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Phil Brickell (Bolton West) (Lab)
I beg to move,
That this House has considered the impact of financial secrecy in the Overseas Territories on UK communities.
It is a pleasure to serve under your chairmanship, Mr Twigg. Before being elected to this place, I dedicated almost 15 years of my working life to tackling financial crime at two major UK banks. That work took me across the globe to the USA, the United Arab Emirates and often to India, so I like to think I can speak with some authority about financial secrecy overseas and how it impacts us at home.
For a number of people watching this debate, the contents of my speech will make for uncomfortable viewing, so let me be clear from the outset that my objective is not to criticise the overseas territories writ large—far from it. Some have shown a real commitment to transparency, which I commend them for, and others have a zealous determination to work with the Foreign, Commonwealth and Development Office to drive through much-needed reforms, but are hampered by a lack of local expertise. But other overseas territories seem insistent on blocking change at every opportunity, and it is those that I wish to focus on.
Hon. Members might ask, “What connects the sun-kissed beaches of the British Virgin Islands with the rain-soaked streets of Bolton?” What do my constituents care about shell companies, trusts and the veil of financial secrecy that a number of our overseas territories seem quietly content to provide? The purpose of today’s debate is to challenge the notion that what goes on over there has few ramifications for our daily lives over here. Financial secrecy in our overseas territories has real-world consequences for my constituents, businesses and Britain’s standing in the world. Journalists including Nicholas Shaxson and Oliver Bullough have outlined how the UK’s overseas territories have systematically undermined the global economy by creating a shadow banking system—“Moneyland”, to use Oliver Bullough’s parlance.
In a number of our overseas territories, low levels of taxation and substandard levels of transparency have attracted the world’s crooks and kleptocrats like moths to a flame. Money laundering, fraud, bribery, tax evasion: regrettably, many of the scandals we read about are likely to involve a financial structure in the British overseas territories. It is an enduring embarrassment going back many, many years, and it undermines our global reputation.
In 2016, 11.5 million documents detailing financial and attorney-client information relating to 214,488 offshore entities were leaked—the now-infamous Panama papers. More than half the shell companies exposed in that leak from Panamanian offshore law firm Mossack Fonseca were set up in the British Virgin Islands. That leak revealed the sheer scale of the dark economy, which allows the rich and powerful to store their assets offshore, out of sight of the taxman, law enforcement or the press. From the likes of the former Georgian Prime Minister Bidzina Ivanishvili to the more than 30 Mossack Fonseca clients blacklisted by the US Treasury, roughly $2 trillion passed through that firm. In 2017 came the Paradise papers, with another 13.4 million documents from firms, including from Bermuda, the BVI and the Cayman Islands, then the 2020 FinCEN files, followed by the 2021 Pandora papers. Each leak tells a story about unfairness, about how those who can afford to find ways to avoid paying their fair share can do so, and about how the world’s crooks and kleptocrats cleaned and stashed their dirty cash. Each leak exposed the role played by the UK’s own overseas territories in enabling assets to be hidden.
So what is the impact on UK communities? I will focus on three areas where there is a direct, tangible impact on the UK: first, inhibiting growth; secondly, threatening national security; and thirdly, damaging our standing in the world. Sustainable economic growth and good-quality public services require the tax that is owed to be collected, whether it is from a small business in Westhoughton in my constituency or from oligarchs who have decided to make London their home—nobody should be above the law. The Chancellor has already made good progress on closing the £44 billion tax gap by hiring 5,500 new compliance staff, incentivising whistleblowers and committing to a 20% increase in the number of tax fraudsters charged each year.
Those are all noble endeavours, and I applaud them, but financial secrecy continues to erode our tax base, because when money that should be taxed is hidden offshore, it is the honest British taxpayer who ends up footing the bill. It harms His Majesty’s Revenue and Customs’ ability to collect what is owed, it fuels unfairness in our system and it leaves less for our stretched public services. There are too many cases to list, but I will endeavour to go over some, such as brothers Michael and Stephen Hirst, who evaded over £3.2 million in tax by routeing profits through companies they secretly controlled into Gibraltar and the British Virgin Islands.
But it goes deeper than that. Illicit money flowing through opaque companies registered in our overseas territories does not stay offshore; it finds its way into our UK property market. That distorts it, according to the National Crime Agency, and hinders people’s attempts to get on to the housing ladder. Transparency International UK has identified over £11 billion in suspicious wealth invested in British property, more than half of which was routed through shell companies in our overseas territories. Behind those faceless firms are the likes of Bangladeshi businessman Shafiat Sobhan, Pakistani tycoon Malik Riaz Hussain and Azerbaijani banker Jahangir Hajiyev—individuals accused or convicted of grand corruption who saw London as the safest place to stash their gains.
That money even floods our high streets. If we walk down any high street in the UK, we will see a proliferation of vape shops, candy shops, Harry Potter shops and barber shops. Not all of them have unscrupulous owners, but some are used as fronts for money laundering and tax abuse. As London Centric recently reported, these practices are often enabled by opaque corporate structures in offshore jurisdictions.
Joe Powell (Kensington and Bayswater) (Lab)
I congratulate my hon. Friend on securing the debate. Does he agree with the National Crime Agency that if it had open and accurate data on who owned and controlled those businesses, its operations would be much more effective? Those businesses are often linked to overseas territories, so the National Crime Agency cannot find their real owners and crack down on them.
Phil Brickell
I thank my hon. Friend for his passionate campaigning on this issue. He is absolutely right that we need more transparency to support our law enforcement agencies to tackle this issue, and I will come on to that now.
I pay tribute to the brilliant enforcement work undertaken by the National Crime Agency through its Operation Machinize. Just last week, police visited a number of addresses in my constituency, seizing £17,000-worth of goods in the process. I applaud the work of our enforcement agencies, but as I will explain, these tireless professionals need more support in their work.
