Caribbean Governments have strongly objected to a recent decision by European Union’s Finance Ministers to add Anguilla and Barbados to its blacklist of offshore financial centres.
In a strongly worded statement, CARICOM said that the EU’s backlisting strategy was “unilateral, arbitrary and non-transparent” while Barbados’ Prime Minister, Mia Mottley, has described the island’s listing as “unjustified and disproportionate.”
The criticism follows a 6 October meeting of EU Finance Ministers at which they added Anguilla and Barbados, but agreed to remove the Cayman Islands from their blacklist of countries which it says are non-cooperative tax jurisdictions and deficient in relation to Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regulations.
Responding on behalf of Caribbean governments, CARICOM said that the inclusion of some Caribbean states on the EU blacklist underscored the EU’s “unwillingness to take into account the substantial progress made by CARICOM Member States at compliance with global standards”.
In a reference to the Paris based Organisation for Economic Cooperation and Development’s (OECD), the statement added that the unquestioning use of ratings from other international bodies as a determining factor in the listing of a jurisdiction, along with the absence of meaningful prior consultation with the affected States, negated the spirit of partnership that has characterised the relationship between CARICOM and the EU.
“Along with the unprecedented task of staging a post-COVID-19 economic recovery, these CARICOM States now have the added the burden of being subjected to the EU’s discriminatory tactics”, the statement observed.
Noting that the labelling caused significant reputational risk and discouraged investment, CARICOM called on the EU end its “harmful practice” of blacklisting and instead pursue “a mutually collaborative engagement’ that would enhance the region and the EU’s ‘shared goals of effective tax governance and combatting money laundering and terrorism financing”.
A separate statement issued by Barbados’ Prime Minister, Mia Mottley, noted that in its case the listing related to a period between July 2015 and June 2018 under a previous administration.
It said that the island was being penalised for being ‘partially compliant’ in three of the ten ‘essential elements’ of OECD standards. These it said related to the availability of ownership and identity information as well as accounting information, and the quality and timeliness of its responses to requests from overseas tax authorities for tax information on Barbados resident taxpayers.
It explained that since assuming office it had amended 14 pieces of legislation; ensured that requests for exchange of Information from other jurisdictions are appropriately answered in accordance with the law; conducted audits and reviews of the Corporate and Trust Service Providers; and had ensured that up-to-date and relevant beneficial ownership information is properly maintained and accessible by the authorities.
“The EU, has therefore, chosen to ignore all the work that has been done by the Government of Barbados to correct the deficiencies in 2015 to 2018 period’, the statement from the Prime Minister’s office said.
In contrast, the decision to delist the Cayman Islands, according to the EU, was based “on their pending commitments to remove a harmful tax regime and increase tax transparency respectively”. The decision which followed extensive lobbying, was welcomed by the Cayman government. It said that the decision was an indication of Cayman’s “commitment to a responsible policy of tax neutrality that poses no harm to other countries”.
The current EU blacklist also includes Trinidad and the US Virgin Islands, as well as American Samoa, Fiji, Guam, Palau, Panama, Samoa, The Seychelles, and Vanuatu. Countries on the blacklist face reputational damage, higher levels of scrutiny in their financial transactions by international banks and financial institutions and are at risk of losing EU and other funds.
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