The deal, unveiled at the spring meetings of the International Monetary Fund in Washington late on Thursday, will see tax and law enforcement agencies from the five countries exchange data on company beneficial ownership registers and new registers of trusts, allowing for more effective investigation of financial wrongdoing.
“In the future, nobody should be able to hide behind complex legal structures,” German finance minister Wolfgang Schaeuble said as he unveiled the initiative. “Fighting tax evasion requires a global response.”
Secretive companies targeted
UK chancellor George Osborne said: “Britain will work with our major European partners to find out who really owns the secretive shell companies and trusts that have been used as conduits for evading tax, laundering money and benefitting from corruption.”
The move comes as offshore jurisdications, including British crown dependencies and overseas territories, are coming under increased scrutiny over their role as international financial centres in the wake of the release of the so called Panama Papers.
Around 11.5 million leaked documents from a Panama-based law firm have exposed the offshore holdings of politicians, sports stars and public officials around the world.
Global move to follow
Osborne said he had also written to G20 counterparts, along with finance ministers from Germany, France, Italy and Spain, urging progress towards a fully global exchange of beneficial ownership information in order to remove ‘the veil of secrecy under which criminals operate’.
“A global move towards interlinking country registries will provide, for the first time, international real-time access to tax and law enforcement agencies on company ownership,” he said in statement.
Two-step process
The new scheme will begin by exploring the best way for countries to share this information, with a view to developing a truly global common standard in a two-step process leading to the interlinking of national registries.
The letter to G20 finance ministers suggests that the OECD, alongside the Financial Action Task Force, should take a lead role in developing a new single global standard for such exchange and for the interlinking of registers.
A global exchange of beneficial ownership information will compound the effectiveness of the Common Reporting Standard (CRS), which was launched as a result of the UK’s G8 presidency.
The CRS will see more than 90 countries, including overseas territories and the crown dependencies, automatically exchange taxpayer financial account information, giving HM Revenue & Customs access to the data of accounts held by UK taxpayers in these jurisdictions.
The UK is already set to receive this information from its overseas territories and the crown dependencies in 2016, one year earlier than the rest of the world.
From June 2016, the UK will also be the first major country to have a register of company beneficial ownership in place. It has also decided to make the information public, and it will be free for anyone to access.