Elsewhere, financial murkiness causes friction for British businesses. When I worked in finance, we would often conduct “know your customer” checks and hit a wall, because a trust or a corporate service provider was incorporated in a secrecy jurisdiction. The beneficial owner was always elsewhere. Every time we spoke to law enforcement, journalists or civil society about dirty money, the same names came up: the BVI, the Cayman Islands and Bermuda. It is farcical.
Banks, lawyers and accountants are on the frontline of anti-money laundering checks. Collectively, they spend over £38 billion a year on financial crime prevention—the equivalent of £21,000 every hour. A good-quality public register of beneficial ownership would make their work cheaper, faster and, frankly, more effective, unlocking the growth potential of our world-leading financial services sector.
On national security, since Russia’s barbaric invasion of Ukraine, the UK has quite rightly been at the forefront of the global sanctions regime against Putin. I commend the Minister for his personal leadership in ensuring that it is Putin and his cronies who pay for their unlawful war. The overseas territories have played an important role in enforcing those sanctions, freezing over £7 billion in Russia-linked assets. Indeed, initiatives like the Cayman Islands’ Operation Hektor, which has frozen £6 million of assets, deserve recognition.
Enforcement is only as strong as the weakest link. If opaque corporate structures allow sanctioned individuals to move assets through nominee companies, the whole system is undermined. That is why full beneficial ownership transparency is not a bureaucratic nicety; it is a national security measure. Opponents will say that UK law enforcement agencies have access to this information, but many agencies are critically underfunded and simply do not have the capacity to keep up the bewildering game of whack-a-mole that they play with bad faith actors.
Transparency International UK has identified around £700 million-worth of UK property linked to sanctioned Russian oligarchs that went unflagged in the UK’s register of overseas entities in 2022. Among them is a vast Hampstead estate valued at up to £300 million, reportedly owned by Russian chemicals magnate Andrey Guryev. Reports suggest the property was originally acquired using a company based in—you guessed it—the British Virgin Islands. I asked my friend Yaroslaw Tymchyshyn, chair of the Bolton branch of the Association of Ukrainians in Great Britain how he felt about this. He said:
“The government needs to seize all Russian assets which should be used to fund the Ukrainian war effort. It irks us that the oligarchs are living the high life in the west, whilst the Russians continue to bomb and use drones to kill civilians, including children.”
What should I say to him?
Elsewhere, the Office of Financial Sanctions Implementation has reported that since February 2022 more than a quarter of suspected sanctions breaches have involved intermediary jurisdictions, including the BVI and Guernsey. This level of financial secrecy allows sanctioned elites and hostile actors to hide their wealth, undermining Britain’s sanctions regime and weakening our ability to deter aggression. When dirty money flows unchecked through our financial system, it erodes the credibility of our foreign policy, drives up the cost of energy and food, and ultimately fuels Putin’s brutal war in Ukraine.
In addition, criminal gangs involved in drug smuggling, people trafficking or protection rackets need to launder their ill-gotten gains into the regular economy. The financial secrecy afforded by the overseas territories gives the perfect cover to dodgy accountants, lawyers and corporate service providers. Edin “Tito” Gačanin, a Dutch passport holder but a Bosnia and Herzegovina native, was convicted last year of trafficking drugs from South America into Europe. It has been alleged that Gačanin is connected to the infamous Kinahan cartel, one of Europe’s most notorious organised crime gangs. As reported by the BBC, that cartel has flooded UK streets with drugs and guns over two decades. According to an investigation by The Times, in order to avoid US sanctions, the Kinahans recently sought anonymity using jurisdictions such as the Cayman Islands, the BVI and the Isle of Man.
Even organised fraud finds shelter in the overseas territories. Just last month, the Foreign Secretary rightly announced sanctions on a global scam network led by Cambodian citizen Chen Zhi, who allegedly used BVI companies to launder profits. Those profits were reportedly routed into a £12 million mansion in north London, a £100 million City office block and a string of luxury flats, while victims across the world were left penniless. Even when the authorities do catch fraudsters, financial secrecy in our offshore territories inhibits our ability to hold criminals to account.
Covid fraudster Gerald Smith was prosecuted by the Serious Fraud Office, but tried to use a BVI company to obstruct the seizure of a flat he owned to avoid paying compensation, resulting in a direct loss to the taxpayer. He still owes £82 million—and he is not alone. Just this summer the SFO told the all-party parliamentary group on anti-corruption and responsible tax, which I chair, that 25% of all cases that it is currently investigating have links to the overseas territories.
A final point on national security: I am gravely concerned that secrecy jurisdictions open a back door into our politics. The FinCEN files reveal that in 2016 the husband of Lubov Chernukhin received more than £6 million from Suleiman Kerimov, who was sanctioned in 2022 by the UK for his connections to Putin. Kerimov used a BVI company to conceal that payment. Lubov Chernukhin has donated more than £2 million to the Conservative party since 2012.
I have additional concerns about the Electoral Commission’s capacity to keep up with cryptocurrency donations, which Reform has reportedly already begun accepting. Indeed, the crypto platform Zebec sponsored a panel at Reform’s party conference on “Strengthening the Rule of Law: legislative reform?”. Zebec is, unsurprisingly, ultimately controlled by an entity registered in the British Virgin Islands, as reported by The Observer. Protecting our democracy from foreign interference is made all the more difficult by crypto firms involving themselves in our politics while hiding behind the veil of corporate secrecy, enabled by our overseas territories.
