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UK’s Progress On Beneficial Ownership Transparency Overshadowed by Links to Secrecy Jurisdictions

Written by Kevin Bridgewater on Friday, 13 November 2015
BVI

Flickr/ Collin Erickson; Cropped by TI-UK

 

 

What may come as a surprise is the relative strength of the UK’s framework in comparison to other countries.  The UK scored 85 overall and is the only country to have scored 100 percent on four of the 10 principles assessed, partly due to the recently adopted legislation to establish a central registry of beneficial ownership containing relevant information that will be made public.  However, it’s important to note that the UK assessment only focuses on domestic legislation. Whilst it’s true the UK is leading the world in beneficial ownership transparency for UK companies, its links with secrecy jurisdictions threatens to overshadow the UK’s domestic progress.

“The weaker performance in many of the British Overseas Territories and Crown Dependencies on key beneficial ownership issues threatens to undermine the UK’s implementation to the G20 principles as a whole”

A number of the UK’s Overseas Territories, such as the British Virgin Islands and the Cayman Islands, operate a legal system that creates a veil of secrecy to obscure the identity of those establishing companies. The use of these secret and anonymous companies constitutes a serious obstacle to investigating money laundering.

Just this week, we published a joint statement with the National Association of Estate Agents, urging the Government to begin the process to make foreign and offshore ownership of UK property fully transparent.  Anonymous offshore companies hold the titles to over 35,000 properties in London, with the British Overseas Territories and Crown Dependencies making up the lion’s share.

In the next few weeks, representatives from the British Overseas Territories will travel to the UK to set out their plans for strengthening beneficial ownership rules. The UK Government needs to take a strong position and ensure the Overseas Territories commit to public registers of beneficial ownership.

To be fully effective in tackling the money laundering of illicit funds through anonymous companies, the UK also needs to ensure that its anti-money laundering regime is fit for purpose.

One clear and striking weakness in the property sector is that estate agents are only required to carry out checks on the seller and not the purchaser of high-value property.

As the recent ‘From Russia with Cash’ documentary highlighted, a number of estate agents are willing to turn a blind eye to apparent money laundering by corrupt foreign buyers.

The problem goes beyond property too, into the range of professional sectors in the UK. TI-UK will be publishing a report later this month, highlighting weaknesses across a number of different sectors in the UK.

In short, the UK should be commended for its progress, but there’s still a lot more work needed to deliver on the Prime Minister’s pledge to ensure the UK is not a place for foreign fraudsters to “stash their dodgy cash.”

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Read 593 times Last modified on Wednesday, 03 February 2016 14:54

Kevin Bridgewater

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