Not surprising

We are living in uncertain times; will the US be a safer place under Trump or will the world be better under Hilary Clinton? Should we leave the EU and go it alone, or will we be better off with the protection of being part of a larger group pulling together? Each one of us who votes will put their cross against what they see as best for them and uppermost on the agenda is personal safety and well-being,

In July last year, the Prime Minister spoke of the need to address corruption and to combat illicit financial flows. This is also tapping into everyone’s concern for their safety and well-being. As from this month, June 2016, the UK is to be the first G20 country to establish a publicly accessible central registry showing who really owns and controls UK companies. The reason is to ‘open a new era of corporate transparency in Britain’ which will help us tackle corruption, money laundering and terrorist financing.

But before we sweep away privacy and confidentiality I would like to know what research has been done into whether such a public register will genuinely flush out crooks or will it in fact create more.

The private client industry is already beset with compliance and regulation which seeks to flush out those who have made their wealth from ill-gotten gains. Every business which is involved with financial transactions needs to obtain from their clients a copy of their passport and utility bill and to investigate how their clients made their money. Since 5th July 2005, if any private client practitioner has reasonable grounds to suspect that monies have been made by suspicious transactions, they then need to make a suspicious transaction report to the Financial Conduct Authority.

The reporting of suspicious transactions has been with us now for over 10 years. We should by now know whether this cost of compliance and the inconvenience to the majority of innocent people has resulted in a significant increase in apprehending criminals. 

Although not all countries want to make the information they glean from other countries under the automatic exchange of information (Common Reporting Standard) public, I am seeing a fear amongst wealthy individuals that this information whether public or not, will lead increase the risk of criminal activity against them rather decrease the number of people gaining from criminal activity and want to know what they can do about it. 

Currently the focus in offshore structuring is to include entities in countries which either have not signed up to the Common Reporting Standard or do not collect the beneficial ownership details when companies or entities are formed.  The country at the top of the list is the US and in particular Delaware companies and trusts based in the US Virgin Islands.

As we all know most wealthy people have not made their money from illegal activity. Behind every successful business, whether it supplies us with BBQ’s, fuel, wine or curtain fabric is one or more wealthy individuals; people who have made their riches through sheer hard work, client focus and determination. It is simply not true that a billionaire could have only have made ‘that sort of money’ through exploitation, corruption, greed, cheating or organized crime. However, despite this obvious fact many of our journalists and politicians would have us believe otherwise, and that this is a small price to pay for the benefit of being rich.

Is it? Just pause to think how you would feel if there was a public register of everything you owned (including the numbers of shoes and watches) how much you had in your bank account and what you spent your money on. Why should there be one rule for the rich and another for the poor?

If you would like to comment or would like to book an appointment with Caroline for estate or succession planning, or with any one of her team for dispute resolution, matrimonial or investment strategy write to or call her on 020 3740 7423.