We come on to international leadership. Financial secrecy in jurisdictions under the Union flag does not just damage our economy; it damages our credibility. The UK rightly prides itself on being a global leader in the fight against economic crime. We have made real progress with the Economic Crime (Transparency and Enforcement) Act 2022, the Economic Crime and Corporate Transparency Act 2023 and the register of overseas entities, by boosting the powers of Companies House, and with the Treasury’s recent welcome announcement on reforming our anti-money laundering framework.
Next year, when the UK hosts the countering illicit finance summit, the Government will have a chance to show further leadership, but the UK cannot credibly call on others to improve transparency if the jurisdictions flying our flag lag behind on beneficial ownership. Our diplomats work tirelessly to promote British values overseas—the rule of law, fair competition and integrity in public life—yet, when investigative journalists, non-governmental organisations or foreign Governments look into global corruption cases, the trail often runs through a British overseas territory. That damages us and weakens our hand in international negotiations, giving cover to regimes that would keep their elites’ wealth hidden.
What needs to happen? In 2018, MPs led by the right hon. Member for Sutton Coldfield (Sir Andrew Mitchell) and the Government’s anti-corruption champion, Baroness Hodge, successfully secured an amendment to the Sanctions and Anti-Money Laundering Act 2018. I pay tribute to them for their tenacious campaigning over many years. Their amendment required all overseas territories to introduce registers of beneficial ownership by 2020. That deadline slipped to 2023, and then to 2025—another deadline that was largely missed.
The UK’s overseas territories are a valued and integral part of our British family. Their ties to us are deep, and their prosperity is something we rightly cherish. They are our partners in defence, trade and increasingly in tackling the great global challenges of our age: climate change, migration and the rule of law. But being family means being honest, and I am afraid to say that certain jurisdictions have not covered themselves in glory by obfuscating, delaying, ignoring and frustrating the will of this Parliament. It is not acceptable. Missing deadlines sends a “terrible message” to the world, according to the current Deputy Prime Minister, in response to a question I asked him earlier this year when he was before the Foreign Affairs Committee.
This speech is not lazily tarring all overseas territories with the same brush. Far from it: Gibraltar, Montserrat and St Helena have delivered and deserve praise. The Falkland Islands are on track to implement by mid-2026 and are engaging constructively with the UK Government. Bermuda has made positive noises, although there is still room for improvement in its recent statement on next steps under its Beneficial Ownership Act 2025.
Elsewhere progress has been slow and patchy. The British Virgin Islands, in particular, remain a serious concern. Transparency International UK has warned that the British Virgin Islands’ proposed company register framework is not compatible with global transparency standards, with journalists being granted information on only a subset of data, rather than the beneficial ownership that they record, even baking in a tip-off for people being investigated, giving them a chance to object to their information being shared with a journalist. The Cayman Islands have also been slow to move from consultation to implementation. Although some good work has been done, substantial areas remain, including exorbitant costs and an unreasonably high threshold for granting applications from civil society and journalists.
The fact remains that some of the largest financial centres under the British flag are still operating secretive structures that enable tax evasion, sanctions evasion and kleptocracy. Occasionally, capacity restraints are cited. The UK Government rightly have an obligation to step in and provide technical support. There is also a suggestion that some jurisdictions do not want to fulfil their promises, lest they lose their competitive advantage.
To those naysayers, I say that the UK has an obligation to help its overseas territories to diversify their economies. It can be done, as in the case of the Isle of Man, where considerable work is under way to invest in offshore wind. Let me be clear: transparency has not hindered economies elsewhere. The UK has had a fully public register for years, and the sky has not fallen in. Research commissioned by the UK Government estimated that corporate transparency reforms produce data worth up to £3 billion to the public and private sectors. Look at Gibraltar, which has continued to grow, driven by insurance, gaming and fintech, even after introducing full beneficial ownership transparency.
I have a number of asks of the Minister. Last month, the Prime Minister’s anti-corruption champion, Baroness Margaret Hodge, visited the BVI to understand what progress it is making towards fully open registers of beneficial ownership. What update can the Minister give us on that visit? With November’s Joint Ministerial Council rapidly approaching, will he remind those overseas territories that continue to delay the implementation of publicly accessible registers of beneficial ownership, with the maximum possible degree of access and transparency as per last year’s joint communiqué, of their commitment?
Concerningly, the 2024 JMC communiqué contained the following line:
“We note the UK Government’s ambition that Publicly Accessible Registers of Beneficial Ownership (PARBOs) become a global norm and its expectation that Overseas Territories and Crown Dependencies implement full PARBOs.”
Will the Minister confirm that the overseas territories and the Crown dependencies are still expected by His Majesty’s Government to implement fully public corporate registers? If legitimate-interest access filters are an interim step, what assurances can he give me that journalists, civil society organisations and others with a genuine interest will have open and repeated access to company data in the overseas territories? Finally, will the Minister meet me and Yaroslaw from the Bolton branch of the Association of Ukrainians in Great Britain to reassure him that the Government are doing all they can to bring an end to Putin’s barbaric war in Ukraine, including by enforcing economic sanctions in the OTs?
My speech does not seek to undermine the important constitutional relationship between the overseas territories and the UK. I welcome, for example, the £7.5 million recently provided by the UK to Commonwealth member Jamaica after Hurricane Melissa, alongside $1.2 million from the Cayman Islands. But partnership brings mutual obligations, which must include the shared commitment we have all made to openness, integrity and accountability, because every pound laundered through a BVI shell company and every mansion bought with stolen public funds is a stain on our national integrity.
Cleaning up this system is not just an act of international justice; it is a patriotic duty. We cannot build clean foundations for growth while our financial system remains a refuge for dirty money. Public, accessible and verifiable registers of beneficial ownership are not a burden; they are our competitive advantage. They enable cheaper due diligence for firms and cleaner supply chains for investors, they protect small businesses by making procurement fairer and fraud harder, they strengthen our economy by rooting out corruption before it takes hold, and they give the British people confidence that when they pay their taxes, buy a home or open a small shop on the high street, the system is fair and honest.
