LONDON (Thomson Reuters Foundation) – The British government unveiled plans on Wednesday to crack down on corruption by lifting the veil of secrecy over who owns private companies and making it an offence to help people hide their assets, usually to avoid paying tax.
The two new laws were announced in the Queen’s Speech, written by the government and read out to parliament by the queen, which sets out the government’s legislative programme for the coming year.
Anti-corruption campaigners cautiously welcomed the news while noting that the impact of the legislation would depend on its detail.
“The UK’s new register is good news for people living in poverty in the UK and poor countries alike, because they pay the price for tax evasion and corruption,” Barry Johnston, a senior UK political adviser at campaign group Christian Aid, said in a statement.
Johnston said the UK has done more than any other G8 country to shed light on the true ownership of companies registered on its shores. But the government must ensure that the information in the registry is accurate, that the registry includes trusts in addition to companies and that the UK’s Overseas Territories and Crown Dependencies also create registries of their own, he said.
Territories such as the Isle of Man and the Channel Islands are popular offshore havens where people can hold accounts in corporate structures that hide the ownership as a way to evade taxes or hide proceeds of crime.
Once the law rolling back corporate secrecy is enacted, the United Kingdom will become the first country to make public the ownership of offshore companies set up with complex structures.
Lawmakers in the United States have proposed bills to require that beneficial owners of companies are made public, but the measures have made no progress in the Republican Party-dominated Congress.
Transparency campaigners, some of whom carry out their own investigations into corrupt dealings, have pushed hard for a public registry, saying it would help tax authorities not only in developed countries but also those in developing countries to trace funds that have been spirited out of the country illegally.
Some campaigners have estimated the illicit flow of funds out of developing countries exceeds the amount given to them in foreign aid.
WHITE COLLAR CRIME
Prime Minister David Cameron said while chairman of the G8 in June 2013 that he planned to create a registry of UK corporations.
But the new offence announced on Wednesday of ‘participation in an organised crime group’ carrying a sentence of up to five years in prison, surprised anti-corruption campaigners.
“Nobody is above the law. But for too long corrupt lawyers, accountants and other professionals have tried to evade justice by hiding behind a veneer of respectability,” Karen Bradley, minister for modern slavery and organised crime, said in a statement released in advance of the speech.
“This new offence sends out a clear message to those individuals - if you are helping to oil the wheels of organised crime, you will be prosecuted and face being jailed,” she added.
Britain’s reputation in the fields of law, accountancy and banking helped it recover more quickly than most from the global economic crisis but may also have attracted criminals looking to launder their illicit wealth.
“There is abundant evidence that corrupt funds are laundered through the UK and used to buy property, luxury goods, sports clubs, companies, fine art and other assets - helped by a small army of professional intermediaries like lawyers and accountants and with reputations cleansed with the help of PR firms,” Robert Barrington, head of campaign group Transparency International UK said in a statement.
“'We have identified 10 tests that we believe any new legislation must meet in order to tackle the scale of this problem. We will be monitoring the draft legislation carefully to see whether it represents serious action or window-dressing,” he added.
Our Standards: The Thomson Reuters Trust Principles.