Gibraltar “deserves credit” for its efforts to improve corporate transparency, according to a report by leading anti-poverty organisations that nonetheless found Britain’s Overseas Territories remain among “the most notorious purveyors of financial secrecy”.
Prime Minister David Cameron has vowed to lead the global fight against corruption but the report, entitled ‘The UK’s Corruption Problem’, questions whether Britain has gone far enough.
While the UK and its territories have made significant progress on information exchange, the report’s authors said more could be done to lift the veil of secrecy and make publicly available details of who owns and controls companies.
“The UK’s Overseas Territories remain some of the world’s most notorious purveyors of financial services to tax evaders, the corrupt and the downright dangerous,” said Rosie Sharpe, senior campaigner at Global Witness.
“A World Bank study found that the most popular places that the corrupt use to incorporate a company are the UK’s Overseas Territories.”
The report by Christian Aid, Global Witness, the Tax Justice Network and Transparency International UK was published as leaders of the Overseas Territories gather in London for their annual Joint Ministerial Council meeting with the UK government.
James Duddridge, a Foreign Office minister, is expected press them to repeat their commitments to uphold international standards of transparency.
Although no details have been publicly confirmed yet, Chief Minister Fabian Picardo is also expected to fly to London later this week to attend the top-level meeting.
The report considered the extent to which bank and other financial accounts could still be hidden from other jurisdictions’ tax authorities.
While all of the Overseas Territories had made progress over the last two years by agreeing to automatically exchange bank account data with other countries’ tax authorities, the report claimed no data had yet been exchanged.
The study also analysed the extent to which tax evaders, the corrupt and criminals can still hide behind anonymous companies.
Montserrat has become the first of the Overseas Territories to promise to put the names of the people who own and control companies – the so-called beneficial owners – into the public domain.
Gibraltar, as a member of the EU, is also preparing a register of beneficial ownership that will be open to authorities in other countries.
A spokesman for No 6 Convent Place told the Chronicle that work to bring the register into effect was already under way and its launch was “imminent”.
The efforts of Gibraltar and Montserrat were acknowledged by the team that prepared the report published yesterday.
“Montserrat and Gibraltar deserve credit for improving their beneficial ownership grades since last year,” the document said.
“In particular, Montserrat has become the first Overseas Territory to agree to make beneficial ownership information public.”
“The other Overseas Territories should now follow suit.”
The report’s authors urged Overseas Territories to make beneficial ownership data “fully public” and called for more action to back up the verbal commitments.
“For all the talk about beneficial ownership transparency – and there has been a lot – there has not yet been enough action,” Alex Cobham, director of research at Tax Justice Network.
Joseph Stead, a senior advisor at Christian Aid, added: “With David Cameron planning to host an anti-corruption summit in 2016, now is the time to change things and demonstrate that the UK is as committed to stamping out corruption in its backyard as it is elsewhere in the world.”
Gibraltar has already made significant strides in the area of tax information exchange and corporate transparency.
The Gibraltar Government has signed 27 bilateral tax information exchange agreements, and has transposed an EU directive that provides an exchange mechanism with EU members. Likewise the OECD’ and Council of Europe Convention on Mutual Administrative Assistance in Tax Matters has also been extended to Gibraltar.
In practical terms, it means Gibraltar has OECD-standard tax information exchange agreements with 79 countries.
Gibraltar, which applies the EU Savings Directive, has also taken steps to enter into FATCA agreements with the UK and US, and for the automatic exchange of information with close to 100 countries.
Some of those agreements, while relatively new, are already being used in practice.
“The first batch of automatic information on tax matters in respect of persons with a United States tax residence was exchanged with the Internal Revenue Service on September 30 this year,” the government spokesman told the Chronicle.
Compliance with international transparency and information exchange standards is seen as crucial in Gibraltar. Meeting the highest standards undermines criticism levelled by Spain that the Rock is an opaque jurisdiction.
“Gibraltar regulatory, law enforcement and intelligence authorities work hand in glove with their United Kingdom, United States and other international counter parties in the detection and prevention of crime,” the spokesman said, adding that the Rock’s anti-money laundering regime was “draconian”.
“Our legislation, systems and administrative practices have been independently tested by independent reviews from the Financial Action Task Force, the International Monetary Fund and others and we have been found to have a robust arsenal not only just in place but crucially also in practice.”