The UK will adopt European laws designed to combat terrorism and money laundering post-Brexit. The new regime could reveal the beneficiaries of thousands of secretive trusts.
In a private letter to MP Margaret Hodge, Lord Henley, a parliamentary undersecretary of state at the Department for Business, Energy and Industrial Strategy (BEIS) revealed the government’s intention to adopt the fifth anti-money laundering directive (5AMLD).
In the correspondence, Lord Henley wrote: “You ask about the government’s plans in regard to complying with the requirements of the fifth anti money laundering directive. The deadline for the transposition of the directive falls within the [post-Brexit] implementation period and the UK will transpose this directive.”
A spokesperson for BEIS declined to comment, stating that the letter was personal correspondence.
What is the fifth anti-money laundering directive?
The new legislation was created as a response to the Panama Papers scandal; a massive leak of documents which lifted the lid on how the rich and powerful use tax havens to hide their wealth. The investigation revealed the extensive use of trusts and complicated offshore arrangements to launder money generated from bribery, corruption and tax evasion.
5AMLD introduces some crucial changes to the current anti-money laundering regime, including:
· Public registers of ultimate beneficial owners of companies and other legal entities in every member state
· Access to the names of the beneficiaries of trusts for law enforcement agencies and those with a “legitimate interest”. This includes investigative journalists and NGOs
· A cross-border database of company and trust owners, overseen by the European Commission
· Automatic access to the names of bank account holders for national financial intelligence units
· Extending the scope of the regime to additional service providers (e.g. electronic wallet providers, virtual currency exchange service providers, and art dealers)
· Member States required to undertake enhanced due diligence measures to monitor suspicious transactions involving high-risk countries.
EU legislation post-Brexit
While the UK is on path to leave the EU next March, there will be a transition period until the end of December 2020, and during this time, Britain has promised to abide by all existing and new European laws.
If there is a no-deal Brexit it is not clear whether the government would still implement new EU laws, but if it wants continued access to European markets it will have to adhere to EU policy on anti-money laundering.
Hodge, the Labour MP for Barking and a leading campaigner against tax avoidance, said: “This is a welcome further step in our big campaign to eradicate dirty money and tax avoidance in the UK. Britain’s crown dependencies should now come into line and agree that they too will adopt public registers of beneficial ownership.”
Alex Cobham, chief executive of the campaign group Tax Justice Network, added: “At least in this area the UK will not pursue a post-Brexit race to the bottom on financial secrecy. This decision will help establish the fifth directive and its position on public registers as the international standard.”
