Last year UK Prime Minister David Cameron promised to rip aside the “cloak of secrecy” and set new standards for transparency of company ownership.
What came out of the Joint Communiqué an agreement to hold the information on the people who ultimately own and control companies — so-called beneficial owners — in their jurisdiction, either in centralized registries “or similarly effective systems.”by political leaders and representatives of the UK and Overseas Territories last month (following reportedly “robust discussions”) was
There will now be talks with UK law enforcement authorities “on further developing a timely, safe and secure information exchange process.”
As a lawyer whose firm specializes in the investigation of international fraud and money laundering, I’m glad the various overseas territories did not agree to Prime Minister Cameron’s original request for public registers of company ownership. Why? Because it has taken years for the offshore jurisdictions concerned to gather the information available today; the last thing the world needs is the threat of an open-registers, as this will drive the unscrupulous further underground.
I’m in favour of a central registry to create a more objective record of ownership and control of offshore companies. But not one that is open to the public without a court order for disclosure. As I conduct my investigations, it is becoming increasingly common to see more and more “ghost” Ultimate Beneficial Owners (UBOs), listed as UBOs of offshore companies, yet living in non-existent Moscow apartment blocks.
The UK government floated the prospect of open registers. Thankfully, cooler heads acknowledged that kleptomaniacs and fraudsters aren’t going to allow their names to appear in a public register of ownership of offshore companies.
There are many exaggerations made in the press about offshore companies being impenetrable fortresses. This is not the case: information is available if you have good cause to acquire it. Police inquiries by warrant and mutual legal assistance treaty requests from foreign law enforcement authorities are common and helpful gateways to the intended data being collected today.
Although I acknowledge that some high-profile companies have generated a wave of bad publicity (by allegedly abusing the facilities offshore companies can provide), campaign groups such as Global Witness and media outlets like The Guardian are well-intentioned advocates for transparency of offshore company ownership, but they “know not what they do”.
By providing the caveat that UBOs can be identified, but only by court order and if there is evidence of wrongdoing, it puts a legitimate hurdle in the way of Big Brother and prevents criminals from fleeing to locations where they are welcomed with open arms and promises of near-total secrecy.
I understand the perspective provided by Christian Aid and Global Witness, who have been upset by the UK government’s supposed climbdown. But the changes that have been agreed will go some way to improved transparency. My reading of the situation is that these may be small steps in the right direction, but with a clear inference that there will be ongoing discussions to improve the cross-flow of information between the various jurisdictions.
Common sense has prevailed. Congratulations to all those involved for arriving at a much more sensible agreement.
Martin Kenney is Managing Partner of Martin Kenney & Co., Solicitors, a specialist investigative and asset recovery practice focused on multi-jurisdictional fraud cases www.martinkenney.com |@MKSolicitors.