Anguilla: A Caribbean Haven with a Complicated Reputation

Emily Wolf

Anguilla’s Slipping Transparency Ranking

Once a popular vacation spot for celebrities and wealthy individuals, Anguilla, a British Overseas Territory in the Caribbean, now finds itself in the headlines for a less desirable reason. Anguilla has dropped down the global transparency index in a new report released by the Organisation for Economic Cooperation and Development (OECD). The island is now considered “non-compliant” with international standards on sharing information related to tax avoidance and financial crimes.

The OECD’s Report Card

From 2015 to 2017, Anguilla responded to only nine out of 53 requests for information from other countries regarding Anguillian companies. The OECD report expressed concern over the island’s ambiguous laws and poor record-keeping.

“It is not clear whether reliable accounting records are actually maintained, and there is no measure to incite entities to do so.” – OECD Report

Anguilla’s Response

Anguilla attributes its inability to provide corporate information to the “poor governance structure” of the international law firm Mossack Fonseca, which played a significant role in the Panama Papers scandal. When the scandal broke, Mossack Fonseca’s Anguilla office closed, and records disappeared.

Unique Challenges for Anguilla

According to Peter Clegg, a Caribbean politics expert at the University of the West of England in Bristol, small, economically challenged islands like Anguilla face unique difficulties.

“Anguilla struggles the most in some ways. It’s poorer than its better-known neighbors like the British Virgin Islands and the Cayman Islands.” – Peter Clegg

European Union countries, as well as France and the Netherlands, have blacklisted Anguilla due to its lack of transparency. Over the years, reports from investigations such as the Panama Papers and Paradise Papers have revealed suspected instances of drug trafficking and tax evasion linked to Anguilla.

Anguilla’s Business Attraction Strategy

Despite its challenges, Anguilla has actively courted businesses seeking to set up offshore companies. Emails from Mossack Fonseca show that Anguilla officials negotiated special rates to attract wealthy clients and aimed to create at least 1,000 Anguillan companies each year. Mossack Fonseca marketed Anguilla as a “cheaper alternative” to the British Virgin Islands, leading to the law firm’s Anguilla office opening in 2007. By 2016, Anguilla was one of Mossack Fonseca’s top four jurisdictions for incorporations.

Defending Anguilla’s Position

In response to the OECD report, Anguillian barrister and offshore service provider Carlyle K. Rogers defended the island and criticized the OECD for engaging in an “anti-free market and imperialistic crusade.”

Anguilla’s Hidden Web of Financial Dealings

Anguilla remains a popular tourist destination for vacationers, attracting celebrities and those seeking a tropical paradise. However, beneath its picturesque beaches and clear waters lies a complex world of financial dealings that have proven difficult for institutions like the OECD to decipher.