This week I spoke in a debate in the Commons on the Sanctions and Anti-Money Laundering Bill. I made the case for action to tackle tax havens in the UK’s overseas territories, such as the British Virgin Islands.
To our shame, criminals are notoriously able to hide behind secrecy in setting up companies in these places, facilitating money laundering and corruption.
The United Nations Conference on Trade and Development estimates the cost of tax havens to developing countries to be some $100billion a year. The price is being paid by the poorest in the world. But tax havens also allow lawful, though highly questionable, tax avoidance. Leaks such as the Panama Papers have revealed the extent of this, but as President Obama said, the problem is that much of the activity is legal, not illegal. A 2014 United States Senate report pointed out that the US loses some $150billion in tax revenues a year owing to offshore tax schemes.
In the UK, thanks to David Cameron’s leadership, we now have public registers of beneficial ownership of companies, so we can see who the ultimate owners are. Why should not the same principle be extended to our overseas territories? The EU is following suit, and many developing countries have committed to do so, including Kenya and Nigeria.
It is argued that if our overseas territories are required to be transparent, they will suffer economically. In this case we should support them – but the argument that criminal activity should be facilitated because otherwise it will just move somewhere else is unconscionable.
We should work with the overseas territories and give them time to adjust, especially after the terrible hurricane damage which recently hit them.
But it is now four years since our then Prime Minister urged the overseas territories to act. Bermuda, the BVI and the Cayman Islands have set up central company registers which enable inspection by the law enforcement authorities. But this is nowhere near the full transparency which is acknowledged as the global standard in the fight against corruption.
Regrettably, the Government has now eased up the pressure on the overseas territories to reform. That isn’t good enough. Tax havens harm the world’s poorest most of all. They harm developing countries, and they harm us – not just economically, but also our reputation.
We live in an age of accountability and transparency. Britain should lead the fight against corruption, and our overseas territories – which pride themselves on their links with us – should follow.
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