OTs STILL FACE UK DECREE OVER COMPANY OWNERSHIP TRANSPARENCY

OTs STILL FACE UK DECREE OVER COMPANY OWNERSHIP TRANSPARENCY

The British government says it expects that beneficial ownership information on businesses registered in the Overseas Territories(OTs) will be accessible to the public by 2023.

This follows a commitment it says it has received from eight of the OTs including the Cayman Islands, but not the British Virgin Islands.

According to the Minister for the Overseas Territories and Sustainable Development, Baroness Liz Sugg) in a report to the UK parliament, the OTs “have all demonstrated good progress and political leadership as part of the global effort to increase transparency in financial services and tackle illicit finance.”

“We hope that the British Virgin Islands will also commit to publicly accessible registers of company beneficial ownership without delay,” she said in the statement.

OTs which do not have the measures in place, as stipulated by the UK in its role as administering power, will have the legislation slapped on them by imperial decree from London.

Baroness Sugg told the UK parliament in a letter that the British government will prepare a draft Order in Council before the end of this year which will impose Sanctions and Money Laundering Act 2018 for the public declarations of ownership on the territories which do not have it in place by the 2023 deadline.

She said the UK government considers that a reasonable deadline for the introduction of the registers.

However, the Minister for Overseas Territories has admitted that meeting this date will be a challenge for many of the OTs.

It took the UK itself over three years to introduce its public register.

“It will be a considerable ask for many Overseas Territories,” she said, “given their limited resources; especially those Overseas Territories that do not currently have a company beneficial ownership register. It will involve significant legislative and operational changes.”

The UK has been assisting the OTs with preparations for the policy change. This has included a technical workshop last July and webinars in November. It says further assistance will be provided.

The contentious issue of public access to registers of beneficial ownership has set the OTs and the UK on a collision course with the OTS accusing the administering power of imposing its will and that of the Organisation for Cooperation in International Development (OECD) which has global oversight for the global financial industry.

The OTs insist that they already have rigid systems in place to ensure transparency of their lucrative financial centres on which their local economy depends. They have also accused the UK and the OECD of constantly ‘shifting the goalposts’.

The territories are considered at high risk for money laundering, tax evasion and terrorist financing through their offshore financial centres which generally have a low tax threshold and high levels of confidentiality.

According to Baroness Sugg, “The 2023 deadline also aligns with the Government’s international campaign to advance publicly accessible company beneficial ownership registers as a global norm.

“We believe that action on beneficial ownership information in the Overseas Territories should be complemented by improved public access to beneficial ownership information internationally. This maximises the protection of our national security.”

The statements from the territories which have so far committed to introducing the system is seen by the UK minister as underscoring the OTs “continued contribution to the global fight to tackle illicit finance”

Noting that “it is not the only action they have taken”, she goes on to list several other steps which have been put in place.

“All Overseas Territories with financial centres participate in the Exchange of Notes arrangements. These are bilateral arrangements under which they share beneficial ownership information with UK law enforcement and other agencies within 24 hours (or 1 hour in urgent cases).

"They are an invaluable capability for our law enforcement, particularly for the National Crime Agency on money laundering and asset denial activity. Last year’s statutory review found that these arrangements are working well and are providing UK law enforcement with rapid access to information used to support ongoing criminal investigations.”

Many OTs are also reported to have committed to global tax transparency standards, including the OECD’s Common Reporting Standard; under which taxpayer financial account information is automatically exchanged for tax purposes.

This reciprocal, automatic exchange of financial information addresses the secrecy that facilitates offshore tax evasion and provides evidence of tax non-compliance, the British government says.

“The Government therefore welcomes the statements on making company beneficial ownership information publicly accessible and all the constructive action the Overseas Territories are taking as responsible jurisdictions,” Baroness Suggs said in her statement.

Meanwhile, her boss, Foreign Secretary Dominic Raab, has added his voice to the process as it stands at this stage.

He called it an important step forward by governments from across the Overseas Territories, adding that he “welcomes the leadership to improve corporate transparency, and the message it sends about the need to tackle illicit finance globally.”

A statement from the Foreign and Commonwealth Office(FCO) said the UK Government has led an international campaign to make such registers a global norm by 2023.

Singling out the British Virgin Islands, it said the FCO “is hopeful the only remaining permanently inhabited territory not to make an announcement, the British Virgin Islands, will make a similar commitment soon.”

The FCO said it is continuing to work with the BVI Government “in encouraging them to take this action.”

It also referred to the arrangements already in place with the Overseas Territories whereby they provide UK law enforcement authorities access to information on the ownership of companies in their jurisdictions.

That information is said to improve the ability of law enforcement agencies to detect money laundering and financial crime.

The FCO said the announcements demonstrate the positive action the UK’s Overseas Territories are taking to help tackle illicit finance and follows work by Gibraltar, earlier this year in March, to make their company register publicly accessible.