The autumn Budget is scheduled for 26 November. After her Budget speech, tradition dictates that the Chancellor will go to the Two Chairmen for a well-earned gin and tonic. That pub, which I hasten to add is not accused of any wrongdoing, is owned via the Isle of Man and leased to Greene King, which is itself owned via the Cayman Islands. I think that encapsulates just how out of hand the shadow financial system has become.
Sir Andrew Mitchell (Sutton Coldfield) (Con)
As vice-chairman of the all-party parliamentary group, I want to express my appreciation to the chairman, the hon. Member for Bolton West (Phil Brickell), for the brilliant way he has led the debate. He underlined that there must be an all-party approach, which he expressed with great eloquence and factual back-up. He made the point that we all have a constituency interest in this issue. We certainly recognise that in the royal town of Sutton Coldfield. I also thank his predecessor as chair, the hon. Member for Kensington and Bayswater (Joe Powell), who I note the Government have now neutered by putting on the payroll. As a former Government Chief Whip, I know exactly how these things work, and it is a recognition of his great abilities that he has now been put on the non-ministerial payroll.
I want to emphasise why this issue matters. We are talking about dirty money—money stolen from Africa and from Africans, money from the sex trade and money from the drug trade. Although Africa is my principal concern, because I believe that development is being held up by the enormous amount of money that is stolen from that continent, the hon. Member for Bolton West also made an extremely important point about tax. After all, in a few days’ time, the Chancellor will be looking for as much tax revenue as she can get. If she follows the hon. Gentleman’s advice, there is no doubt that billions would flow into the Exchequer, for the reasons that he set out.
For many years, we believed that closed registers were doing what was required. Closed registers enabled law enforcement authorities to dip into the details and, in the case of terrorism, get a response within 24 hours, but the publication of the Paradise and Panama papers showed definitively why we must have open registers of beneficial ownership. Without open registers, we cannot join the dots of who is doing what to whom. That is a very important point. The scales fell from our eyes when the Paradise and Panama papers were published—all praise to the BBC and The Guardian for doing so—as they showed precisely why open registers are absolutely essential. That is at the heart of this debate.
Let us be in no doubt, either, that we are talking about the Crown dependencies as well. They may come after the overseas territories in the Government’s enforcement action but, like the overseas territories, they are on the frontline of this issue. As the hon. Gentleman said, we are not talking about all the overseas territories. Many of them have implemented, or are implementing, registers in good faith; it is just a pity that some of them have not.
It is also worth saying that the UK has big questions to answer. From what the National Crime Agency said some years ago, we know that up to 40% of money laundering goes through London, the overseas territories and the Crown dependencies. That is one of the reasons why David Cameron made tackling corruption an important aspect of the G8 in 2016. Britain can be proud of leading that attack on dirty money. We should remember not only Britain’s leadership, but the fact that we have a dog in this fight.
I also want to emphasise how we got here. The hon. Member for Bolton West rightly said that the Government gave way because otherwise they would have been defeated—an embarrassing moment for me, as a former Government Chief Whip, to have led that rebellion with Baroness Hodge. With the Sanctions and Anti-Money Laundering Act we made it absolutely clear that, if the overseas territories did not accept the will of Parliament, it would be imposed through the ancient and arcane process of an Order in Council. Baroness Hodge and I took a legal opinion from some of the best lawyers in the country, including one of the most brilliant former Directors of Public Prosecutions, Lord Ken Macdonald. The opinion made it absolutely clear that the Westminster Parliament had the right, indeed the duty, to impose an Order in Council if the will of Parliament was not accepted in the overseas territories.
It so happens that the Foreign Office, with the skill and dexterity for which it is famous, interpreted that measure as meaning not that an Order in Council would be imposed after a year, but that it would be drafted after a year for imposition after another year—thus giving the overseas territories an extra year. That was condemned in the House of Commons by two former International Development Secretaries—myself and the Secretary of State for Northern Ireland, the right hon. Member for Leeds South (Hilary Benn)—and by two distinguished former Chairmen of the Public Accounts Committee, my right hon. Friend the Member for Goole and Pocklington (David Davis) and Baroness Hodge. It has still not been done. That is where we are now.
I echo the questions that the hon. Member for Bolton West asked the Minister. It is very important that we get a definitive approach from the Government to implementing that measure. The Minister is a good bloke. He and I have been discussing development matters for nearly 20 years, so I know exactly what his view is. I hope very much that he will stiffen up the relevant Foreign Office officials, who like to ensure good and harmonious relations, and who do not like a row. He must remind them that officials advise and Ministers decide. Ministers are the servants of Parliament, and Parliament decided as long as seven years ago why these matters must be brought to a head.
I have recently seen senior representatives from Bermuda and the Cayman Islands who, in my judgment, were truculent and disrespectful of the will of the Westminster Parliament. As the hon. Member for Bolton West rightly said, the BVI is one of the key countries that needs to accept that, if these overseas territories and Crown dependencies want to use the British flag and to have our monarch and our laws, they must also accept our values.
Although the hon. Member has admirably summed up the first of them, I will end my remarks by quoting three points in this excellent brief from the APPG, which I hope will be widely distributed. Backed by Transparency International, Tax Justice Network and others, the report deals with the impact of financial secrecy in the overseas territories on UK communities. The hon. Member spoke about Transparency International UK’s revelation that at least £5.9 billion-worth of suspicious funds have been used to purchase UK properties—an astonishing figure. Secondly, the Office of Financial Sanctions Implementation found that, since February 2022, over a quarter of all suspected sanctions breaches were made intermediary jurisdictions including the BVI and Guernsey. Finally, Transparency International UK’s research has linked to our overseas territories £250 billion-worth of funds diverted by rigged procurement, bribery and embezzlement in 79 countries, of which the British Virgin Islands accounted for 92%. What is more, Tax Justice Network’s report, “The State of Tax Justice 2024”, shows that countries are losing nearly £375 billion to multinational corporations and wealthy individuals using tax havens to underpay tax, with over £1 trillion in profits being shifted into tax havens.
