June 20, 2019 / 11:01 AM / in a month

Breakingviews - UK tax havens’ new look has old problem

A general view of Saint Peter Port in Guernsey, one of the Channel Islands, July 3, 2017. Picture taken July 3, 2017. REUTERS Russell Boyce

LONDON (Reuters Breakingviews) - Secretive offshore UK tax havens could soon become slightly less shadowy. Jersey, Guernsey and the Isle of Man said on Wednesday they would look at requiring companies registered there to publish their real owners on a public database by 2023. The British outlying islands are expected to move things forward off the back of a 2022 European Union review, which could see other tax havens globally shamed into following suit. But it may not turn out that way.

While Jersey, Guernsey and the Isle of Man have left the exact implementation details ambiguous, their joint statement is the first major admission that something needs to change. Assuming the register is fully open to the public and accessible, it sounds possible to scrutinise who really owns the companies. That would potentially help fight money laundering and, according to the island trio, even counter the financing of terrorism. No man is an island, and the hope is that other offshore jurisdictions will have to play catch-up with tighter transparency standards for fear of becoming pariahs of a cleaned-up global financial system.

However, rules are useless if they are not sufficiently enforced. Britain’s company register, Companies House, is a case in point. Since 2016, it has required companies to say who really controls them, but it has no powers or resources to systematically check whether the four million firms registered in Britain are telling the truth. Only two individuals have ever been prosecuted for providing false statements to the register – and one of them was a journalist who sought to demonstrate how easy it was to lie to Companies House by setting up a company named after Liberal Democrat politician Vince Cable.

The British government has woken up to the body’s shortcomings and is undertaking what it says is the biggest overhaul of Companies House since the entity was created in 1844. If Jersey, Guernsey and the Isle of Man are serious about stemming the flow of illicit money, they will learn from Britain’s mistakes. But if it echoes the mainland’s lack of a proper deterrent to sharp practice, the dodgy cash will linger.

Breakingviews

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