Corporate transparency registries should be a global standard, member of UK parliament says

02 Apr 2020 12:31 pm by Robert Thomason

Registries of the beneficial owners of companies should become a universal standard, UK parliament member  Andrew Mitchell said today, adding that current US legislation would provide an impetus for better law enforcement against illicit financial dealings throughout the world.

Legislation in the US House and Senate would require the disclosure of beneficial owners of corporations and limited liability companies. Mitchell, a former UK secretary of international development, said the weight of US authority in establishing ownership registries is an important next step in fighting financial crime.

"The problem if America doesn't introduce these registers is that the attack on money laundering will falter," Mitchell said during a presentation in Washington, DC.

"And if America does now proceed and introduce these registers, because the American law enforcement is so much better than in most other parts of the world there will be a real chance for America to mount the argument that everyone should at least come up to the standards of transparency and probity in this area that America will have then legislated," Mitchell said.

Mitchell noted that the US legislation, which has passed the House and is under consideration in the Senate, only makes ownership data available to law enforcement and tax authorities, but not to the general public as it does in the UK. "In Britain we have gone further — we should go further because of our relationship with the overseas territories and Crown dependencies and the pivotal position of London," he said.

Mitchell is a Conservative Party member who, in 2018, worked with Labor MP Margaret Hodge to pass a UK law compelling overseas territories to establish ownership registries. The territories have until 2023 to do so; the UK itself has already opened such a registry.

Although he said open registries should one day be the universal standard, a US ownership disclosure law would be significant progress. "Let's not make the best be the enemy of the good," he said.

Tax havens could benefit from better behavior

Mitchell said many small jurisdictions, such as overseas territories, support themselves on revenue from registering shell companies and other firms because they have few economic options. However, many of these territories, such as the Cayman Islands — which the European Union recently put on a money laundering blacklist — are money-laundering and tax-evasion havens whose clients frequently find themselves in the cross-hairs of criminal and civil investigations and prosecutions.

"My argument is that if they clean up their act, then there is a substantial amount of business, including banking business which they cannot do at the moment,"  that they "would be able to do," he said. Mauritius and the British Virgin Islands, which he said "are widely regarded as having cleaned up their act," are now jurisdictions where funds can be invested for legitimate reasons.

Holding financial facilitators accountable

Mitchell said the UK government is looking at proposals that would hold financial facilitators, such as accountants or tax lawyers, liable if those professionals intentionally put a client's money into an instrument intended and designed to evade taxes or to further some other financial crime.

"I think there are indications of the government introducing legislation to which this might be relevant," Mitchell said. "It is a live subject in Britain."

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