Because I have been away (even if blog activity did not entirely reflect that fact) I have missed a few key events in recent days. This report from the Guardian, which I shamelessly share in the public interest, is one issue I overlooked:
The UK will adopt sweeping European laws designed to combat terrorism and money laundering, the government has confirmed, in a move that could unmask for the first time the beneficiaries of thousands of secretive trusts.
In a letter sent to the MP Margaret Hodge, the Department for Business, Energy and Industrial Strategy (BEIS) says the government will to adopt the fifth EU anti-money laundering directive.
The legislation was created following the escalation of terrorist violence in Europe and as a response to the Panama Papers, in which a global consortium of journalists revealed the widespread use of trusts and opaque offshore structures to launder money generated from bribery, corruption and tax evasion.
In the letter confirming the government's intention, Lord Henley, a parliamentary undersecretary of state at the BEIS, wrote on 16 July: “You ask about the government's plans in regard to complying with the requirements of the fifth anti money laundering directive. The deadline for the transposition of the directive falls within the implementation period and the UK will transpose this directive.”
The UK will officially leave the EU next March, but while negotiations on the final deal are ongoing, there will be a transition period until the end of December 2020. During this time, Britain has promised to abide by all existing and new European laws.
The fifth anti-money laundering directive contains the following measures:
- Public registers of company owners in every member state.
- Access to the names of the beneficiaries of trusts for law enforcement agencies and those with a “legitimate interest”, including investigative journalists and NGOs.
- A cross-border database of company and trust owners, overseen by the European commission.
- Automatic access to the names of bank account holders for national financial intelligence units.
Unsurprisingly I celebrate this fact: it is further evidence of the advance of the tax justice agenda. It is also evidence that the UK is not yet, at least, heading for a race to the bottom on tax haven activity.
There is a note of caution in the Guardian article though:
The directive applies only to member states, rather than their satellites. UK affiliated offshore financial centres will be left to decide whether to adopt some or all of the measures. The overseas territories, which include the British Virgin Islands and Bermuda, and the crown dependencies of Jersey, Guernsey and the Isle of Man still allow companies and trusts registered on their shores to operate in comparative secrecy.
However, the issue has been noted in Jersey As The Biliwick Express has noted:
Jersey could be forced to “come into line” on transparency after the UK agreed to new EU measures that will unmask the true owners of previously secretive companies and trusts.
The good news is that the pressure is growing. And the chance for tax cheats to hide is reducing.
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Who would have thought that the fight against terrorism would have brought us to this point. The last two years or so have seen smuggling of migrants into Europe via illegal channels on an epic scale with mafia in southern Europe and North Africa profiting from their transit. Naturally they want to hide their profits from the tax authorities. It’s a sad fact that some smaller proportion of the migrants have extreme views about Western neoliberal civilisation and wish it would no longer exist. Alas, rather than taking the progressive approach, they want a pan-national caliphate and are willing to commit terrorist atrocities to help get them there.
People who have lost loved ones in Nice, Paris, Berlin and Manchester etc can take some comfort from the latest EU directive working its way through the system. Thanks for bringing it to wider attention.
Let us hope that your last sentence is indeed the case.
I agree this is good news and it is also somewhat contradictory for those who argue/believe Brexit is about the rich avoiding the disclosure and tax consequences of the new regime. I sensed you were starting to fall for that argument too Richard? To be fair we can only judge which way the wind will really blow with several years hindsight.
I have never believed th3 claim that Brexit is all about 5ax abuse
There is no evidence for that
It may work out that way
But it has not been the motive
“The deadline for the transposition of the directive falls within the implementation period and the UK will transpose this directive”
Weasel words? If no WA, no Transition/Implementation period, therefore(?) no transposition of the directive… After all, during such a chaotic period, how would parliamentary time be found for this, how could the implementation of an EU Directive be justified, and who would notice that it had quietly disappeared?
If there is no transition you will have bigger things to worry about
Yes , but since I am not in the UK nor near the channel ports, the one* (probably) thing that will directly affect my wife and I will be the plunge in value of Sterling** (most likely another 10-15% to parity with the Euro, or even less), although I have many concerns for my elder son and his family in the UK.
*I am assuming (no WA) that something will have been cobbled together to get flights to and from the UK moving again by June, when we would want to visit for our grandson’s birthday.
**As with those countries for which MM&T will not work, we have a large majority of our income in Sterling and almost all our outgoings in Euros.
MM&T
what is that?
A description of your pure selfish egotistical self?
Will this new rule force you to reveal who you receive grants from?
I do
Voluntarily
Whilst protecting human rights
Why don’t you ask the IEA?
Loved the article.
In your opinion Richard, who do you think will suffer the most post-brexit in regards to Money Laundering Regulations? the UK is/was a key and instrumental member of the EU especially in regards to the fight against money laundering, it also has the world’s leading financial centre. Therefore, do you reckon the EU or other member states will suffer a loss by losing Britain? or do you reckon the UK’s AML regime will be the one to incur the long term loss given that it will no longer be obligated to implement or enforce EU AML directives?
The reality is AML pressure comes from more than the EU. The FATF also delivers it. I do not think we will substantially differ from international norms in the long run.