Those are significant figures; they show why Parliament was absolutely right to vote for and implement the Sanctions and Anti-Money Laundering Act 2018. They show why today we need to hear the Minister say that his patience is running out, and that he will issue the Order in Council if the overseas territories do not accept the will of the British Parliament.
Several hon. Members rose—
Derek Twigg (in the Chair)
Because of the number of Members who have indicated that they wish to speak in the debate, with the authority of the Chairman of Ways and Means, I am imposing a time limit on Back Benchers’ contributions of two and a half minutes.
Jo Platt (Leigh and Atherton) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr Twigg. I begin by paying tribute to my hon. Friend and constituency neighbour the Member for Bolton West (Phil Brickell) for his work in this House and outside it to combat fraud and corruption. His steadfast resolve is to be commended. I have probably wasted half my time saying that, but it needed saying.
As we have heard, financial secrecy in Britain’s overseas territories and Crown dependencies enables tax abuse, fraud and organised crime, draining billions from public coffers and weakening enforcement, but I shall talk about the impact that it has on our towns locally. In Leigh and Atherton and across our country, our high streets are being hollowed out by rogue traders using these opaque corporate structures. Dodgy vape shops, fake candy stores and unlicensed barbers are increasingly used to launder money, sell illicit goods and evade scrutiny. These businesses often phoenix overnight, reopening under new names to dodge enforcement. They damage the reputation of our town centres and erode public confidence.
That is why, like my hon. Friend the Member for Bolton West, I want to highlight Operation Machinize, a multi-agency crackdown led by Greater Manchester police, co-ordinated by the NCA and supported by trading standards and our local authority teams. Across Greater Manchester, including Leigh, over 100 premises were targeted. The operation led to arrests, closure orders and the seizure of illegal vapes, illicit cigarettes and counterfeit goods. I thank all those involved.
Despite such action, the activity carries on and the authorities’ hands are tied. My office supported a raid in Leigh. It took over year to build the evidence and it was very clear, yet the business was reopened within an hour. That is why I have joined forces with my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn) to launch a national campaign calling for stronger powers, better co-ordination and real accountability. Our communities deserve better.
Jim Shannon (Strangford) (DUP)
It is a real pleasure to serve under your chairship, Mr Twigg. I thank the hon. Member for Bolton West (Phil Brickell) for leading today’s debate with such a detailed, informative speech. We are all impressed by the way he set the scene.
This United Kingdom is made up of four countries that are directly impacted by public finances in how we can distribute allocated money and what we have the capacity to deal with, so this debate is important. There is already a strain on public finance; we all witness it every day. We see our public Departments struggling, especially health and education. Whether it is here or back home, the issues are the same. We must also note that the Chancellor has not yet ruled out tax rises ahead of the Budget. The public are already taking on the burden of the UK’s debt.
We have seen, and the Government are aware of, countless instances of tax evasion and avoidance by people in the United Kingdom, especially in the jurisdiction of the Cayman Islands. That contributes to lost tax revenues across the country. My issue is the loss of tax revenue—money that should be spent in this country on our own people. The UK Treasury loses billions each year to offshore tax avoidance. Northern Ireland relies on the block grant from Westminster through the Barnett consequentials for our devolved Government, so this tax avoidance and evasion means less funding for crucial sectors in Northern Ireland such as health, education and infrastructure. That is frustrating for people. [Interruption.]
Joe Powell
I thank the hon. Gentleman for joining the last debate we had on this topic in this Chamber seven months ago. Does he agree that the link we are discussing between the overseas territories and the sorts of criminal activity that we all see demonstrates that the British public would be on side with cleaning up this mess?
Jim Shannon
I thank the hon. Gentleman for giving me the chance to get my cough sorted; I appreciate that very much. I agree with him.
There is obvious unfairness in taxation, especially because citizens face higher scrutiny than wealthy users of offshore arrangements. For example, the average person will at some point in their life be hit with a tax bill—that dreaded letter that comes through saying, “You haven’t paid enough tax.” The same does not go for those who partake in tax avoidance. The Treasury should do more to ensure that such people pay into the system just the same as everybody else.
The UK’s register of overseas entities 2022 revealed that several properties in Northern Ireland were held via entities in secrecy jurisdictions—more evidence of offshore-linked ownership of commercial and residential assets, especially in Belfast. Such investments can inflate property value and cause confusion over true ownership of property. That has a great impact on the ordinary person.
My focus and my responsibility are my constituents and the money that they must lose from their wages each month to increase Government spending. There must be more clarity and better insight. Government must do more to reinstate trust with the public, because there is disillusionment when it comes to finance. The Minister is a good and honest man. I look to him for an acknowledgment that Northern Ireland and the devolved nations suffer as a result of this and that he will endeavour to do more for this country to protect finance and, ultimately, my constituents.
