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Beneficial Ownership and disclosure of trusts: challenging the privacy arguments

December 7, 2016   Blog, Financial Regulation, Secrecy

On July 22nd, 2016 the French supreme constitutional court ruled on a case brought by a US American citizen resident in France who had created a trust, allegedly to distribute her inheritance. She was contesting moves by France to set up a public register of trusts connected to France in an attempt to tackle tax fraud and serious economic and financial crime[1]. So, what does this mean for transparency and tax justice?

A Tax Justice Network How-To Guide on solving secrecy risks around Trusts

TJN square logo - NOV-2013The Tax Justice Network has today released a new report: The case for registering trusts – and how to do it. Many people would have you believe that solving secrecy risks around trusts is impossibly complicated. Now we show it isn’t. Another objection often raised is that it’s not worth the cost. Well, we think it is. And not only that, but technology now makes it affordable. We release our report just as the EU Commission is discussing an amendment to the 4th EU Anti-Money Laundering Directive regarding the registration of trusts and public disclosure.

Brexit gets worse as London seeks to wriggle free from UK

London, going further offshore?

London, going further offshore?

Cross-posted from Fools’ Gold.

We have our own particular reasons for disliking Brexit – the recent decision by the UK to leave the European Union.

In a pre-Brexit analysis we quoted Adam Posen, director of the Peterson Institute for International Economics, who articulated what is probably our biggest generic concern:

“If you’re anti-regulation fantasists to begin with, you start going down the path, ‘Oh we can become an even more offshore center. We can become the Cayman Islands writ large, or Panama writ large.’ And this frankly is the way I think this also spills over to the rest of the world, is that the UK decides, ‘Hey, regulatory arbitrage, letting AIG financial products run in London, actually destroyed the US financial system, but didn’t hurt us – made us a lot of money. Let us continue down this path. Let us be the ‘race to the bottom’ financial center. And I think this that’s where this going, because they’re not going to have any other option. It’s not good.”

HSBC opts to stay in ‘competitive’ London. (It was never going to leave anyway)

HSBCFrom the Fools’ Gold blog, yesterday:

There’s been a lot of talk for a long time about a threat from globe-trotting HSBC to move its headquarters from London to Hong Kong. It seems there’s been a resolution of the question for now, of sorts. As Bloomberg puts it:

“HSBC Holdings Plc recommitted its future to London, ending 10 months of deliberations over whether to move its headquarters, after securing concessions from the U.K. government on regulation and taxes. The shares rose.”

That’s the Competitiveness Agenda at work, right there. Shower goodies on mobile capital and its owners for fear that they’ll flee elsewhere. More specifically, via Reuters:

The Finance Curse: Britain and the World Economy, new paper

We’ve pointed to a draft of this before, but here is the final published version, in the British Journal of Politics and International Relations, a paper by two TJNers and Duncan Wigan of the Copenhagen Business School. (It’s also available here.)

Fin Curse

The abstract goes like this:

The Global Financial Crisis placed the utility of financial services in question. The crash, great recession, wealth transfers from public to private, austerity and growing inequality cast doubt on the idea that finance is a boon to the host economy. This article systematizes these doubts to highlight the perils of an oversized financial sector. States failing to harness natural resources for development led to the concept of the Resource Curse. In many countries, resource dependence generated slower growth, crowding out, reduced economic diversity, lost entrepreneurialism, unemployment, economic instability, inequality, conflict, rent-seeking and corruption. The Finance Curse produces similar effects, often for similar reasons. Beyond a point, a growing financial sector can do more harm than good. Unlike the Resource Curse, these harms transcend borders. The concept of a Finance Curse starkly illuminates the condition of Britain’s political economy and the character of its relations with the rest of the world.

This builds on the original Finance Curse document from May 2013, based on Shaxson’s and Christensen’s extensive work in mineral-dependent countries and in financial centres.

We will store this permanently in our Finance Curse page.

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