- Three tax havens rank among the five least transparent jurisdictions, behind dictatorships North Korea and Turkmenistan
- Several British Overseas Territories used as tax shelters have made little progress in opening up since the UK government demanded more transparency in June 2013
- This lack of company and legal information “greases the wheels of the international money laundering industry,” says Arachnys
Tax havens including the Turks and Caicos Islands, Micronesia and Nauru are some of the least transparent jurisdictions in the world, lagging behind dictatorships and countries that have been devastated by war, according to compliance technology firm Arachnys.
The firm’s exhaustive research in 215 jurisdictions, which forms the basis of its Compass service for investigators and intelligence analysts, ranks British Overseas Territory the Turks and Caicos Islands at the bottom due to its complete lack of a public corporate registry, its court records not being available online and its under-developed news industry.
Tax havens Micronesia and Nauru place second and fourth from the bottom respectively, while war-torn Western Sahara is third from last, and dictatorship Turkmenistan is the fifth worst jurisdiction for transparency.
“The Turks and Caicos Islands are a black hole for company and legal information, which makes it an extremely attractive place from which to launder money,” said David Buxton, CEO and co-founder of Arachnys. “Not only is a British Overseas Territory the best place to achieve anonymity, but British assets, specifically London property, are the investment of choice for criminals looking to complete the illusion that dirty money is clean.
“The government needs to get a grip of this problem. It can only influence British Overseas Territories to open up, not legislate there, but if overseas buyers of UK property were required not just to disclose company names, but the full beneficial owners of the companies buying the property, criminals would certainly think twice before using it as a means to launder money.
“On an international scale, UK legislation alone would simply prompt the vast money laundering industry to find another country and asset class in which to launder money, so there needs to be a much better coordinated international response to tackle this problem.
“It also presents major risks for companies that want to do business with firms based in these jurisdictions, adding a level of complexity to ‘Know Your Customer,’ anti-money laundering and sanctions requirements that have grown dramatically in recent years. Ultimately, businesses make decisions based on calculations of risks and rewards and if they see the risks as being too high, they will think twice about doing business with these companies.”
Several British Overseas Territories that are often used as tax shelters, such as the Turks and Caicos Islands, British Virgin Islands and the Cayman Islands, have made little progress in opening up since the UK government demanded more transparency from them in June 2013.
In March 2015, the UK government wrote to the Cayman Islands and British Virgin Islands to repeat its demand that they set up a central registry of private companies’ beneficial ownership, a public database that the Turks and Caicos Islands also lacks. Earlier this week, David Cameron outlined plans to introduce a public registry of foreign companies that own UK property, with greater detail than is currently provided by the Land Registry, in an attempt to stop money being laundered through British real estate.
Arachnys’ research into the availability of corporate and legal information is part of its free Compass service. As well as highlighting data “black holes,” it gives investigators, intelligence analysts and other information professionals free, direct access to the sources that they need to run checks worldwide.
Visit compass.arachnys.com to access the service.
About Arachnys
Instant Worldwide Due Diligence
Arachnys’ web-based software enables businesses to run fast and reliable compliance checks on companies and individuals worldwide.
Proud innovators in the due diligence industry, Arachnys is the only provider of dedicated compliance software and truly global data, powered by an in-house research team of risk analysts, linguists and technology experts.
With coverage in over 200 countries, investigators and AML analysts use Arachnys to identify, retrieve and monitor high-value information from over 16,000 data sources with real-time translation in over 80 languages, including Chinese, Arabic and Russian. This includes proprietary and paywalled data sets, which are constantly monitored, augmented and updated by our expert team.
Arachnys’ web-based tools provide due diligence and compliance professionals immediate access to the information they need to make informed decisions and reduce risk. We enable strong compliance processes and streamlined due diligence work through simple SaaS tools. Our products are instantly scalable across expanding teams, helping companies fulfill their obligations to provide robust and verifiable audit trails or risk large fines.
Our customers include major banks, multinational corporations, law firms and accountancy firms.