Lloyd Hatton (South Dorset) (Lab)
It is a pleasure to serve under your chairship, Mr Twigg. I thank my hon. Friend the Member for Bolton West (Phil Brickell) for securing this timely debate. It is timely for two simple reasons. Just yesterday, the Bureau of Investigative Journalism revealed that HMRC is apparently refusing to publish its official estimate of how much tax is currently being lost due to tax dodging facilitated by tax havens. The Public Accounts Committee, on which I sit, found in July that HMRC simply is not able to track down those individuals who stash their fortunes offshore in tax havens including overseas territories. The Committee has pressed for greater transparency concerning tax that is lost offshore. Without that information we will never be able to properly assess whether HMRC’s efforts are effective, or even adequately resourced. Even more crucially, without that estimate our tax authority cannot effectively pursue those who deliberately avoid or evade paying their fair share of tax. It is very simple: we should be able to assess what tax is owed and then go on to collect it. HMRC must be able to get a firmer grip on the scale of wealth that is currently stashed away offshore, and publish its findings openly. We need to bolster its ability to spot and stop tax dodging offshore by the super wealthy.
That leads me to the second simple reason that this debate is timely. With the Budget fast approaching, in a time when the global economy is uncertain and dysfunctional, collecting the right amount of tax is not just a technical matter; it is about ensuring that everyone pays their fair share for the public services that we all rely upon. Holding even one billionaire to account on their tax obligations can influence the wider public purse. Unfortunately, we know that there are many individuals not paying their fair share, such as the sanctioned oligarch Roman Abramovich, who has used a British tax haven—again, the British Virgin Islands—to avoid paying almost £1 billion in tax owed to HMRC.
Alex Sobel (Leeds Central and Headingley) (Lab/Co-op)
This speaks to a wider point about Ukraine. Two years ago Chelsea was sold for £2.35 billion and now a company controlled by Roman Abramovich is demanding a repayment of £1.5 billion. The absolute secrecy and the intricacy of his controlled companies are having a direct effect on humanitarian efforts in Ukraine.
Lloyd Hatton
My hon. Friend speaks the truth. Unfortunately, Roman Abramovich is just one of a great many tax dodgers. The only way to ensure that everyone pays their fair share is to finally throw open the books and end decades of secrecy in every British tax haven. The fact that most overseas territories do not publish information on who owns companies registered on their shores makes them a highly attractive destination for tax dodgers. We all know—it is common knowledge—that those tax havens are a go-to destination for would-be tax dodgers looking to reduce their tax liabilities.
As we approach two critical junctures, the autumn Budget and the Joint Ministerial Council, I hope that Ministers appreciate the cross-party strength of feeling on this matter. There must be consequences for failing to end this kind of financial secrecy offshore. At the moment it enables crime, undermines HMRC and deeply weakens our public services. We cannot fail to act any longer.
Ms Marie Rimmer (St Helens South and Whiston) (Lab)
It is a pleasure to work under your chairmanship, Mr Twigg. I congratulate my hon. Friend the Member for Bolton West (Phil Brickell) for securing this important debate, and for his excellent introduction to it.
There is one particularly alarming case that we cannot overlook in this debate: that of Roman Abramovich. His activities epitomise how opaque offshore structures undermine UK financial integrity and global trust. In a letter to the Chancellor dated 10 September, the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) and I, as co-chairs of the APPG on Magnitsky sanctions and reparation, and my hon. Friend the Member for Bolton West, as chair of the APPG on anti-corruption and responsible tax, warned that Russian billionaire Roman Abramovich may owe HMRC up to £1 billion on profits from his multimillion-pound hedge fund investments. The Bureau of Investigative Journalism found that these hedge funds, although registered offshore, were being run from the UK. Under UK law, they should have been paying UK taxes. This investigation revealed that Abramovich benefited from a fraudulent scheme designed to evade €14 million in VAT due in Cyprus on his fleet of superyachts. Cypriot tax authorities have since filed criminal charges to recover more than €25 million in tax.
As our letter pointed out, HMRC has yet to respond to these findings. Even when journalists offered to brief HMRC’s permanent secretary, their offer went unanswered. That silence has raised serious concerns about the Government’s willingness to act decisively against those who use offshore networks and shield vast sums from scrutiny. The Government’s reply, sent in October, insists that
“everyone should pay the tax that is legally due”,
and highlighted new enforcement measures, including 5,500 extra compliance staff and the creation of a complex cross tax and offshore team. Those steps are welcome, but they do not answer our central question: why is there still no visible enforcement action in this case?
This is not just about one oligarch; it is about ensuring that our own financial system and the jurisdictions linked to it cannot be used to hide wealth, evade tax or escape sanctions. That £1 billion would build the 500 schools so badly needed in our poorest areas.
Steff Aquarone (North Norfolk) (LD)
I congratulate the hon. Member for Bolton West (Phil Brickell) on the way he has framed this discussion, because we are debating the impact of these tax arrangements in the overseas territories on UK communities. Every penny being shielded from paying the fair share in these places is a penny that is not getting into our NHS and is not going to support local schools or improve public transport.
Hard-working people in North Norfolk pay their taxes fairly, but thanks to the shady systems of places like the BVI or the Cayman Islands, the multimillionaires and multibillionaires can squirrel their money away and pay very little tax at all. With their shell corporations and subsidiaries, trusts and transfer pricing, the fat cats can get away without paying their fair share. It is a tax system that is “pay to play”, and the billionaires are playing all of us.
The BVI, the Cayman Islands and Bermuda all have something in common: up there, in the top left-hand corner of their flags, is the Union Jack. Many look at this as a legacy of centuries past, but it must actually represent the existing British responsibility for—dare I say, complicity in—tens of billions of pounds of corporate tax avoidance and abuse. We still hold power over many of these places, and we can take steps to force their hand if necessary. Orders in Council have been drafted previously, which can require our overseas territories to take this action. Governments have been understandably reluctant to take this step, not wanting to appear as the colonial hand reaching across the ocean to meddle in the affairs of its territories. But if we are to provide defence and security for them, stand up for their interests internationally and support them in their hours of need, it is not too much to ask that the Governments of those territories play fair.
