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Richards has mixed feelings on register

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Bob Richards believes Bermuda did not have to bow to international pressure and commit to making its companies beneficial ownership register public.

However, the former finance minister understands why the Government has decided to do it.

Mr Richards was giving his views on the Government's move, announced on Sunday, to introduce legislation for full transparency on company ownership by January 2023.

As part of the One Bermuda Alliance administration from late 2012 to 2017, Mr Richards fought hard against Britain's demands that its Overseas Territories should keep publicly accessible registers.

Financial regulator the Bermuda Monetary Authority keeps a beneficial ownership register, which has been in existence for about 70 years, and which is available to tax and law enforcement authorities.

Last year, the British Parliament passed an amendment to the Sanctions and Anti-Money Laundering Bill. The effect was that Britain is scheduled to issue an Order in Council at the end of this year requiring all of its OTs to keep public ownership registers.

Bermuda could have resisted successfully, Mr Richards said in an interview.

“I think if we'd stuck to our guns, it would have ended up in court and we would have won,” he said.

The Government has long argued that under the island's constitution, the Order in Council would need to be approved by the Bermuda legislature.

Mr Richards's main disappointment about this week's statement is that it may strengthen the impression that Britain is free to “force legislation on us”.

“It may give London the feeling that they can pass legislation for us on matters that are clearly within the purview of our locally elected Parliament,” Mr Richards said. “That matter has been left unresolved.”

He repeated his assertion that Britain had been racially biased against its OTs, in that the Crown Dependencies of Jersey, Guernsey and the Isle of Man were treated more favourably with regard to ownership transparency.

“A year ago that may have seemed to be far-fetched, but in the post-George Floyd era, more people will see that there is a racial element,” Mr Richards said.

Bermuda had spent “a king's ransom” in recent years building new computer systems and strengthening resources to comply with a series of new international standards, such as mutual legal assistance treaties, tax information exchange mechanisms and economic substance rules, Mr Richards said.

He added: “We've been spending a whole lot of taxpayers' money not to be subject to what clearly is an extrajudicial process by which the EU can blacklist you and you have no legal recourse.”

However, he appreciates why Curtis Dickinson, the finance minister, has made the commitment for a public register.

“I understand why we are doing this,” Mr Richards said. “The Government is in a fragile position and we can't afford to make enemies at this time.

“It appears from the finance minister's statement that our commitment is conditional. I believe he's taken a cue from Cayman, who also agreed to this last year on a conditional basis.”

He said the Government's statement had been carefully crafted, and in his view, the implication was that if public beneficial ownership registers did not become a global standard, then Bermuda would not go public with its own.

Mr Dickinson's statement referred to the European Union's fifth Anti Money-Laundering Directive, which requires member states to keep publicly accessible records on companies' true owners.

Mr Richards said: “Just because the EU's doing it doesn't make it a global standard. If the US is not going to do it, then it means nothing.

“There are certain states in the US, where there are hundreds of thousands of companies based in a building and it's not clear who owns them. They don't have to answer the probing questions we ask here.

“In my opinion, the probability of this becoming a true global standard is zero.

“This is a European initiative driven by people in a contest with the US, and Bermuda is caught in the middle of this chess match.”

International pressure continues to grow on low-tax jurisdictions.

European lawmakers voted last Thursday to establish a permanent sub-committee to tackle tax dodging. The Committee on Economic and Monetary Affairs sub-committee will have 30 members.

Martin Schirdewan, Member of the European Parliament, told the International Consortium of Investigative Journalists that the new sub-committee would allow lawmakers to shape the agenda of the EU institutions on combating tax fraud and avoidance.

“These issues are always relevant, not only when a data leak heightens public awareness,” he said.

He believes the sub-committee will focus particularly on “the ongoing industrial-scale corporate tax avoidance by Big Tech” and the “lack of transparency around multinationals' tax information”.

Meanwhile, the Organisation for Economic Co-operation and Development is making progress on its efforts to overhaul the global tax system and said this week it hoped to have a blueprint ready by October.

Pillar 1 of the plan would reallocate some multinationals' profits to the jurisdictions where they have users or consumers, while Pillar 2 would establish a global minimum tax rate.

Register concerns: Bob Richards, the former finance minister (File photograph)

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Published July 15, 2020 at 8:00 am (Updated July 15, 2020 at 12:32 pm)

Richards has mixed feelings on register

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