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UK to make Offshore Tax Havens transparent

In Anti-Money Laundering, News by Parvesh ShamdasaniLeave a Comment

The Russian poisoning scandal regarding Sergei Skripal has set off a chain reaction. First was a report from Reuters mentioning that “British lawmakers launched a new inquiry into money-laundering, sanctions and economic crime … with a particular focus on properties bought with so-called “dirty money”, amid growing tensions with Russia.” Then came an article from the Independent where ministers “announced plans to clamp down on a century-old business loophole that they say is being used by foreign criminals to launder dirty money through the UK.” Scottish Limited Partnerships (SLPs) introduced in 1907 to help Scottish farmers are being exploited by overseas criminal gangs, in one laundering scheme 100 SLPs were used to move $80bn in Russian money in four years, according to government research. Transparency International “has identified £4.4 billion worth of UK properties bought with suspicious wealth and more than a fifth of these properties were purchased by Russian individuals.”

Just when we thought things could not escalate any further, The Gardian and the BBC both report that the UK plans to require 14 overseas territories (including the British Virgin Islands and the Cayman Islands) to introduce ownership registers by the end of 2020. This is a major blow to money laundering efforts as companies from theses territories have become synonymous with money laundering schemes. However, it does not include crown dependencies, the Isle of Man, Guernsey, and Jersey, the latter which is Apple’s choice when avoiding billions of dollars in taxes according to the Paradise Papers.

It is clear that opaque ownership systems play an important role in money laundering schemes, with criminals using them to conceal their identity. The UK has struck a critical blow but as mentioned the crown dependencies are currently exempt, and once enforced the money will just move to other jurisdictions that offer strict secrecy laws and low taxes, just like Apple did when trying to evade taxes amid a crackdown in Ireland. Even though there is much work to be done, this is a bold move that will hopefully set a trend and inspire others to take a tough stance against secrecy havens that aid in concealing the identity of criminals.

Business and Compliance Consultant , Parv Consulting Limited
Business and compliance enthusiast, problem solver, road warrior, police “ID check” magnet, and half geek whose exploits have taken him around the United States, United Kingdom, Caribbean, India, deep into Southeast Asia and West Africa. Entered the anti-money laundering and high risk field to help develop understanding, contribute research, improve standards, prevent profiteering at the expensive of SMEs, and to protect interests of the average person.
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