A week after an unprecedented leak of some 11.5 million confidential documents from a Panamanian law firm hit financial services markets, governments and wealthy individuals around the world, the UK Government moved quickly on Monday to be seen to be taking action.
Hours after the chief minister of the Isle of Man told BBC Radio 4 of a new arrangement, whereby the IoM would soon be able to provide beneficial ownership information to the UK tax authorities within as little as an hour, UK prime minister David Cameron was unveiling a similar new beneficial ownership agreement between the UK and all of its overseas territories, including the other two Crown Dependencies, Jersey and Guernsey.
In his announcement on Monday, Cameron said the new agreement would ensure greater transparency, and had been the result of a “sustained campaign” by the UK.
Spokesmen for the Jersey government and its financial services industry quickly issued statements welcoming the new beneficial ownership agreement. Responses from other jurisdictions weren’t immediately forthcoming, although some media reports noted that several have either put central beneficial ownership registries in place or are in the process of doing so.
Ian Gorst, chief minister of Jersey, said the deal would “reinforce existing arrangements”.
Geoff Cook, chief executive of Jersey Finance, added: “We are pleased that the UK Government beneficial ownership agreement has been signed by Jersey, which is the culmination of months of inter-governmental work, and which re-affirms Jersey’s commitment to sharing beneficial ownership information with the UK’s law enforcement agencies quickly, and underlines Jersey’s commitment to combatting global financial crime.”
‘Not much change’
Cook added that the new agreement wouldn’t change much, since the island’s regulations were “already sufficiently robust”, as it ha kept a central register of beneficial ownership for more than 20 years, which it already uses to meet requests for information received from tax and law enforcement authorities.
He added that Jersey officials believed their beneficial ownership register is actually “more robust than the public registry to be introduced in the UK, because the data supplied in the UK will be provided directly by the companies, while in Jersey, the information is provided by intermediaries who are regulated, and [who are] required to do so or face penalties”.
Cook said Jersey officials also welcomed Cameron’s observation, today, that the Crown Dependencies were “well ahead of other similar jurisdictions”, and that overseas investments were not, contrary to some recent implications, entered into as a tax avoidance measure.
Media reports saw Cameron’s aggressive approach to the matter as stemming in part from questions having been asked about his own offshore links, which emerged in the leak of the files from the Panamanian law firm, and a consequent desire to defuse criticism.
Some also suggested he was responding to statements made last week by his political rival, UK Labour Party leader Jeremy Corbin, that the UK government should consider taking control of the tax affairs of its overseas territories and three Crown Dependencies if they failed to comply adequately with UK transparency laws.
As reported, Corbyn was reported to have said that some of the British overseas territories were encouraging tax avoidance “on an industrial scale”, to the detriment of public services in the UK.
Leak said ‘biggest ever’
The reported leak of confidential information by the Panama office of the Mossack Fonseca law firm was widely seen as an indication that recent efforts to abolish tax evasion through the introduction of new regulations and increased automatic exchange of information hasn’t been working.
Some are calling it the biggest leak of confidential information ever to hit the global financial services industry.
The leak has fueled widespread criticism of offshore finance centres, which, it is being alleged, are still helping wealthy and large corporations avoid tax, launder money and conceal business arrangements.
The financial centres have been fighting back, pointing out that there are valid reasons that people and entities might choose to hold their assets in institutions that happen to be located in a place that is not the same as where they live, and that their small size did not automatically assume that they didn’t have adequate controls in place to prevent tax evasion, money laundering and other criminal activities.