Looking forward to Pietà Papers

Last weekend during the Labour Party general conference I mooted the idea of a public register. This register would contain full details, including names, of all offshore trusts and companies as well as the ultimate beneficiary owners, registered by Maltese nationals (and not only PEPs) outside Malta. The register would be open for public scrutiny and would also be accessible online. Over the past week I have been asked by those concerned at the unfolding of the Panama Papers as to how, in practice, this is doable.

Questions such as (a) How do you get the information to compile a register which would be accessible online (b) How do you oblige people to register if it is secret (c) Why would anyone want to establish an offshore corporate structure (trust, fiduciary, company etc.,) if this would be on a register accessible by anyone? I will elaborate.

Prior to the Commercial Partnership Ordinance 1962, those who wished to establish a commercial firm or partnership had to draw a private agreement – similar to the PN Skema Cedoli – a private matter. With the progress of time and the enactment of the Companies Act, 1995 all companies registered in Malta are now accessible online through the Registry of Companies website. This should serve as a model.

As part of the continued repercussions of the financial crises, pronouncements from the G8 and G20 groups of nations have encompassed an international strategy to counter cross border tax evasion / avoidance by identifying and disclosing to the public the true beneficial ownership of assets and wealth within cross border and interlinked corporate structures.

As part of this strategy, UK Prime Minister David Cameron stated at the G8 summit in Northern Ireland in summer 2013 that “a public accessible register provides the best outcome for sound corporate behaviour with benefits of effective law and tax enforcement, allowing authorities to prevent misuse of corporate structures”.

This proposal was welcomed amongst others by the former Archbishop of Canterbury and chairman of Christian Aid, Dr Rowan Williams, as ‘a brave decision that involves facing down vested interests’.

Last Monday Cameron in a statement to the UK Parliament said that this register would be established in June of this year. At this time Germany is also in the process of preparing legislation to create a beneficial ownership information central register under its Money Laundering Act. Denmark, Norway and Sweden are actively moving in same direction. 

In May 2015 the European Parliament and Council issued the Fourth EU Directive 2015 / 849 on Anti-Money Laundering (AMLD) whereby it gave Member States two years to implement central registries in accordance with its extensive provisions. 

Article 30 of this directive obliges Member States to ensure that the central register with up-to-date information on the beneficial ownership is accessible in all cases both for competent authorities and Financial Intelligence Units (FIUs), obliged entities when performing customer due diligence, and for persons who are able to demonstrate interest with respect to money laundering, terrorist financing, and associate offences such as corruption, tax crimes and fraud. It is not intended to be accessible to the public.

We can go one step further by making this register public. It should become a criminal offence punishable by hefty fines and imprisonment for those who do not register these offshore corporate structures as well as for those acting as intermediaries.

Establishing such financial vehicles should also be restricted to those jurisdictions with which Malta has a Double Taxation Agreement and/or automatic exchange of information. It is not so impossible. Malta can be a leader in this area. We can do away with unpleasant surprises when leaks happen, whether from Switzerland, Luxemburg, Panama or Timbuktoo.

If the PN truly have nothing to hide through their loan Skema Cedoli they should publish the names. If not for anything, that those running it can sleep serenely at night, without fearing leaks. Next time round the leaks may come from Pietà.