The UK passed legislation on Tuesday that aims to remove the cloak of secrecy shrouding many of the British overseas tax havens, with activists hailing it as a major victory in the fight against corruption and tax dodging.
Amendments added at the last hour to a sanctions and anti-money laundering bill will compel jurisdictions like the Cayman Islands, Bermuda and the British Virgin Islands to create public databases setting out the real owners of all companies registered there. It’s a step long sought by critics, who say the anonymity offered by offshore shell companies often permits people to hide vast illicit sums.
“It will stop them exploiting our secret regime, hiding their toxic wealth and laundering money into the legitimate system, often for nefarious purposes,” said Margaret Hodge, the opposition Labour member of Parliament who introduced the amendment.
“With open registers we will then know who owns what and where, and we will be able to see where the money flows, and then we will be better equipped to root out dirty money.”
The legislation affects the so-called British Overseas Territories and requires them to create public beneficial-ownership registries by the end of 2020, failing which the UK government will impose them. Just one of those territories, the British Virgin Islands, was the locale of half the 210,000 companies exposed in the Panama Papers leak in 2016.
The amendments do not touch the jurisdictions known as Crown dependencies — Jersey, Guernsey or the Isle of Man — which Parliament left to future discussions.
The Conservative government was forced to accept the amendments because it does not hold a majority of seats.