Beneficial Ownership Registers: Overseas Territories and Crown Dependencies

Angela Eagle Excerpts

Thursday 7th December 2023 Commons Chamber

[Dame Margaret Hodge]

I am left wondering whether The Sunday Times would ever publish that—we shall see.

Let me address the point made by the hon. Member for Bromley and Chislehurst (Sir Robert Neill). In April 2019, the right hon. Member for Sutton Coldfield and I sought legal advice about whether it would be constitutionally lawful for the UK Parliament to legislate to compel all Crown dependencies to establish public registers of beneficial ownership. I have the advice here, which concluded:

“It is beyond doubt that the intrusion of criminal funds into the UK economy threatens the interests of the UK. It is also beyond doubt that extensive funds in this category emanate from the Crown dependencies.”

The last sentence states: “The proposed amendment”—we put an amendment to the King’s Counsel to consider whether it was lawful—

“is a constitutionally legitimate and lawful exercise of the UK’s powers to secure its domestic interests by protecting confidence in its financial institutions and the integrity of the commercial life of the nation”.

Finally—I recognise that we are running out of time— I want to touch on the compromise that I think the Minister is seeking to secure in his negotiations with our tax havens. The compromise is that in order to have access, a member of the public needs to have a legitimate interest, a term that was introduced in the European Union’s sixth anti-money laundering directive. We already have that proviso in relation to the register of overseas properties, and I draw to the Minister’s attention the fact that Transparency International has put in inquiries in six cases to get information, has waited for four to six months, and has then seen those requests for information turned down by His Majesty’s Revenue and Customs. All of those requests were in relation to trusts listed as the beneficial owners of overseas companies that hold property here in the UK, and we would have expected them to be on that register and for the information to be provided.

[Dame Angela Eagle (Wallasey) (Lab)]

Surely, every single citizen of this country has a legitimate interest in closing the kinds of loopholes that have allowed rotten, dirty money to come flooding into our jurisdiction. Does my right hon. Friend agree that it has had huge detrimental effects on ordinary people—who do not have trust funds and are unlikely to inherit anything—such as the huge increases in property prices that have forced many people out of the housing market?

[Dame Margaret Hodge]

My hon. Friend makes an important point: those who suffer the most are the poorest in our community. One must remember that no tax is levied on all this illicit finance, so it does not fund the public services that we require. I would also point out to the Minister that a legitimate interest proviso does not meet the requirements of the Sanctions and Anti-Money Laundering Act 2018: the terms of the draft Order in Council specifically said that we want

“a compliant publicly accessible register”.

I ask the Minister to think about that.

Sunlight is the best disinfectant—we all know that. If we are serious about our effects to clamp down on dirty money and eliminate it from Britain, and from our overseas territories and Crown dependencies, we must have public registers, so that we can at the very least start to follow the money.

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[Dame Angela Eagle (Wallasey) (Lab)]

I thank my right hon. Friend the Member for Barking (Dame Margaret Hodge) for securing this debate, and for her consistent and tireless work in tackling the scourge of illicit finance. As she said, the introduction of public registers of beneficial ownership in our country’s offshore financial centres ought not to need debating, and it should have happened many years ago. Yesterday, after seven long years, the Hillsborough families finally got a response from the Government to Bishop Jones’s report, yet it was a response that rejected his key recommendations. This Government have been even more tardy when it comes to delivering on their declared policy of public registers of beneficial ownership.

It has been almost 10 years since the Prime Minister, Lord Cameron, called on our overseas territories and dependencies to raise their transparency standards, and not a lot has happened, as we have heard. After five years, amendments were made to what became the Sanctions and Anti-Money Laundering Act 2018, requiring territories and dependencies to act. By that time, the Prime Minister had gambled and lost the Brexit referendum, and he had left office, left Parliament and got embroiled in the dubious activities of Lex Greensill, and still nothing had changed.

The case for transparency is clear and unarguable, and the fight against crime and corruption requires it, but we are still no further forward. Lord Cameron has returned to Parliament in a new guise as Foreign Secretary. I hope he will once more be directly responsible for policy in this area, and I hope he will be able to help us make some real and meaningful progress. The public disclosure of company ownership information would facilitate the trailing of money and identity and illicit activity, and deter money laundering, crime and sanctions busting, and it is essential that we make progress.

