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'Dirty money' fears as EU court backs tax haven secrecy

Secret: The UK - and offshore financial centers such as the Channel Islands, Isle of Man (pictured), Bermuda and the British Virgin Islands - may now have to restrict access

‘Dirty money’ fears as EU court backs secrecy of tax havens: Companies have right to keep owners’ identities secret

Companies based in tax havens have the right to keep the identity of their owners secret, a major blow to press freedom, transparency and the fight against fraud.

This weekend, anti-corruption campaigners called a European court ruling a “return to the dark age of dirty money”.

The controversial decision puts the European Union on a collision course with the UK, which has led the way in making property registers available in its fight against fraud and money laundering.

Secret: The UK - and offshore financial centers such as the Channel Islands, Isle of Man (pictured), Bermuda and the British Virgin Islands - may now have to restrict access

Secret: The UK – and offshore financial centers such as the Channel Islands, Isle of Man (pictured), Bermuda and the British Virgin Islands – may now have to restrict access

Ministers pledged to tackle the use of shell companies or ‘screens’ for financial crime and terrorism by subjecting them to more public scrutiny, not less. A second Economic Crimes Bill pending in parliament will require business owners to verify their identities after long criticism over the accuracy of business records.

However, lawyers say the UK – and offshore financial centers such as the Channel Islands, Isle of Man, Bermuda and the British Virgin Islands – may now have to restrict access following the decision of the European Court of Justice.

“There is a real possibility that the UK registers are in breach of UK law [as that law is derived from the EU]” said Filippo Noseda of Mishcon de Reya, a law firm acting for the plaintiffs in the CJE case.

Moran Harari of the Tax Justice Network said: “We urge EU governments not to accept a return to the dark age of dirty money.”

However, that call seemed to fall on deaf ears over the weekend as Ireland became the latest EU country to block public access to its company records – joining the Netherlands. , Luxembourg and Austria.

Two unidentified owners of Luxembourg-registered companies brought the landmark case to the ECJ after opposing the publication of personal data in public documents.

The court ruled that “public access to beneficial ownership information constitutes a serious interference with the fundamental rights to privacy and protection of personal data”.

“The pendulum finally seems to be swinging back towards privacy and security,” said Michael Hanson of Bermuda law firm Carey Olsen.

But Dame Margaret Hodge, who chairs the cross-party anti-corruption committee, said the decision was “a terrible blow” and “completely out of touch” with a consensus that transparency was the best antidote to “shady” corporate behavior. She added: “Citizens have the right to know the identity of those who own businesses or hold property in the UK.”

Guernsey, Jersey and the Isle of Man had pledged to open registries by the end of next year but said they were now considering the move.

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