Richard Foord (Honiton and Sidmouth) (LD)
The Panama papers, released in 2016, were so-called because the company whose papers were exposed, Mossack Fonseca, was headquartered in Panama. Is my hon. Friend aware that one out of every two companies listed in the Panama papers was incorporated in the British Virgin Islands?
Steff Aquarone
Yes, I am frighteningly aware, because I have tried to access these registers myself, and I have relied upon reports by other organisations to tell me what is really going on. When a country’s wealth in savings is a multi-hundred-times multiple of its GDP, that brings all this into sharp focus.
But to get back to my focus, when people in North Norfolk see their health services closing down, their children’s schools unable to buy glue sticks and the cuts to public services, and then they look at the billionaires and their yachts, mansions, football clubs and private jets, they smell a rat—they know something is not working here. Something has to change. That change is real, and it is possible, if the Government have the will and the guts to stand up for it. I hope the Minister and his Government can finally be the ones to end this scandal, secure money for our public services and stop these tax havens once and for all.
Rebecca Long Bailey (Salford) (Lab)
I thank my hon. Friend the Member for Bolton West (Phil Brickell) for securing the debate.
It is a simple principle: profits should be taxed where real economic activity takes place. Yet that simple principle is routinely violated, and multinational corporations move billions through paper subsidiaries, internal loans and royalty payments to places where little or no real business occurs. As we have heard today, the result is devastating. For the United Kingdom alone, it represents tens of billions lost—money that should be funding our hospitals, schools, transport and care.
Sadly, the UK’s current approach is still falling short, so what must we do? First, we need real transparency. Public country-by-country reporting must be mandatory. beneficial ownership registers must be complete, verified and accessible to all, and there must be comprehensive disclosure of cross-border affiliate transactions of intra-group pricing and payments in dividends flowing to low or zero-tax jurisdictions.
Secondly, HMRC must be properly equipped. The Department is dramatically under-resourced, so it needs resources, specialist expertise and the independence to pursue large-scale investigations without political constraint. The diverted profits tax should be strengthened, and penalties must actually bite.
Thirdly, we need structural reform at home. The UK must stop indulging secrecy within its own network of territories. It should require those jurisdictions to meet the same standards of transparency and accountability as the mainland. We must make domestic law fit for purpose by ensuring that multinationals cannot hide behind opaque structures, and that the UK does not act as a facilitator for profit shifting through low-tax dependencies.
Broadly, we must lead reform on the international stage. Britain should champion stronger global agreements—not merely a minimalist 15% tax floor, but a framework that stops profit shifting altogether. That means automatic exchange of tax information, higher global minimum rates, global minimum tax enforcement standards, pressure for jurisdictions that facilitate profit shifting to reform, and co-ordinated sanctions imposed against them if they refuse to co-operate. Fundamentally, this is about fairness, accountability and the very future of democracy itself.
Joe Powell (Kensington and Bayswater) (Lab)
I congratulate my hon. Friend the Member for Bolton West (Phil Brickell) on securing this debate and on his election to the chair of the excellent all-party parliamentary group on anti-corruption and responsible tax. I thank other Members here and the right hon. Member for Sutton Coldfield (Sir Andrew Mitchell) for championing this issue.
We last met in this Chamber to debate this issue seven months ago to the day, so it is helpful to have another debate to check on progress and demonstrate to the overseas territories the strength of cross-party feeling about it. Such debates do have an impact. My hon. Friend the Member for Bolton West and I were featured in a cartoon in a BVI newspaper not long ago for bringing this issue up so frequently in the House—I take that as a badge of honour.
The Government’s commitment to make London the anti-corruption capital of the world, as opposed to a dirty money capital, is extremely welcome. I know the Minister is personally committed to that agenda, and I look forward to the anti-corruption strategy in the next few weeks.
Sir Andrew Mitchell
Although the hon. Gentleman may have been in a cartoon, Baroness Hodge and I were the subject of a demonstration in one of the overseas territories, with placards saying, “Let’s hang Mitchell and Hodge”.
Joe Powell
I am sure we all agree that we would not support that action.
I want to make a serious point about where progress has been made. Some of us recently met the leader of Gibraltar, Fabian Picardo. Gibraltar now has an open register, and he told us that it has had no impact on investment there. In fact, it has attracted a different type of investor: those making sustainable, long-term investments into a reliable market where financial secrecy is not undermining the strength of the financial services.
I note that in the Public Gallery there is a representative of St Helena, which has made great progress—as others have said, we are also meeting representatives of the Cayman Islands and Bermuda. Although it is not perfect, there has been political commitment from those leaders to make progress and work together.
But the harms are still severe: serious organised crime, drugs on our streets, the high streets issue that many hon. Members have spoken about, sanctions evasion, tax dodging, environmental crime, destruction of tropical forests and property. I invite Members to join me on our “Kensington Against Dirty Money” walking tour, which Baroness Hodge and I conduct in my constituency. The No. 1 source of foreign ownership of property—my constituency has 6,000 such properties—is the BVI. The question is: why? It is not a victimless crime, and we need to understand why it is happening.
Let me very briefly talk about next steps. I really welcome Baroness Hodge’s trip to the BVI. She is a fearless champion for this issue. It would be good to understand the BVI’s red lines for a legitimate interests test. I think it should be broad, reliable and repeated access for those journalists who have helped to uncover so many issues in the past, while maintaining the Government’s long-term goal of publicly accessible beneficial ownership registers as the gold standard.
The summit on illicit finance next year is a huge opportunity; it was great that the Deputy Prime Minister confirmed that on the world stage at the UN General Assembly this year. The summit will be 10 years on from the 2016 anti-corruption summit, where public registers of beneficial ownership for UK companies were first introduced. Could the summit be the moment when we finally move forward on this issue, too?
