

The International Monetary Fund (IMF) has made public commitments and adopted a new framework to address corruption - we check how the IMF is progressing with this one year later.

Three years after the Panama Papers: progress on horizon

The explosive Pulitzer Prize-winning global media project known as the "Panama Papers" turned three years old, and there are many reasons to celebrate.

Social Media

Follow us on Social Media