British overseas territories agree to share information on bank accounts, but activists call for more action on offshore havens
Tax transparency campaigners have cautiously welcomed a deal between the UK Treasury and British overseas territories including the British Virgin Islands, but have warned that further, swift action will be necessary in order to tackle Britain's offshore havens.
The Treasury announced on Thursday that all of Britain's overseas territories – countries nominally still under the UK's auspices, but in practice self-ruled – had agreed to new rules to automatically share information on individuals holding bank accounts in their country, with the UK as well as France, Germany, Italy and Spain.
The agreement, signed by Bermuda, the BVI, Anguilla, Montserrat and the Turks and Caicos Islands, means they will automatically share information including names, dates of birth, addresses and bank account numbers, in an effort to clamp down on offshore tax avoidance and evasion.
Campaigners said the new agreement showed the UK was able to effect reform when it applied "leverage" to its overseas territories, and the changes amounted to a promising start.
"It's certainly a step in the right direction and it is great to see momentum building for greater financial transparency," said the Global Witness director of campaigns, Gavin Hayman. "Co-operation from Britain's overseas territories is critical, and should help generate buy-in from other G8 countries.
"The real prize lies in ensuring the ultimate owners of companies are made public – because secret company ownership helps facilitate tax evasion and arguably more heinous crimes such as drug and arms smuggling and state looting."
The Guardian's ongoing Offshore Secrets investigation showed usage of sham "nominee" directors and shareholders to mask real company owners was rife in the BVI and beyond, and these measures could allow wealthy individuals to use corporate secrecy to avoid even these new, tighter, information-sharing requirements. The BVI alone plays host to more than 1m offshore companies.
While the new measures ostensibly include accounts relating to trusts and non-trading companies, identifying which companies this applies to – and which have real owners from the affected countries – could prove difficult, if not impossible.
These risks were highlighted by the accountant Richard Murphy, of Tax Research UK, who said the requirements in the new agreement were very similar to existing EU treaties, might not prove to be enforceable, and excluded countries such as China and Russia – increasingly important clients of offshore financial services.
Murphy stressed much greater transparency was necessary to make the new deal effective.
"I welcome this, but so far it's a good gesture and no more," he said. "The reality of information exchange working, with all required back-up such as a fully functioning company and trust register, has to be in place to make this deliver on the promise."
A spokeswoman for the Treasury said the EU treaties mentioned by Murphy primarily related to savings tax, while the new agreement covered income tax evasion – but acknowledged there was "some overlap" between the new and existing agreements.
In the wake of this initial settlement, focus is shifting to the forthcoming G8 meeting in June, which the UK is chairing. David Cameron has pledged to make transparency a key theme of the UK's chairmanship, and further steps to tackle offshore secrecy are expected – or hoped for – by those in the process.
Prof Paul Collier, an Oxford University academic who has been advising No 10 on tax transparency before the G8, said the overseas territory announcement was a good example of what was to come.
"I think this is important progress. In effect, it is an example of the shock wave ahead of the G8," he said. "Now that these countries know that change is afoot, they are pre-emptively trying to put their house in order – less humiliating than being forced into it. So, a thoroughly good thing and part of a much wider movement."