G8 agreement will see companies adopt national company ownership registers

A statement of principles agreed by the leaders of the world's major economies at their annual summit also encourages countries to "provide basic company and beneficial ownership information upon request" from authorities in other territories.

Tax expert Jason Collins of Pinsent Masons, the law firm behind Out-Law.com, said that the agreement appeared to be a "watered down" version of proposals for a UK register of corporate beneficial ownership, announced by the Chancellor and Prime Minister earlier this week. However, he said that the UK Government would see the announcement as "a step in the right direction".

"The gold standard that the UK and other countries are looking for is 'automatic' exchange of information, that is that information is shared without there being a specific need or request – and this accord falls short of that," he said. "The UK also failed in only negotiating that very basic information will be available to the public at large."

"However, Rome was not built in a day and the UK Government will see this as a step in the right direction and a victory in its crusade to open up the offshore world," he said.

The statement calls on national law enforcement and tax authorities to "cooperate effectively domestically and across borders to combat the abuse of companies and legal arrangements for illicit activity". Companies should be required to obtain and hold "adequate, accurate and current" basic information on the beneficial owners who control them, it said.

In order to make that information accessible to national "law enforcement, tax administrations and other relevant authorities including, as appropriate, financial intelligence units", the statement suggests the creation of a central registry at national or state level of company beneficial ownership and other basic information. Some "basic" company information should also be publicly accessible, according to the statement.

Similarly, trustees should know the beneficial owners, beneficiaries and settlors of the trusts that they oversee, according to the statement. This information should also be accessible by law enforcement, tax administrations and other relevant authorities, it said. Financial institutions and related professions, including trust and company service providers, should be subject to effective and supervised anti-money laundering and counter terrorist financing obligations, while financial instruments and complex shareholding structures should not be "misused", it said.

According to the statement, countries will be able to choose how to organise and make the suggested information available "subject to our different constitutional circumstances". G8 leaders have committed to publishing national Action Plans setting out the concrete actions they will take to give effect to the principles. Their performance against these action plans will be monitored by the Financial Action Task Force and the publication of public updates.

Earlier this week, the UK Government announced that it planned to require companies to supply information about their beneficial owners to a central registry, maintained by Companies House. It intends to consult on a legal framework for this later this year.

Tax expert Jason Collins welcomed the inclusion of statements in relation to the beneficial ownership of trusts and share arrangements, and strengthened anti-money laundering provisions, in the G8's announcement. However, he said that there were still questions around how countries would supervise each other's enforcement efforts.

"The G8 have agreed to prevent the misuse of nominee and bearer arrangements where the holder of a share or fiduciary position is not the true owner, and to enforce stricter anti-money laundering controls, with heavier penalties for businesses which do not comply," he said.

"The G8 wants to set the standard here. Many countries are bringing tax evasion within the ambit of money laundering rules for the first time, such as Singapore from 1 July; and others are redoubling the efforts to enforce the rules that they already have, such as Hong Kong."

G8 leaders have also announced that they will work with the Office for Economic Cooperation and Development (OECD) to develop a new model for global automatic exchange of information between tax authorities. They will also draw up a template for multinational companies to report where they make their profits and pay taxes to the different tax authorities, they said.