Britain has done more to tackle secretive company ownership practices that facilitate corruption than other leading economies, while the US and China are falling short of their promises, a leading anti-corruption group said.
Britain has made good progress on making beneficial ownership information accessible, having legislated for a central registry of individuals who ultimately control companies, but its progress risks being undermined by continuing secrecy in its overseas territories, Transparency International said on Wednesday.
The US and China, the world’s two largest economies, were among the worst performers in the campaign group’s ranking of beneficial ownership transparency among G20 nations, which include many of the world’s largest economies.
“Pick any major corruption scandal in recent history ... and you would find a secret company was used to pay a bribe, shift and hide stolen money, or buy luxury real estate in places like London and New York,” Transparency International managing director Cobus de Swardt said.
“It makes no sense that this gaping loophole for the corrupt remains open. What is stopping G20 nations from actively shutting down this vital avenue to corruption, despite promises to do so,” he said.
The report comes before a G20 summit in Turkey this weekend where leaders are to discuss a set of beneficial ownership principles agreed last year to make it harder for people, including corrupt officials, to hide behind secret companies.
Governments and campaign groups are concerned about company ownership transparency because webs of companies in secretive locations are important vehicles for money laundering. Up to US$2 trillion is laundered each year globally, Transparency International said
The US, which has the largest share of the world’s offshore financial services market, was also criticized earlier this month by campaign group Tax Justice Network for not doing enough to combat international financial secrecy.
Low taxes and high secrecy make many British Overseas Territories and Crown Dependencies, such as the British Virgin Islands and the Cayman Islands, attractive places for businesses to register, and vast sums of money flow through them.
“The UK needs to do more to ensure that the Overseas Territories are not used as a safe haven for laundering illicit and corrupt wealth,” said Transparency International, which did not include the countries in its assessment of Britain’s progress.
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