New transparency rules to help tackle corruption

Global leaders meet at the Anti-Corruption Summit: London 2016

Six countries have pledged to publish public registers of ‘beneficial ownership’ covering all the companies within their jurisdiction, whilst some of the world’s tax havens have agreed to share full data on beneficial ownership with other governments.

There was also progress on reclaiming the proceeds of corruption and tackling money-laundering at the Anti-Corruption Summit held in London on Thursday 12 May, which was attended by representatives from more than 40 countries.

The six countries set to publish public registers are the UK, Afghanistan, Kenya, France, the Netherlands and Nigeria, and a further six countries have promised to consider it. Just as significant is the agreement of Jersey, the Cayman Islands, Bermuda, Anguilla, the UAE and the Isle of Man to joining a group of nations which share private registers amongst themselves – aiding the pursuit of global money-laundering and fraud. However, the USA – which has several tax havens, including the state of Delaware – and the British Virgin Islands did not agree to join either register.

In an attempt to demonstrate that the UK is committed to substantive action to tackle its own problems with money-laundering and corruption, UK prime minister David Cameron announced that Britain will create a public register of all foreign companies which own property or win public contracts in the UK. This will mean that “corrupt individuals and countries will no longer be able to move, launder or hide illicit funds through London’s property market.” Some 44,000 London properties are owned by overseas businesses, as well as approximately 60,000 outside the capital.

Meanwhile, the Commonwealth’s new secretary-general Baroness Scotland announced that she would create an office of criminal and civil justice reform, and allow businesses to apply for Commonwealth certification that they have reached a new standard for anti-corruption best practice.

Other outcomes of the summit include a plan to hold a Global Forum for Asset Recovery, hosted in the USA next year and dedicated to identifying and return money and assets stolen from Nigeria, the Ukraine, Sri Lanka and Tunisia. And nine countries are to participate in setting up an anti-corruption innovation hub, initially hosted by the UK’s Government Digital Service.

Some campaigners were unimpressed with the summit’s final communiqué, arguing that tax havens should commit to making their registers of beneficial ownership public. Oxfam GB’s chief executive Mark Goldring argued that “until tax havens are required to publish public registers showing who really profits from shell companies, the corruption and tax dodging revealed by the Panama Papers will continue undisturbed”.

But Allan Bell, chief executive of the Isle of Man, pointed to the USA’s refusal to give any ground on its own tax havens. Asked about America’s recalcitrance during the concluding press conference, Cameron responded that automatic intra-governmental sharing of company data is “not just for small islands, it is the United States, China, India that I want to sign up as well.” He commented that “we just have to work with all these countries to convince them”.

The PM pointed out that all of the UK’s overseas territories and Crown dependencies have come a long way “in the last few weeks and months. I am convinced that we will get them over that bar.”

Last month, Cameron announced that all the overseas territories and Crown dependencies – including the British Virgin Islands – had agreed to provide UK tax and law enforcement authorities with full access to their records on companies’ ownership. But the “gold standard”, he said on Thursday, is fully public registers.

Robert Barrington, chief executive of Transparency International UK – which has been actively campaigning on these issues in the run-up to the summit – commented that “the announcements made today are in the main impressive.”

He praised the communique’s promise of a new UK anti-corruption strategy, the commitment to publish data on company ownership, and forthcoming consultations on new anti-money laundering and ‘Unexplained Wealth Orders’ initiatives. However, he warned that some strong ideas might not survive their consultation period, and argued that the summit was a “missed opportunity to lay out a plan for how the overseas territories and Crown dependencies will be required to create public registers of beneficial ownership.”

“This secrecy in the UK’s tax havens remains its weak spot in any discussion on corruption,” he added, but he called the summit a “good day in the fight against corruption.”

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