Your article (“ Why British overseas territories fear transparency push ”, May 3) failed to address the most salient fact for your readers about international financial centres (IFCs) — their critical role in intermediating global investment.
In 2017, according to the Bank of International Settlements, more than $4 trillion of investment was intermediated via IFCs. That includes most investment to developing countries because IFCs provide tax neutrality and protection from corrupt and unpredictable rule of law.
What most IFCs don’t do is provide ‘secrecy’. That has been swept away by the recent G20 and OECD’s reforms which provide full disclosure to tax and law enforcement agencies of IFC-held assets and their beneficial ownership.
The legislation passed by the UK Parliament in relation to British overseas territories is, at best, duplicative.
At worst, it will deflect illicit activities to other, less well-regulated IFC’s — damaging UK business interests in overseas territories and in the City of London for no gain in relation to tackling tax evasion and money-laundering — and make investment in developing economies more difficult and costly.
Let’s be clear, illicit activities in IFCs need to be robustly tackled. But the UKs full engagement in implementing the new global standards, not ineffective unilateral gestures of this kind, is what is needed.
Research Fellow, Overseas Development Institute