July 9, 2018

United Kingdom: Unmasking Shadow Companies

Whether helping criminals launder cash, allowing terrorists to shift money, or provide a vehicle for the fantastically wealthy to avoid taxes, anonymous companies are the go-to tool for hiding money. The World Bank estimates that 70 percent of corruption cases involve such structures. The City of London, described as one of the best places in the world to set up a company and hide who owns it, has been a key node in this nexus of secrecy.

To untangle the mess, the government passed beneficial ownership legislation requiring companies to disclose who ultimately owns and controls them.

The UK took a collaborative approach to building the registry, holding consultations with civil society and business, while using the wisdom of the crowd to spot errors in the registry and drive improvements. The registry is now accessed more than twenty thousand times a day. Activists and journalists have uncovered widespread malfeasance, exposing scores of senior politicians, seventy-six people on the U.S. sanctions list, and hundreds of others who are barred from owning UK companies.

Following the UK’s example, fifteen countries have made beneficial ownership transparency an OGP commitment. In mid-2018, the UK parliament voted to introduce public registers for British Overseas Territories — home to some of the world’s most notorious tax havens.

70% of Corruption Cases Have One Thing In Common