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Trillions of dollars in assets sit in offshore accounts internationally. Much of it’s held in opaque shell corporations and trusts, safely shielded from public scrutiny. Over the past decade, major data leaks and investigations — from the Panama Papers in 2016 to the FinCEN Files in 2020 — have put a highlight on how the key arrangements have abetted tax avoiders, money launderers and terrorist activities. The web has tightened. Still, many jurisdictions make it too easy for illicit activities to hold on with impunity by failing to adopt the best levels of transparency: public helpful ownership registers.
Open registers help legal experts, non-governmental bodies and journalists to quickly link money trails to named individuals and spot suspicious activity. In 2016, the UK took the lead by making a compulsory public register of individuals with significant control over corporations. It subsequently gained commitments from its overseas territories, corresponding to the Cayman Islands and British Virgin Islands, and crown dependencies to ascertain them. But many have dawdled and missed implementation targets.
The UK should use its influence to press for greater transparency. Ahead of a three-day joint ministerial council this week, where officials meet counterparts from the overseas territories, British MPs called on foreign secretary David Lammy to hurry up efforts towards public registers. A Financial Times evaluation also revealed that corporations registered within the overseas territories exported $134mn price of products to Russia in 2024, in an apparent breach of UK sanctions. These territories and dependencies must recommit to strict motion plans to implement open databases.
The globalisation and digitalisation of capital means responsive cross-border co-operation on monitoring money flows is critical. In theory, international initiatives, led by the Financial Motion Task Force and the OECD, have made progress in setting standards for law enforcement agencies to access company information on request. In practice, gaining international clearance is usually difficult and cumbersome. That provides bad actors time to maneuver their assets. Legitimate interest registers, which grant conditional access to investigators, can have similar drawbacks.
Major financial hubs, including the US and Switzerland, are also among the many worst jurisdictions for enabling secrecy, in response to the Tax Justice Network. In 2022, a European Court of Justice decision blocked the introduction of public registers within the EU. The choice has been cited by other jurisdictions as a reason to not push towards full transparency. Recent hubs are emerging too. The cash tied to corruption, organised crime and sanctions evasion has shifted towards Dubai and Hong Kong.
The most important jurisdictions must lead by example, including by extending transparency efforts to trusts and other assets. As more areas adopt public registers, those who lack them risk tarnishing their image. The worldwide push for transparency may also be boosted through technical assistance, particularly for those with less data expertise. Limitations on procuring from undisclosed entities, and even taxing payments made to them, may be explored as well. Exemptions may very well be provided for people who’re at a real security risk.
Many favoured destinations for incorporation risk losing business in the event that they speak in confidence to scrutiny — but economies that rely upon secrecy are hardly built on strong foundations. Nations and territories can still compete by offering low taxes and lightweight regulation. Using opacity as a singular selling point as a substitute undermines tax collection, sanctions and anti-corruption efforts all over the place. A concerted push towards open-access data would make the economic system fairer, safer and stronger for all.
