Foreign secretary Robin Cook has announced a crackdown on moneyeasures but experts question effectiveness. laundering and tax evasion in Britain’s overseas territories, though tax experts have already questioned whether the measures will work.
Countries such as the Cayman Isles, the British Virgin Isles, Turks and Caicos and Bermuda have until the start of the new millennium to start dealing with money laundering and tax evasion. If they fail to enact their own legislation, Cook is threatening that the UK will enforce it.
The foreign secretary has sweetened the pill by offering British citizenship for all current residents of overseas territories, a matter that will be supervised by a Council of the Territories.
But Cook has also made it clear that while Britain has a responsibility for overseas residents, they have responsibilities to the UK, with financial regulation a top priority.
Announcing a white paper on the plans, Cook told MPs that jurisdictions must ‘match the best international standards in financial regulation’.
He said many had already made substantial progress in recognising that a solid reputation was a prime asset in maintaining the prosperity of a sound financial sector, but some had not yet met the standards required.
In the paper, ‘Partnership for progress and prosperity’, the government also made it clear that in future the territories, whose past record for timely audited accounts of their own public-sector activities has been ‘mixed’, would have to improve.
The government wants sound procedures for administering finances, including adequate internal audits.
The white paper stated: ‘Overseas territories will be required to produce timely, independently audited annual accounts for all public-sector activities to UK standards, with full identification of contingent financial liabilities.’
According to Cook, there will be an in-depth independent report by regulatory experts to assess progress by the end of the year. In cases where improvements have not been made, the paper said: ‘We will consider seriously whether to use our powers to ensure the required standards are met.’
Cook’s move was welcomed by tax experts, but cynicism was expressed over whether the measures would bite. Andrew Snowdon, tax partner at Kidsons Impey, said: ‘Some of these territories have been renowned for their relaxed attitude. If anything can be done to facilitate anti-evasion measures, we would welcome it.’
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