According to a recent report, tax havens make “glacially” slow progress on transparency measures to combat economic crime.
Gibraltar, the only jurisdiction with a fully functional and public beneficial owner register in the UK, was expected to be the first to do so by 2023.
The UK Anti-Corruption Coalition, Tax Justice UK and other campaign groups conducted research that found the majority of countries were “someway off” from implementing a register.
Former Labour minister and veteran MP Dame Margaret Hodge claimed that some territories are using “every trick” to avoid their obligations. She claimed that the government was “working on establishing public registers by consensus”, but now should “consider using its legislation powers to compel tax havens” to act to help tackle Britain’s image as “the jurisdiction for dirty money”.
The campaign groups claimed that the territory and dependencies provided “a safe haven” for criminals, tax evaders, and kleptocrats to store their illicit gains.
Transparency International UK identified money laundering and corruption cases linked to Shell companies in overseas territories which “amount to more than £250 billion of economic damage”.
The Crown Dependencies of Guernsey and Jersey, and 14 UK Overseas Territories, including Bermuda and British Virgin Islands are not part of UK, and have a different relationship with the crown and Westminster parliament.
It is an established convention that the UK Parliament does not legislate in crown dependencies without consent from local governments. There is no restriction on the ability of the UK parliament to legislate in overseas territories.
To give the overseas territories time to develop public registers, the government said that it will not introduce legislation until 2023 for them to implement them.
The UK government says that this ruling shouldn’t be an obstacle. Since 2016, Britain has its register.
In December, crown dependencies stated that a public registry would not be in line with their “international obligations”. They said that they would continue to work on “extending access” of such information.
The British Virgin Islands (BVI) and Bermuda have suspended implementation until the European Union has completed its review of money laundering rules. Hodge claimed: “They appear determined to ignore the will and wishes of parliament.”
Dame Margaret Hodge is leading efforts to expose the misuse of tax-havens
The BVI stated that it was “committed” to implementing a public register of beneficial owners and that the “appropriate framework” would be implemented by the middle of 2025. Bermuda has a record of beneficial ownership for over 60 years and says it is committed to fighting “all forms” economic crime. It stated that it aimed to expand its transparency regime by autumn, in light of EU rulings and other rulings.
The crown dependents said that they have beneficial ownership registers at the disposal of law enforcement. Jersey claimed to have a “leading role” in transparency. A spokesman stated that it was regrettable and misleading to continue with inaccurate descriptions about the situation in Jersey.
Guernsey stated that it “made clear progress in beneficial ownership transparency”. It stated that it is committed to expanding access in “line” with EU regulations so it can “continue to be at forefront of combating financial crime”. The Isle of Man stated that it maintains “high standards of regulation and supervision in the financial sector” and is expanding access.
A UK government spokesperson said that the vast majority overseas territories and crown dependents were “committed” to implementing publicly accessible registers for beneficial ownership or legitimate interests.