UK government finally backs register to tackle ‘dirty money’

2 May 18

The UK government has finally backed plans to crackdown on ‘dirty money’ and make tax havens more transparent.

Britain’s overseas territories will now have to adopt public registers of company ownership by the end of the decade, following the acceptance of an amendment to the in the Commons yesterday.  

Labour’s Margaret Hodge and Tory MP Andrew Mitchell have been pushing for an amendment to the bill to stem the flow of cash obtained unlawfully or immorally. But previous attempts to amend the bill have been rejected.

Mitchell said during the report stage in the House of Commons yesterday: “I think that this is the fourth time that we have been around this track, so it is now time for the House to assert its authority and nudge the government into the right place.”

He added: “I am therefore delighted that the government have indicated that they will accept new clause 6”, which he said would “in in bearing down on money laundering, corruption, tax evasion, terrorist financing and fraud”.

Clause 6 is the requirement to introduce public registers of beneficial ownership for companies registered in British Overseas Territories. 

Hodge, chair of the CIPFA sponsored APPG on Responsible Tax, told PF: “Billions of pounds are laundered through the British Overseas Territories every year. 

“They encourage corruption, organised crime, tax evasion and avoidance and are a mechanism for funding terrorism.  This is a huge problem.

“Opening the Overseas Territories to scrutiny and accountability through public registers of beneficial ownership will make a massive difference.  This really is a historic moment in fighting corruption and financial crime.”

 

 

Foreign office minister Alan Duncan told the Commons yesterday that ministers recognised “the majority view in this house” and would not oppose the amendments to the bill from Hodge and Mitchell.

Duncan said ministers were reluctant to tell the overseas territories what to do but added: “We have listened to the strength of feeling in this house on this issue and accept that it is without a doubt the majority view of this house that overseas territories should have public registers.”

The amendments to the bill require all 14 overseas territories, including the financial centres of the British Virgin Islands and the Cayman Islands, to introduce these registers by the end of 2020 or face having them imposed by the UK government.

This comes as recent leaked financial documents, namely the Panama Papers and Paradise Papers, revealed global tax abuses by wealthy individuals and corporations, including some with links to Britain’s overseas territories.

CIPFA chief executive Rob Whiteman said: “CIPFA is a proud supporter of the kind of transparency this amendment represents, and so we are delighted that the government is taking significant steps to clamp down on tax avoidance.”

Mitchell also told MPs yesterday: “It is only by openness and scrutiny, by allowing charities, NGOs and the media to join up the dots, that we can expose this dirty money and those people standing behind it. Closed registers do not begin to allow us to do it.”

Tax Justice Network director Markus Meinzer said: “Today’s vote is good news for the protection of human rights and democracy across the globe, and bad news for tax dodgers, money launderers and kleptocrats.

“The risks for dirty business ending up in bright daylight is increasing. Let’s now move on to tackle the next strongholds of financial secrecy – there are enough left for a lifetime.”

The transparency measure of having public registers of ownership was by then UK prime minister David Cameron and then chancellor George Osborne in 2013.

The bill has gone through the House of Lords and House of Commons and is now in the consideration of amendments stage before becoming law.

Oxfam’s head of inequality Rebecca Gowland said the UK is set to show global leadership by standing up for tax transparency.

She said: “This is great news for the world’s poorest people. Ending secrecy in UK-linked tax havens will developing countries to recoup billions of lost revenue that could pay for much-needed schools and hospitals.

“These public services can make a massive difference to the lives of the poorest women and girls who most often miss out on healthcare or an education.”

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