UK MPs have called for action against money laundering and tax avoidance in overseas territories during a second reading of the sanctions and anti-money laundering bill, which will replace some components of European legislation following Brexit.
Several MPs, including the former chair of the Public Accounts Committee, Margaret Hodge, demanded that the UK Government implement the fifth EU anti-money laundering directive, which requires public registers of beneficial ownership by the end of 2019.
Ms Hodge stated that UK overseas territories play a central roles in "the scourge that is corruption, tax evasion and money laundering" adding that more than half of the companies exposed in the Paradise Papers were registered in the British Virgin Islands.
"We simply want to ensure that British overseas territories, many of which constitute the leading tax havens in the world, have registers of beneficial ownership that are public and open for anyone to interrogate: businesses, individuals, the press or civil society.
"What happens in our tax havens really matters. Persistent collusion by the UK in enabling them to endure, because of the Government’s failure to clamp down on the secrecy that pervades our British tax havens, is inexcusable."
In response to these comments, Miles Dean, managing partner of Milestone International Tax, said: "Margaret Hodge needs to provide more evidence to support her assertion that the automatic exchange of information isn’t working.
"The Common Reporting Standard is only just being rolled out and whilst it will be many months until the effects are fully felt, there are behavioural changes being seen across the tax advisory profession and the offshore financial services sector.
"The desire for transparency whereby an individual’s right to privacy is totally eroded serves only for petty political point scoring. Public registers of ownership aren’t the answer because the scandals which the likes of Margaret Hodge would like to exist simply don’t, as the Paradise Papers very clearly showed."
The bill passed second reading on 20 February 2018 and will next be considered in a Public Bill Committee scheduled to conclude by 6 March 2018.
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