Press Releases

Anti-Corruption Summit: IFC Forum calls for shareholder data to be effectively verified

Published: 13 May 2016

The IFC Forum welcomes the Anti-Corruption Summit’s commitment to improving the accuracy of beneficial ownership information available to tax and law enforcement authorities. Data verification is required to effectively combat crime and corruption.

For over a decade the British Crown Dependencies and Overseas Territories have collected information on the ultimate beneficial owners of local companies and trusts. Comprehensive and systematic beneficial ownership identification and verification is conducted by licensed and supervised trust and company service providers. Data is accessible by the governments for law and tax enforcement purposes, including in response to requests by foreign governments.

The British Crown Dependencies and Overseas Territories have agreed to establish central registers or similar mechanisms to allow government access to this shareholder data. Following this implementation, they will be the only jurisdictions in the world with verified beneficial ownership information available through central government access.

The task now is for other governments to meet the standards and commitments already made by the British Crown Dependencies and Overseas Territories.

IFC Forum Counsel Richard Hay said: “Criminals establishing companies for fraudulent purposes will not abide by the honour system. The Summit communiqué calls for accurate information to be available, but without verification, the only accurate information on share registers will be from law-abiding citizens. Countries need to move further and require that shareholder data collected in registries be verified to Financial Action Task Force standards.”

The fight against money laundering and tax evasion must be truly international, argues the IFC Forum

Published: 7 April 2016

The publication of the Panama Papers has raised serious questions about global compliance with international regulatory standards, and it is apparent that some jurisdictions have fallen markedly behind in the global efforts to combat money laundering and tax evasion.

By contrast, the Overseas Territories and the Crown Dependencies, being British international financial centres (British IFCs), are rated as having amongst the highest regulatory standards in the world by all international assessments, including by the Organisation for Economic Co-operation and Development (OECD) and Financial Action Task Force (FATF).

The British IFCs automatically exchange tax information with the UK and US governments and are amongst the first adopters of the OECD’s Common Reporting Standard (CRS), which will extend information exchange to most other countries. They were also early signatories to the OECD’s Convention on Mutual Administrative Assistance in Tax Matters, a multilateral agreement providing for tax cooperation between its participants.

British IFCs are consequently amongst the hardest places in the world to evade taxes or launder money. These financial centres have laws and courts based on those of the UK and many lawyers and professionals educated, trained and qualified in the UK. The financial regulators in the British IFCs are also recognised members of the International Organization of Securities Commissions (IOSCO), the global standard setter for the securities sector. The key appeal of the British IFCs is the trust placed in them by institutional investors, and so high regulatory standards are of paramount importance to them.

Richard Hay, Counsel to the IFC Forum, said: “It is wrong to bracket all small financial centres together as so-called secrecy jurisdictions. British IFC regulatory standards, including on tracking of beneficial ownership, are judged in peer reviews and authoritative academic studies to be amongst the best in the world.? British IFC information exchange standards are also at the leading edge of global standards.

“The IFC Forum calls on all financial centres – large and small – to adopt the information collection and exchange protocols endorsed by the international community and which are commonplace in the British IFCs.”

Common Reporting Standard must include all major financial centres to be effective, warns the IFC Forum

Published: 25 February 2016

The global tax compliance landscape has significantly evolved in recent years as governments, international bodies and financial institutions have come together to share information to tackle cross-border tax evasion. Most recently, the OECD launched the Common Reporting Standard (CRS) to fight international tax evasion.

Over 90 jurisdictions have agreed to implement CRS: the latest standard by which governments automatically exchange financial account information to prevent tax evasion. The British international financial centres – including Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Guernsey, Jersey and the Isle of Man – are all early adopters of the new standard.

However, the US has declined to join CRS, citing the extensive network of intergovernmental agreements it already has under the Foreign Account Tax Compliance Act (FATCA). Yet, FATCA was designed to require information reporting to the US, including information on accounts indirectly owned by individuals and trusts. Although US has agreed to supply basic information to other countries, it will not include information on accounts which are indirectly owned.  CRS requires full exchange of information on indirectly held financial accounts so goes further than the obligations that the US accepts under FATCA, and would require the US to match the obligations of fully effective disclosure which the US has imposed on others.

As jurisdictions prepare to exchange CRS information from January 2017, the IFC Forum, which represents financial and professional services firms in the British international financial centres, questions whether the new OECD system will be effective without US participation. The IFC Forum is responding to a recent article in the Economist which reports on the US’ decision to decline to join CRS and suggests that money is flowing into the US to minimise disclosure.

Jack Marriott, Chairman of the IFC Forum, said: “In order to be effective, CRS must be truly global. Is it viable without participation from the world’s largest financial centre? Similar concerns apply to other proposed transparency measures such as the availability of ultimate beneficial ownership information.”

Richard Hay, Counsel to the IFC Forum, adds: “Clients who wish to avoid CRS may move money to the US to take advantage of the lower disclosure standards which will apply there. As the OECD already appears to have recognised, it only takes one hole in the balloon for all of the air to go out. The US must participate if CRS is to be effective.”