Rowans-blog: Cameron’s government reneges on yet another proposal to prevent global money laundering!

The Government announces that it now does not intend to keep its promise to demand greater transparency over the issue of beneficial ownership of offshore corporations.

This is not altogether surprising, because when it comes to implementing procedures which might impact adversely on their sleazy friends in the banking sector, this government has been proving itself to be remarkably limp-wristed, even by the standards of Tory administrations.

In my last blog, I demonstrated how the City of London was lobbying to relax the rules which deal with the implications of the rules dealing with politically exposed persons, in order to remove unwanted barriers to the free-flow of foreign capital into the City of London’s coffers.

I made the point that since the Tory victory in the last general election, the City and its supporters were working hard to water down the implications of the perfectly sensible laws which exist to prevent and forestall dirty money from finding a safe haven in British banks.

We have strong laws designed to stop foreign criminals and particularly foreign corrupt politicians, senior military personnel, and other persons who have held elevated roles in public life, during the course of which they have enriched themselves beyond the dreams of avarice, from enjoying the proceeds of their crimes. That money has to go somewhere, and the banks in London want it to come here, if you please, from where, our organised mafia bankers will make sure it finds its way into the world’s offshore fantasy finance facilities, thus preventing it from being identified, sequestered and restored to its rightful owners.

British bankers don’t give a flying fig for the rights and wrongs of the actions of foreign dictators, they just love their money very much indeed.

Last year, global money laundering had become an issue of major importance for the world’s leading nations. It was especially concerned with issues of global tax evasion as Governments were looking for ways to recoup the enormous sums of money they believed they were owed by tax evaders.

David Cameron likes to be seen to be a ‘leader’ in political debate, he likes to be seen to be driving the discussion, as opposed to tamely following the agenda. At the end of October, 2013, he was able to announce that Britain was to pledge public access to a tax evasion-busting database.

He was set to announce that he would make public a new database of company ownership details designed to expose international money laundering and tax evasion schemes.

The plan advanced Cameron's efforts to push money laundering and tax evasion to the top of the global agenda, and followed up on a debate at a summit of eight of the world's wealthiest states (G8) earlier in June 2003..

The idea of a "beneficial ownership register" would go beyond the existing registration of corporations and shareholders by untangling deliberately opaque ownership structures to help tax authorities track down those who were using low-tax regimes overseas to illegally reduce their tax bills.

By making the data public, a decision taken after a consultation with businesses and pressure groups during previous months, the government hoped to allow wider scrutiny and put more pressure on firms and individuals seeking to hide wealth and profits.

"For too long a small minority have hidden their business dealings behind a complicated web of shell companies - and this cloak of secrecy has fuelled all manners of questionable practice and downright illegality," Cameron was to say at a conference in London later in the day.

"It's better for us all to have an open system which everyone has access to - the more eyes that look at this information, the more accurate it will be."

Cameron would urge other countries to follow suit.

Campaigners said that by making the first move, Britain had set a welcome precedent for others.

"This sets such an important global principle... You have to have someone who makes a stand on principle and then gets the world to follow. In this case it's the UK," said Gavin Hayman of the anti-corruption group Global Witness.

Efforts to improve transparency in the European Union were currently being debated, and recent legislative proposals in the United States could tackle company ownership disclosure. Hayman said neither was expected to quickly follow Britain's lead.

Cameron's efforts to clamp down on tax evasion had been complicated by the fact that Britain was seen as a market leader in providing access to offshore tax havens in former British colonies.

"We've found the UK has been one of the pillars of financial secrecy in the past so this is quite a significant shift," Hayman said.

"Using the corporate veil to obscure underlying ownership brings the corporate sector into disrepute and creates significant opportunities for wrongdoing or criminal activity," said Roger Barker, spokesman for the Institute of Directors.

"Significant practical challenges remain in order to ensure that any register of beneficial ownership is accurate and robust, but we support government efforts to begin this process."

We could be forgiven for thinking that this was a move that was intended to be followed through.

But how naive that view has proven to be.

It was announced this last week that the UK government appears to have relaxed its pressure on the Cayman Islands to create a register of company ownership, despite David Cameron’s plea last year for overseas territories to do so in the interests of tax transparency.

The prime minister promised to introduce a public register of beneficial ownership in the UK and wrote to the overseas territories last year urging them to consider doing the same, arguing that public access to a central list is “vital to meeting the urgent challenges of illicit finance and tax evasion”.

However, the Cayman Islands is one of several offshore territories – including the British Virgin Islands and Bermuda – that are refusing to implement the idea after consultation.

Despite further pressure from the Foreign Office and Treasury earlier this year, the position of the Cayman Islands now seems to have been accepted by Grant Shapps, a Foreign Office minister.

On a visit last week, Shapps said he believed the aims of helping tax authorities could be achieved within the Cayman Islands’ existing systems and argued “there’s more than one way to skin a cat”.

But these are just weasel words from Mr Weasel himself. There are more;

“Now, in terms of beneficial ownership the principle’s really straight forward. There needs to be, certainly for law enforcement agencies and bodies, the ability to find out who owns what in a transparent way, and not only for that information to be quickly and efficiently available so a single request could go in and the information can be provided,” Shapps said.

Well, this does not accord with Cameron’s original basis for requiring registers of interests to be maintained. He had said;

“...But dealing with tax evasion is not just about exchanging information. It is also about improving the quality and accuracy of that information. Put simply, that means we need to know who really controls each and every company. This goes right to the heart of Britain’s G8 commitment to knock down the walls of company secrecy...These (proposals) will need to provide for fully resourced and properly managed centralised registries that are freely available to law enforcement and tax authorities, and contain full and accurate details on the true ownership and control of every company...”

Under the Cayman Islands plan, there would be no government-held register, but corporate service providers would have to make available on company ownership to law enforcement agencies within 24 hours of a request being made.

Shapps himself observed that the Treasury had only ever expected overseas territories to set out timetables for either central registries “or similarly effective systems” by November 2015.

A spokeswoman for the Foreign Office insisted the position of the British government had not changed.

“As Mr Shapps set out during his visit to the Cayman Islands, our objective is to ensure law enforcement and tax authorities are able to access company beneficial ownership information without restriction,” the spokeswoman said.

“This will ensure relevant authorities can quickly identify all companies that a particular beneficial owner has a stake in, without needing to submit multiple and repeated requests.”

As always happens, a tame civil servant in the Foreign Office has trotted out some bromide seeking to put a gloss on the reality, which is the offshore sectors have told Cameron to go and take a running poke at a rolling doughnut!

But yet again, the devil has successfully hidden himself behind the detail.

Those of us who deal professionally with the issue of global money laundering know only too well how much of the success of the global ball of hot and dirty money is facilitated by the off-shore secrecy facilities offered by little Islands like the Caymans.

Why else does every crook, tax evader, conman and money launderer want to have access to these and similar jurisdictions.

Their own Governments know only too well that if their corporate registries are required to provide transparent lists of corporate beneficial ownership, then the islands will be forced back, very quickly, into penury.

The City of London, which is the equivalent of spaghetti junction for most of the world’s offshore entities, also knows that without access to that global network of funny money secrecy, a lot of their dubious business schemes would not succeed.

So, pressure has had to be brought on David Cameron and his ministers, to find a way to save face and give in gracefully, and little Grant Shapps has been deputed to trot out to Cayman and go through the motions of looking good about the new proposals, which are a huge embarrassment for David Cameron.

Yet another perfectly sensible provision to help forestall international money laundering has been dismantled, and the City of London can go on running its nefarious schemes.