This week, UK ministers and political leaders from Britain’s overseas territories will come together at the joint ministerial council. This summit is intended to build a united strategy for our partnership with the overseas territories, built on shared democratic values and respect for human rights.
But this partnership also comes with the obligation to adhere to certain standards. For those campaigning to eradicate money laundering and fraud from the UK’s economy, that involves tearing down secrecy and promoting full corporate transparency and robust accountability through publicly accessible registers of beneficial ownership.
We know all too well that the overseas territories and crown dependencies play a pivotal role in helping crooks and tax dodgers launder and hide their dirty money. Britain’s offshore tax havens continue to feature prominently in global money laundering investigations, scandals and leaks. That became clear as early as 2016 when the Panama Papers revealed that half the entities named in the leaks were companies incorporated in the British Virgin Islands.
Russia’s illegal invasion of Ukraine shone a spotlight on how these offshore havens are also used to evade our sanctions and hide corrupt wealth. Russian oligarchs have escaped sanctions by placing their wealth in secret trusts in our tax havens. In other words, we are unwittingly complicit in bankrolling dictators and oligarchs around the world. By facilitating this economic crime we are also undermining our national security.
Dirty money underpins corruption, crime and conflict. It causes immense harm at home and abroad, enabling serious and organised crime and diverting resources needed for vital public services.
Public registers, and the scrutiny that they bring, are the best antidote to the scourge of illicit finance. These registers – disclosing the ultimate owners of companies and assets – help us to follow the money and identify wrongdoing. If implemented, registers would bring to an end decades of secrecy in each of these havens.
This common-sense measure has strong support across the business community as a crucial measure to promote good corporate behaviour.
It also commands support from members of parliament in all the political tribes. That is why we succeeded in promoting and passing an amendment to the Sanctions and Anti-Money Laundering Act in 2018. This clause required overseas territories to introduce public registers of beneficial ownership within two years.
In the hope of finding a consensual way forward, the previous government accepted a delay in implementing the legislation. The overseas territories and crown dependencies all made voluntary commitments to implement publicly accessible registers by the end of 2023. This deadline has now passed and only two of the jurisdictions have complied with the law. The rest have failed to respect the will of parliament by not implementing this vital transparency measure.
Most of these offshore tax havens have either reneged completely or watered down their original commitments. Frustratingly, those overseas territories with the worst track record – namely the British Virgin Islands and the Cayman Islands – have not even provided a clear timeline for establishing public registers. As for the crown dependencies, they have used a ruling by the court of justice of the European Union to row back completely on their commitment, even though the UK is no longer subject to EU laws.
All the evidence shows that open registers are critical to stopping the flow of dirty money. It’s not just the Panama Papers but also the Paradise Papers, the Russian Laundromat, the FinCEN Files and more. They all showed that without open registers, it is not possible to join up the dots on corruption and malfeasance. Only with the sunlight of open scrutiny, can we start to tackle the problem.
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Public registers are pragmatic, non-partisan and decisively pro-growth. The continued secrecy afforded by shell companies in offshore jurisdictions risks undermining our reputation on the world stage. The UK thrives on being a trusted jurisdiction in which one can set up and grow a business.
We will never achieve sustained economic growth on the back of dirty money. The government must use the upcoming summit to ensure that our UK law does not simply gather dust on library shelves. If the overseas territories and crown dependencies will not accept the will of parliament we must use our powers to insist that they act.
This week’s joint ministerial council offers a unique and final opportunity to work with partners in these jurisdictions to deliver full transparency. We must stop the dither and delay of recent years and pierce the veil of anonymity that protects criminals and kleptocrats. After all, sunlight is the best disinfectant.