Labour has repeatedly tried to push the Government to act. Both last year and this year, my hon. Friend the Member for Aberavon (Stephen Kinnock) moved amendments to the Economic Crime and Corporate Transparency Bill, which would have required the Government to lay an Order in Council and to make some progress, but the Government defeated them. They continue to say they are doing things while achieving no real outcome that makes a difference.

The facilitating of illicit finance through our overseas territories and Crown dependencies poses a serious threat in a number of ways. As my right hon. Friend the Member for Barking said, it deprives the public purse of funds, and it prevents true economic stability. It poses very real threats to our national security, and it affects each and every citizen of this country, be it in underfunded public services, higher than expected property prices, illicit crime or organised crime in our communities. All of that affects each and every one of the constituents of Members up and down the country. The financial cost of global tax evasion, enabled by a lack of transparency in our territories and dependencies, is staggering to contemplate. Tax Justice found that 35% of global tax losses suffered by countries around the world occur in the UK and its network of overseas territories and Crown dependencies. That is a shameful statistic.

The lack of transparency in offshore jurisdictions facilitates myriad other illicit activities at great cost to our country. Companies based in overseas territories have enabled corruption cases to the tune of £250 billion. Notably, an astonishing 92% of those were registered in the British Virgin Islands. For context, £250 billion is more than the whole of the UK’s foreign aid budget for the past 20 years. That money is going unaccounted for, when it could be working for our communities.

With war raging in Europe and the middle east, and contemplating the revelations the House heard earlier about organised attempts by the Russian FSB to interfere in UK elections, it is clear that the threat is growing. The cross-party Foreign Affairs Committee has rightfully called for public registers as a “matter of national security”. Increasingly, I believe that the risk to the UK’s international reputation is growing. Our reputation has already been substantially damaged. It is in the public interest for the Minister to tell us what he is going to do as a matter of urgency to deal with this growing threat.

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[Richard Thomson]

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.

[Dame Angela Eagle]

Does the hon. Gentleman agree that ensuring we have open and transparent registers of beneficial ownership is only the first step in dealing with what is a very well established, very difficult and growing threat?

[Richard Thomson]

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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[The Parliamentary Under-Secretary of State for Foreign, Commonwealth and Development Affairs (David Rutley)]

It is an honour to serve with you in the Chair, Mr Deputy Speaker. I have not had a chance to say this in person until now, but thank you for your Christmas card. We know that Christmas is coming, and it is always a joy.

I am particularly grateful to the right hon. Member for Barking (Dame Margaret Hodge) for securing the debate. I pay tribute to her for her work as chair of the all-party parliamentary group on anti-corruption and responsible tax, and for her tireless campaigning on this vital issue over many years. She is respected on both sides of the House for the work that she does. This debate has involved some of the most serious and seasoned parliamentarians, respected by me and, indeed, respected throughout the House—four dames, two knights and counting. A heavyweight group of people have made a serious contribution—and I do not say that lightly; the calculation was made by one of my colleagues.

I am also grateful for the presence of the Under-Secretary of State for Justice, my hon. Friend the Member for Finchley and Golders Green (Mike Freer), who is probably soon to be right hon. or something, what with all the stuff that is going on. He leads on the Crown dependencies in the Ministry of Justice and takes a keen interest in the issues affecting them and the overseas territories. Another of the dames is also present on the Front Bench: my right hon. Friend the Member for Cannock Chase (Dame Amanda Milling), a very well-respected former overseas territories Minister.

Illicit finance is an active and growing threat to the national security of the UK family. There we have it—it has been said on both sides of the House. I am not sure we need to say much more on that particular point, but it is serious. As set out earlier this year in the UK’s second economic crime plan, illicit finance fuels serious and organised crime, threatens our institutions and enables kleptocrats to establish a financial foothold.

