The UK will order territories to make names of owners of shell companies public by December 31, 2020. It is the latest effort to tackle the corruption and tax avoidance that run rampant in Britain's overseas holdings.
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The UK will require territories to reveal the people behind shell companies by the end of 2020, after the government announced that it would support an amendment to establish a central register of company ownership brought by two members of the opposition Labour Party. Campaigners against tax avoidance and money laundering hailed Tuesday's decision as a major victory, with corrupt practices remaining a hot topic globally.
"These jurisdictions have long been the Achilles Heel of our defenses against dirty money," said Duncan Hames, the director of policy at Transparency International.
On Tuesday, Prime Minister Theresa May, who had favored a hands-off approach to disclosure, was forced to acknowledge that her minority government would not be able to block the amendment in the House of Commons, especially with even many of her Conservative Party's own MPs also supporting it. Indeed, several Tories, who rule backed by a North Irish party, flipped to join Labour lawmakers in backing the changes, which Tory Prime Minister David Cameron had pushed during his six-year reign, but resisted by overseas territories, including the Cayman Islands, British Virgin Islands, and Turks and Caicos.
'Their toxic wealth'
Currently, Britain only requires crown dependencies and overseas territories to reveal the true owners of offshore companies to law enforcement bodies — and then only if asked. Labour MP Margaret Hodge, who introduced the amendment, said it would prevent disrupt criminals' finances. "It will stop them exploiting our secret regime, hiding their toxic wealth and laundering money into the legitimate system, often for nefarious purposes," she said. "With open registers we will then know who owns what and where, and we will be able to see where the money flows."
Naomi Hirst, of the Global Witness NGO, said March's poisoning of a former Russian double agent in England might have pressured the government to tackle shell companies that "invest" in Britain. She said seven times as much Russian money had flowed to British overseas territories as to the mainland in the past decade. "This has really fired up imaginations and pointed out to even the most squeamish of politicians concerned about Russian's role in the world that they need to look at this," she said.
The Isle of Man and the Channel Islands are exempt; Parliament has no right to impose its will on them.
Deal or no deal? Brexit options boiled down
There's a spectrum of options on Britain's future relationship with the EU, each with a distinct set of advantages and disadvantages. While euroskeptic purists favor a clean "hard Brexit," others favor a softer landing.
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Hard or soft options
It's essentially a choice of a harder or softer Brexit. Harder prioritizes border control over trade. UK firms would pay tariffs to do business in the EU, and vice versa. The softest Brexit would see access to the single market, or at least a customs union, maintained. That would require concessions — including the payment of a hefty "divorce bill" — to which the UK has provisionally agreed.
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A leap into the unknown
Businesses have expressed concern about a "cliff edge" scenario, where Britain leaves the EU with no deal. Even if an agreement is reached at the EU bloc level, the worry is that it could be rejected at the last minute. Each of the 27 remaining countries must ratify the arrangements, and any might reject them. That could mean chaos for businesses and individuals.
If there is no agreement at all, a fully sovereign UK would be free to strike new trade deals and need not make concessions on the rights of EU citizens living in the UK or pay the financial settlement of outstanding liabilities. However, trade would be crippled. UK citizens in other parts of the EU would be at the mercy of host governments. There would also be a hard EU-UK border in Ireland.
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Divorce-only deal
The EU and the UK could reach a deal on Britain's exiting the bloc without an agreement on future relations. This scenario would still be a very hard Brexit, but would at least demonstrate a degree of mutual understanding. Trade agreements would be conducted, on an interim basis, on World Trade Organization rules.
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Limited arrangement, like with Canada
Most trade tariffs on exported goods are lifted, except for "sensitive" food items like eggs and poultry. However, exporters would have to show their products are genuinely "made in Britain" so the UK does not become a "back door" for global goods to enter the EU. Services could be hit more. The City of London would lose access to the passporting system its lucrative financial business relies on.
Under the Swiss model, the UK would have single market access for goods and services while retaining most aspects of national sovereignty. Switzerland, unlike other members of the European Free Trade Area (EFTA), did not join the European Economic Area (EEA) and was not automatically obliged to adopt freedom of movement. Under a bilateral deal, it agreed to do so but is still dragging its feet.
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The Norway way
As part of the European Economic Area, Norway has accepted freedom of movement – something that no Brexit-supporting UK government would be likely to do. Norway still has to obey many EU rules and is obliged to make a financial contribution to the bloc while having no voting rights. Some see this as the worst of both worlds.
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A Turkey-style customs union
Turkey is the only major country to have a customs union with the EU, as part of a bilateral agreement. Under such an arrangement, the UK would not be allowed to negotiate trade deals outside the EU, instead having the bloc negotiate on its behalf. Many Brexiteers would be unwilling to accept this. It would, however, help minimize disruption at ports and, crucially, at the Irish border.
