It is no secret that offshore banking is a hot-button issue around the world. Recently, the United Kingdom has been making moves to improve transparency regarding banking in crown dependencies, and those dependencies are far from happy about this.
The Transparency Initiative
The issue boils down to several MPs who are strongly pushing for certain dependencies to develop and maintain public registers listing beneficial ownership. This would specifically impact Jersey, the Isle of Man, and Guernsey, all of which have reputations as tax havens. This initiative has bipartisan support, with both Labour’s Margaret Hodge and Tory’s Andrew Mitchell backing it.
Not the First Beneficial Ownership Register
The UK itself already has a beneficial ownership register that is publicly accessible. This was created in 2016. A relatively recent amendment means that Overseas Territories will have to create their own similar registers by 2023. The deadline was originally 2020 but has been pushed back.
Concerns About Money Laundering
Those in favor of the transparency initiatives point to concerns regarding money laundering that is enabled by offshore banking and tax havens. In fact, over 40 MPs signed a Financial Services Bill amendment that would require the United Kingdom to assist all crown dependencies and Overseas Territories organize these registers within the relevant jurisdictions.
The goal behind the move is to shine some light on the issue of money laundering. With transparency in place, it should become significantly more difficult to launder money. The move will also be able to highlight funds from crimes such as human trafficking.
What the Crown Dependencies Say
The crown dependencies in question are strongly opposed to the proposed amendment. The governments of the crown dependencies issued a joint statement in which they indicated that the amendments would go against the established constitutional relationships and would lead to inoperable legislation.
Additionally, the crown dependencies feel that the laws are not necessary. Those dependencies indicate that they are already fully committed to providing information regarding ownership to the UK. This goes toward the crown dependencies’ efforts to fight corruption, money laundering, and tax evasion. The crown dependencies went as far as to indicate that they actually follow higher standards in their jurisdictions than the United Kingdom does. They indicated that their registers contain accurate, up-to-date information as it stands, without any need for improvement.
Time will tell what this means for those who enjoy the privacy of offshore banking in the crown dependencies. At the very least, it means that those who bank in these dependencies should expect a higher level of scrutiny in the future.
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