Anguilla is a Caribbean island known for attracting celebrities on vacation with the setting you would expect from paradise. The island recently reached international attention as the latest report from the Organization for Economic Cooperation and Development (OECD) found that it is even less transparent than it previously was.
The Changes to the Report
OECD considers Anguilla a non-compliant country in its Global Forum on Transparency and Exchange of Information for Tax Purposes report. The non-compliance comes explicitly from its inability to meet standards in countries sharing information. This information concerns companies or high-net-worth individuals suspected of committing a financial crime or avoiding taxes. Before the most recent report, Anguilla had been classified as “partially-compliant” since 2014.
Details Regarding Transparency
The drop in Anguilla’s transparency is connected to the Panama Papers, at least according to the island. For those unfamiliar with it, Anguilla is a British Overseas Territory. The EU, the Netherlands, and France have all blacklisted Anguilla for lack of transparency.
The report from the OECD found that from 2015 to 2017, Anguilla received 53 international requests for information about Anguillan companies. The report indicates that the country only responded to nine cases, providing details in only those.
The OECD says that this low response and assistance rate combined with the country’s poor record-keeping and its ambiguous laws. The result was that Anguilla rated as “non-compliant” or “partially-compliant” on four of the 10 measures for tax transparency that the OECD uses.
What OECD Says
The OECD further said that there is no way to tell if Anguilla maintains reliable accounting records, and that “there is no measure to incite entities to do so.” The organization further indicated that it was unclear whether the firms in Anguilla that create and manage offshore companies have a legal requirement to know who owns those entities.
What Anguilla Says
As mentioned, Anguilla at least partially blames its lack of transparency on the Panama Papers. Specifically, the territory points to Mossack Fonseca’s “poor governance structure.” As a reminder, Mossack Fonseca was the international law firm responsible for the leaked files that began with the Panama Papers. The law firm was unable to respond to requests asking for basic corporate information. According to Anguilla, the collapse of Mossack Fonseca led to the closure of its office and the disappearance of records.
The company’s closure meant that it was hard for Anguilla to provide access to information. The OECD report even confirms that those factors “hampered access to information in relation to such companies” and that it “reflected negatively in Anguilla’s overall ability to exchange information.”
This also fits into the statistics the OECD report cited regarding Anguilla’s response rate to information queries. 90% of those requests concerned companies Mossack Fonseca had created.
It is worth noting, however, that when Mossack Fonseca showed interest in working in Anguilla, the territory welcomed it enthusiastically. The law firm then negotiated rates that would entice high-net-worth individuals to buy companies in Anguilla. Mossack Fonseca promised to do its best to form 1,000 companies in Anguilla each year.
What Others Say
Others acknowledge that Anguilla has always faced struggles. Caribbean politics expert Peter Clegg called it one of the semi-forgotten territories. It is not doing poorly enough to need financial assistance from the UK but not big enough to be self-sufficient.
An Anguillan offshore service provider and barrister, Carlyle K. Rogers, also pointed out that Anguilla has limited resources to help it meet the demands of the OECD.
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