Earlier this week the UK Government backed an amendment to the anti money laundering bill that will impose public company registers on British Overseas Territories (BOTs).
Conservative MP Andrew Mitchell, who tabled the amendment, said it would prevent BOTs being used as “a haven for crooks, kleptocrats and corrupt individuals who engage in financial skulduggery”.
A proportionate response?
Jason Collins, tax exert at international law firm Pinsent Masons, said in this day and age it is difficult to argue with transparency.
However, he said while democracy is supposed to be alive and kicking, “the BOTs won’t be feeling that way about this measure”.
“Transparency is a good thing, but the information revealed by the so-called ‘Paradise Papers‘ didn’t show any criminality, so the response should be kept in proportion,” Collins said.
Forcing only some to act
Several of the BOTs have slammed the UK Government’s support of the amendment, labelling it as “colonial overreaching”, with chief ministers and premiers throughout the territories saying they do not oppose a public register, but only if it were an international standard.
Collins says he questions what impact the public registers will have by only applying to BOTs.
“Ultimately, any move towards transparency will be less effective if some jurisdictions act but others do not, so unilateral action of this type isn’t really the answer.
“Those who want privacy, for good or for bad purposes, will use a jurisdiction where that is still on offer,” he said.
Comparing apples with pears
Collins also points out that BOTs had already agreed to keep a central register of beneficial ownership, which is accessible to law enforcement within an hour.
He said what the amendment does is throw open the information to wider scrutiny by making it public.
“As the UK has recently introduced a public register for UK companies, one might say that this just follows suit – but the big difference is that anyone can open a company in the UK, whereas you need to go through a licensed operator to open one in the BOTs, who will be performing checks on the data before it is added.
“Global Witness [an NGO research and campaign group] has recently shown that the information on the UK register is hugely incomplete, and it wouldn’t be surprising if much of it is inaccurate,” he said.
If a territory fails to introduce such a register by the end of 2020, it would be forced to via a rarely-used, legally-binding order from the Queen’s Privy Council.
The amendment does not apply to the crown dependencies of Jersey, Guernsey and the Isle of Man.
