Anguilla: A Caribbean Paradise Under International Scrutiny
ANGUILLA, the Caribbean island paradise that has attracted celebrities like Michael Jordan and Sandra Bullock, made headlines last week due to financial transparency issues. The Organisation for Economic Cooperation and Development (OECD) revealed Anguilla’s regression in complying with international standards for sharing information related to suspected tax evasion and financial crimes.
OECD Report Places Anguilla in “Non-compliant” Category
Anguilla’s position in the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes report dropped significantly. After being categorized as “partially-compliant” in 2014, Anguilla is now deemed “non-compliant.” between 2015 and 2017, Anguilla received 53 information requests from foreign governments concerning Anguillian firms but responded with complete details for only nine instances.
Aftermath of Panama Papers Investigation and Mossack Fonseca
Partially attributing the slide in the transparency index to the aftermath of the 2016 Panama Papers investigation, Anguilla acknowledged the challenges posed by the disorderly closing and disappearance of records from the international law firm Mossack Fonseca’s Anguillan branch. As a result, the island received unfavorable ratings for four out of the ten tax transparency measures, according to the OECD report. Notably, a considerable portion of the requests related to companies established by Mossack Fonseca.
- Impact of Mossack Fonseca’s Disappearing Records
- Affected Anguilla’s ability to provide requested information
- Led to unfavorable ratings for tax transparency measures
- Significant number of requests concerned companies established by Mossack Fonseca
Concerns, Defenses, and Criticism
Caribbean politics expert Peter Clegg voiced concerns over Anguilla’s resource constraints and governance issues, highlighting the territory’s uncertain financial situation. Anguillian barrister and offshore service provider Carlyle K. Rogers defended the island, contending that it lacked the resources to meet the OECD’s demands. He accused the OECD of an “anti-free market and imperialistic crusade” and challenged its credibility due to perceived non-compliance by its members, particularly the United States.
Anguilla’s History with Financial Transparency
Previously, Anguilla has faced criticism from the European Union and other entities for its lack of transparency. The island’s financial sector has historically attracted clients with unconventional interests or criminal intentions. Documents from the Panama Papers and Paradise Papers investigations revealed several alleged criminal activities linked to Anguillian companies.
Despite controversy, Mossack Fonseca showed interest in expanding its operations in Anguilla, offering steep discounts to attract wealthy clients. The law firm emphasized the island’s secrecy during negotiations and promised to create thousands of companies every year. The allure of anonymity, as seen through the popularity of bearer shares, contributed to Anguilla’s reputation as a preferred offshore jurisdiction. However, Anguilla banned bearer shares in 2018.
- Reactions and Aftermath
- Mossack Fonseca expressed interest in expanding operations in Anguilla
- Offered steep discounts, created thousands of companies annually
- Island banned bearer shares in 2018
- Freelance investigative reporter discovered former Mossack Fonseca office empty, no signs of previous owners of Anguillan companies established by the law firm.
- Mossack Fonseca expressed interest in expanding operations in Anguilla
Conclusion
Anguilla’s fall from partially-compliant to non-compliant status with the OECD places the Caribbean island under the international spotlight, once again bringing attention to its financial dealing practices and raising questions about transparency and governance.