Anguilla: A Picturesque Caribbean Haven with Transparency Woes
Anguilla, the Caribbean island known for its celebrity followers and tax haven status, found itself under unfavorable global scrutiny last week. The island slipped further down the Economic Complexity Index maintained by the Organisation for Economic Cooperation and Development (OECD), now regarded as “non-compliant” with international standards on information sharing related to suspected tax evaders and financial crime.
OECD Report and Anguilla’s Non-compliance
According to the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes report, Anguilla only responded to requests from other countries for corporate information in nine instances out of the 53 received between 2015 and 2017. The OECD attributed Anguilla’s non-compliance to its ambiguous laws and inadequate record-keeping.
- It is not clear whether reliable accounting records are actually maintained in Anguilla.
- Legal requirements for firms involved in creating and managing Anguilla offshore companies to disclose their clients’ identities remain uncertain.
Background
Anguilla, a UK Overseas Territory, had previously been ranked as “partially-compliant” in 2014. The fallout from the Panama Papers investigation significantly impacted its transparency rating. Malta, another tax haven, also descended to non-compliance in the same report.
Local Expert’s Perspective
Local experts suggest that Anguilla’s transparency woes stem from its limited resources and poor governance structure. Peter Clegg, a Caribbean politics expert at the University of the West of England, Bristol, noted, “The island has struggled to meet the demands set by the OECD, given its limited resources.”
Defending Anguilla
Anguillian barrister and offshore service provider, Carlyle K. Rogers, defended the island and claimed that the OECD was unjustifiably targeting it. Rogers, who is also an ICIJ source, said, “The OECD’s anti-free market and imperialistic crusade against Anguilla will have no credibility until the same standards are applied to its own member states.”
International Scrutiny and Anguilla’s Histories of Questionable Clients
Anguilla has long been the subject of international scrutiny due to its financial services sector, which has a history of questionable clients, as revealed by various investigations, including the Panama Papers and Paradise Papers. France, the Netherlands, and the European Union have all blacklisted Anguilla due to its lack of transparency. Alleged criminal activities, such as drug trafficking and fraud, have also been linked to Anguillian companies.
After the Panama Papers Scandal: The Implications
Following the Panama Papers scandal, Mossack Fonseca’s Anguilla office was forced to close, creating a significant hurdle for accessing information about the companies registered on the island. Most requests made to Anguilla by the OECD between 2015 and 2017 revolved around companies created by Mossack Fonseca, further highlighting the implications of the scandal.
Consequences of Lack of Transparency
Anguilla’s reputation for secrecy and lack of transparency not only threatens its financial status but also poses challenges to the legitimacy of its legal system and governance. As the world shifts towards more stringent regulatory frameworks to combat financial crime, Anguilla may need to address its shortcomings to maintain its market competitiveness.