For a small place, the Cayman Islands just made a big give. On Wednesday, the notorious tax haven in the Caribbean promised to publish the identities of everyone who owns a company there by 2023. Its premier, Alden McLaughlin, said the move is simply part of “a shift in the global standard and the practices used to combat illicit activity.”
Global norms are indeed moving toward stronger curbs on illegal tax evasion and legal tax avoidance by multinational corporations, the corrupt, drug cartels, and terrorist groups. The commitment from the Caymans, according to finance watchdog Global Witness, “shows how company transparency is now the global standard in financial integrity.”
The former British colony was well known as a hiding place for billions in cash from such firms as Enron that set up empty corporate “shells.” Now Cayman accountants and law enforcement officials are being trained in making ethical decisions and spotting high-profile money laundering.
For the past decade, international pressure has been building to eliminate tax havens. The 2009 world recession exposed major tax fraud and forced governments to retrieve revenue secretly squirreled away in other countries. Both Britain and the European Union have set high standards for accessibility and transparency in financial transactions.
As a British territory, the Caymans along with other crown dependencies such as Isle of Man is slowly being forced to comply. To its credit, the Caymans has not made good on a threat to legally challenge a 2018 British law on disclosure of public ownership.
“In such a globally interconnected framework, transparency standards must be widely adopted and effectively implemented in order to have a tangible impact,” the government said in a statement.
The bright light being shined on black money in off-the-grid financial institutions will require more than changes in laws and procedures. Each tax haven must experience a shift in attitudes about corruption and sleight-of-hand accounting. The Caymans just set an example for others to follow.