Offshore ownership registers criticised over cost and access barriers
Campaigners say new systems intended to reveal who ultimately owns offshore companies are too expensive and complicated to provide meaningful public scrutiny.
By The Guardian
Offshore financial centres are facing criticism over company ownership registers that campaigners say remain too difficult and expensive for journalists and investigators to use effectively.
The concerns centre on systems designed to provide access to beneficial ownership information — records identifying the people who ultimately own or control companies.
The UK has spent years pressing British Overseas Territories and Crown Dependencies to improve corporate transparency as part of efforts to combat money laundering and other forms of illicit finance.
However, questions are being raised about how accessible some of the resulting systems are in practice.
Particular concerns have been raised about the Cayman Islands, a British Overseas Territory and major international financial centre.
People seeking beneficial ownership information must demonstrate a legitimate interest in accessing it. Applicants are required to explain how the information would be used in connection with suspected money laundering, terrorist financing or related offences.
The process also carries a financial cost.
According to reporting by The Guardian, obtaining information can cost at least $75, around £55, for each request.
The process is also reported to involve a detailed application and payment by international wire transfer before a request is considered.
Campaigners argue that these requirements create barriers for journalists, civil society organisations and others attempting to investigate offshore company ownership.
The Cayman Islands government disputes suggestions that its system is unnecessarily restrictive.
A spokesperson told The Guardian that only 25 applications for information had been received over a 19-month period, arguing that this demonstrated limited demand rather than a problem with access.
Another area attracting scrutiny is the ability of people whose information appears on the register to seek protection from disclosure.
The Guardian reports that an application for three years of protection in the Cayman Islands costs $1,000.
Protection mechanisms can serve a legitimate purpose where disclosure could expose an individual to harm, although transparency campaigners have raised concerns about how exemptions could affect investigations.
The dispute forms part of a much longer effort to make ownership of offshore companies more transparent.
The UK has previously reached arrangements with Overseas Territories and Crown Dependencies aimed at ensuring accurate beneficial ownership information is maintained and available to law enforcement and tax authorities.
It has subsequently pushed for greater public access to ownership information.
Beneficial ownership records are important because identifying the registered name of a company does not necessarily reveal the individual who ultimately controls it or benefits financially from its activities.
Complex ownership structures can involve multiple companies, trusts and jurisdictions, making it considerably harder to establish who ultimately controls particular assets.
The issue also has implications for the UK property market.
The UK's Register of Overseas Entities requires overseas organisations buying, selling or transferring UK property to provide Companies House with information about their registrable beneficial owners.
Most of that information is publicly accessible, although protections are available in circumstances where disclosure could put an individual at serious risk.
The debate over offshore registers therefore extends beyond whether beneficial ownership information is being collected.
The central question is whether journalists, investigators and other legitimate users can obtain it easily and affordably enough for greater corporate transparency to work effectively in practice.