Parliament

Beneficial Ownership Registers: Overseas Territories and Crown Dependencies

Published date : 07 December, 2023
Let me begin by sharing the disappointment of the right hon. Member for Barking (Dame Margaret Hodge) that this debate is necessary at all. It is incredibly disappointing that the target the UK Government had of ensuring that by December 2023—the month we are in—public registers were set up for the overseas territories and Crown dependencies looks set to be missed. This debate ought to start, as in fairness it has, from a fundamental premise: public registers of beneficial ownership are a vital tool in helping to identify and therefore reduce financial crime, and to increase financial transparency.

The simple fact of knowing who owns what, who benefits from it, and where the moneys have flowed from and are flowing to all helps to identify and tackle crime of all sorts, including corruption, drug trafficking and people trafficking, as well as domestic and international tax evasion and tax avoidance. Being able to get this under control would be massively to our collective benefit, and not just from a reputational point of view, because the revenues, moneys and assets that are concealed in this way can be used to fund activities that are detrimental to national security. It would also be massively to the benefit of the rest of the world to close down options for kleptocratic “businesspeople” or politicians to strip assets from their countries and squirrel them away in untransparent jurisdictions to enrich their lifestyles. That is clearly not a good thing, and the people of those countries suffer as a consequence of that permissive environment.

Registers are a necessary but insufficient step, and there is a lot of work to be done, not just on this issue. We have heard about London’s unenviable reputation as the laundromat—I think that term was used—for some of the world’s dirty money. I remember participating in a debate earlier in my parliamentary career about similar issues that were caused by London being the laundromat for reputational issues, through the prevalence of libel tourism, the ability to use SLAPPs—strategic lawsuits against public participation—and the prevalence of public affairs and public relations agencies that are willing to accept money to do such things. There is much work to be done to clean up the United Kingdom’s act in that sense.

Although the UK Government introduced a register of beneficial ownership in 2016 and have encouraged the Crown dependencies and overseas territories to follow suit, they have not done that, so far at least, despite voluntarily agreeing to do so. That is despite the UK Government using the sweet persuasion of publishing a draft Order in Council as long ago as in 2020 to require them to do so and giving them a deadline of this month, which now seems almost certain to be missed.

This is the fundamental point: if the UK wishes to seek leadership on this issue, it cannot be taken seriously as a world leader on financial transparency if it does not do more, and is not seen to do more, to stop overseas territories being used as havens for individuals to evade their obligations.

It matters very much that that should happen. More than half of the shell companies exposed in the Panama papers were incorporated in UK tax havens. More than two thirds of the companies analysed by the International Consortium of Investigative Journalists from the Panama papers leaks were found to be registered in the British Virgin Islands. The UK and its overseas jurisdictions are collectively responsible, through that permissiveness, for costing the rest of the world nearly $90 billion in lost tax each year by enabling non-residents to hide their finances and avoid tax. As the hon. Member for Wallasey (Dame Angela Eagle) highlighted, Tax Justice UK estimates that the UK and its network of overseas territories and Crown dependencies are responsible for some 35% of global tax losses suffered by countries around the world.

The impact that clamping down on this problem could have, not just on the public good for the UK but in many other countries around the world, is highly significant. We are often invited to believe that the biggest threat to our quality of life—[Interruption.] Excuse me. [Interruption.] Thank you very much.

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Lib? Well, it shows that there is perhaps a future for progressive alliances of one kind or another, Mr Deputy Speaker.

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Yes.

We are regularly invited to believe that the greatest threat to our public services and our quality of life comes not from a lack of resources, but from immigration. Indeed, the governing party is tearing itself to bits today over the difficulties that it has set itself in pursuit of the votes of those they believe might be influenced by such sentiments. I cannot help but feel that we would be in a significantly better place if only the Government put half the effort into clamping down on the opportunities for tax avoidance, evasion and lack of transparency as they put into telling us that there is a problem about boats.

The three countries that ranked highest in the corporate tax haven index 2021, compiled by the Tax Justice Network, were the British Virgin Islands, the Cayman Islands and Bermuda, which is not an accolade to be proud of. Where a score of 100 is the most permissive system and zero is the least permissive, the UK itself scored a less than clever 69. Greece scored 46.4, but seven of the eight territories that scored a perfect 100— I use the word “perfect” advisedly—are British overseas territories or Crown dependencies.

The UK Government and the territory Governments held a joint ministerial council in November, but there has been no statement. Will the Minister update the House on the progress that has been made? How will that affect the December deadline?

In 2014 the Foreign Secretary, who was then Prime Minister, made a number of strides forward in addressing this issue. We on the Opposition Benches are struggling with many things, including my voice, but we can see the benefits that come from Lord Cameron’s appointment. On these matters, we very much hope that he is able to pick up where he left off when he demitted office as Prime Minister.

If not the clock, certainly my voice is telling me that it is probably time to wind things up.

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In short, yes, I do. The registers are necessary, although they are not sufficient by themselves. Clearly, a great deal more work needs to be done.

I commend the right hon. Member for Barking for her clarity and leadership on this issue. Next time we discuss it, I hope we will be discussing how the registers are being implemented and the benefits they bring.

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