The Government of the Cayman islands has announced that it will publish the identities of everyone who owns a company there by 2023. That would bring the island nation in line with a law passed last year by the United Kingdom, and with EU directives and should reduce the significant amount of tax evasion by persons using the Cayman Island bank accounts to hide their assets from the US Government.“We will advance legislation to introduce public registers of beneficial ownership information,” the islands’ government said in a statement.
The Cayman Islands are a British Overseas Territory and it has had its share of large corporate scandals. Enron used nearly 700 entities there to hide enormous debts from its balance sheet. Bear Sterns and Lehman Brothers, the two American casualties of the 2008 financial crisis, both placed billions worth of toxic assets there. In the run-up to that crisis, Citigroup parked enormous investment vehicles in the Caymans to remove them from its balance sheet. When they collapsed, the debts moved to the US and American taxpayers footed the bailout.
The territory has also been linked to alleged government corruption. Mining giant Glencore allegedly routed more than $75 million, which should have gone to a Congolese state company, to a Cayman entity owned by an Israeli billionaire friend of the Congolese president. The billionaire, who denies any wrongdoing, is alleged to have paid bribes to Congolese officials.
Cayman’s willingness to abide by the British law will be a relief to those concerned that tax havens could unilaterally declare independence from the UK in order to retain their secrecy. However, major offshore jurisdictions like the British Virgin Islands and Bermuda have yet to commit to opening their books.
Even if they did, it would be unlikely to solve the problem of offshore corruption. People who don’t want their dirty laundry aired in public have four years to up sticks to non-British tax havens, including US states like Wyoming and Nevada.