I recognise the important work of my noble friend the Foreign Secretary—just to reassure the right hon. Member for Barking, I can feel the strength of his opinion on my shoulders right now. That also goes for my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), who is the development Minister and Minister for Africa, and my right hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat), who is the Security Minister. I think they are well known to the right hon. Lady, and the strength of their opinions is known to her and the House, and to many others too.

This is an important and serious debate. The UK overseas territories and Crown dependencies have a history of working together as partners to strengthen our economic defences against illicit finance. Publicly accessible registers of beneficial ownership are an essential tool in that fight. We want greater transparency, and we are working hard to deliver it. As has been said, the UK implemented our own register in 2016, the first of its kind in the world. The Sanctions and Anti-Money Laundering Act 2018 set out Parliament’s desire for the overseas territories to introduce registers, and in response, all the inhabited territories and Crown dependencies made public commitments to do so.

The UK welcomed those commitments as demonstrations of our joint desire to meet the highest standards in tackling illicit finance. In 2020 we set out in written ministerial statements our expectation that the territories and dependencies would implement registers by the end of this year, and included a draft Order in Council. We then provided technical assistance and support, and we saw OTs make significant progress. For instance, BVI was able to pass appropriate primary legislation in 2022 and the Cayman Islands in 2023, and the CDs have also taken a set of preparatory steps—[Interruption.] Bless you—it could be catching.

It will not have escaped Members’ notice that only Gibraltar currently has an operational register, as was highlighted by my hon. Friend the Member for Bromley and Chislehurst (Sir Robert Neill), the Chair of the Justice Committee. The other thing is that, as those who are following the calendar have noted, there are only three weeks to go until the end of 2023.

Let me be absolutely clear: this is not where the UK Government wanted the OTs and CDs to be. In November last year the Court of Justice of the European Union issued a ruling pertaining to publicly accessible registers, which changed the international context. The judgment found that an EU requirement to implement publicly accessible registers was contrary to the EU charter of fundamental rights. The UK was, however, satisfied with the lawfulness of our own publicly accessible register, and we continue to believe that CDs and OTs could legally implement public registers of their own. Not only that, but no fewer than 14 EU member states allow public access to their beneficial ownership registers even after the November court ruling. That should provide a direction of travel and a sense of security.

We have been in intense discussions with the territories and dependencies since spring—it has been a huge priority for me in recent months, since my appointment as Minister for the overseas territories—to set out the rationale for our view that the registers can indeed be fully implemented in line with the privacy rights that apply to each of them. Montserrat, the Falkland Islands, St Helena, Ascension, Tristan da Cunha and Pitcairn have confirmed that they are continuing to implement theirs, following in the footsteps of Gibraltar, which introduced its own in 2020. However, Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands and the Turks and Caicos Islands, along with the Crown dependencies, continue to have concerns in the light of the court ruling.

Given the differing views on the ruling, we are working together to find ways to make positive progress, including by discussing an interim step that would make significant progress towards commitments to improve corporate transparency: the implementation, next year, of publicly accessible registers of beneficial ownership with a legitimate interest access filter. That would allow access to beneficial ownership information for members of the public with a legitimate interest, such as media and civil society organisations involved in the fight against illicit finance and money laundering. It would also bring the territories and dependencies in line with the EU, as the European court judgment notes that EU member states must continue to enable access to those with legitimate interest.

[Dame Angela Eagle]

rose—

[David Rutley]

I will make one more point and then I will gladly give way.

The right hon. Member for Barking raised an issue regarding requests by Transparency International to HMRC. I cannot comment on individual cases, but if she writes to me, I will follow it up. To be clear, the Government’s policy is that, by definition, legitimate interest should include civil society organisations such as Transparency International.

[Dame Angela Eagle]

The legitimate public interest filter, as the Minister calls it, stands or falls on how “legitimate public interest” is defined. At the moment, it appears to be far too narrowly defined, which undermines the purpose of the transparency. Will he take into account the fact that the filter, as it exists, does not let any light through and is rendering the openness of the list moot?

[David Rutley]

That is not the intention. We want the light to shine on these issues. That will involve media and non-governmental organisations too. I can give the hon. Lady that reassurance.