Tom Hayes (Bournemouth East) (Lab)
I thank my hon. Friend the Member for Bolton West (Phil Brickell) for securing this debate. I recognise that there are many British overseas territories that are trying to do the right thing, but as we have heard today, some are magnets for dirty money and safe havens for the wealth of autocratic aggressors, laundering billions under the British flag. We must put a stop to that now.
Let us be clear about what the offshoring of dirty means here at home, in my constituency of Bournemouth East. It is money stolen from the public purse. Billions are being siphoned away that could go directly into our hospitals and schools, and into lower tax rates. This is about our housing crisis. When the super-rich pour their ill-gotten gains into luxury property in our towns and cities, homes sit empty while families cannot afford a roof over their heads. Young people tell me all the time that they have to move away to get on in life because they cannot afford a home in Bournemouth.
This is about our high streets, where there are trust-owned properties, hidden behind secrecy, lying empty and untouchable. Enforcement officers cannot act because they cannot trace the owners. Our high streets lie empty, robbed of vitality. Indeed, where there is activity, it is in the form of candy or vape shops that are so brightly lit they can be seen from space, themselves a front for money laundering. This is about money being stolen from workers’ wages and from the Treasuries of the world’s poorest nations. Twenty years ago we said, “Make Poverty History”; let us make dirty money history too.
Where does the trail lead? Time and again to the British Virgin Islands. After investigation, I can share that the total number of properties in Bournemouth East reported as offshore entities stands at 82. These are owned through entities based in the Crown dependencies or the overseas territories, and unsurprisingly the BVI figures prominently. Where entities are required to declare their beneficial owners, the choice of jurisdictions appears to be selected for their secrecy. Fifty-seven have not reported the price paid—just 25 have done so. Even when beneficial ownership is shared, details about the person benefiting from the property are not always available to the public.
Lloyd Hatton
My hon. Friend speaks very eloquently on that point. Living in communities like Bournemouth or my hometown of Weymouth, individuals and businesses seemingly do not have a choice about registering a business and being transparent about who owns a property and what tax they pay. Does he share my concern that unless we see further action here, there will be one rule for the majority of people in our constituencies, and seemingly a whole separate raft of rules for the very wealthiest?
Tom Hayes
I could not agree more. In Dorset, we have constituents who want to play by the rules but are routinely let down by the lack of tax transparency.
For the 25 properties that have reported the price paid, the combined total is £7.2 million. With the 57 shrouded in secrecy, the total sums involved will clearly be significant. The BVI should be supporting action to track down crime. Instead, as we have heard, it is giving criminals a head start, tipping them off when there is an investigation under way. Because half the entities exposed in the Panama papers were linked to the BVI, Parliament acted decisively. A deadline was set and the will was clear. However, here we are years later, and Parliament’s will continues to be flouted by the BVI.
My question to the Minister, who I know is an excellent tax transparency campaigner of many years, is: when the remedy exists, are the Government open to using an Order in Council if progress is not made in the next year? Without transparency, we cannot follow the money, and if we cannot follow the money, we cannot truly fund our public services. Without action to correct tax secrecy, we cannot claim to stand for integrity, and without integrity, we cannot truly say that democracy works in the interests of everyone.
Charlie Maynard (Witney) (LD)
I thank the hon. Member for Bolton West (Phil Brickell) for securing this debate. I also thank the right hon. Member for Sutton Coldfield (Sir Andrew Mitchell) for all his work on this issue and for his good speech today. Indeed, I have enjoyed the contributions from all hon. Members so far. The common theme has been explaining that what goes on in the overseas territories impoverishes people in the UK and takes money out of their pockets, which we all want to see stopped.
The Government have an opportunity to improve financial transparency by working with the overseas territories so that they adopt the same standards as the UK. The deliberate masking of corporate ownership is used to dodge tax, accountability and responsibility. It inhibits law enforcement and prevents citizens, workers and journalists from holding the powerful to account for their corporate actions.
If Labour wants bad actors to be brought to heel and to stand up for people in our country and globally, this is its chance; it has the power to act. The world’s top three corporate tax havens—the British Virgin Islands, which have been much discussed, the Cayman Islands and Bermuda—are all British overseas territories. Tax Justice Network estimates that, in total, profit-shifting through the UK and its Crown dependencies and overseas territories accounts for nearly a quarter of all lost tax revenues globally—over £80 billion annually. The continued lack of transparency in the overseas tax havens, or overseas territories, including the absence of truly publicly accessible registers of beneficial ownership, poses a real threat to the UK’s reputation and standing in the world.
Steff Aquarone
Does my hon. Friend agree that the documentation often exists to prove ultimate beneficial ownership, where it suits the individuals concerned? In some cases, we have a perverse situation where respectable UK financial institutions obtain that information in confidence when carrying out their required “know your customer” due diligence, without any obligation to pass on the details to UK tax authorities.
Charlie Maynard
I did not know that, so I thank my hon. Friend for informing me.
How can we ask others to get their own house in order when we enable these entities on UK sovereign territory to beggar their neighbour on a global scale? The UK Government bear responsibility for this lack of transparency, as British overseas territories are subject to UK law in certain respects. The Sanctions and Anti-Money Laundering Act 2018, or SAMLA, requires the UK to support these territories in implementing public registers of company ownership, which are a crucial tool for combating tax evasion and financial crime. More specifically, section 51 of SAMLA allows the UK Government to make regulations requiring overseas territories to establish publicly accessible registers of the beneficial ownership of companies, and if they do not do so voluntarily, we have the power to enforce them to do so.
Sir Andrew Mitchell
On the point made by the hon. Member for Bournemouth East (Tom Hayes) about an Order in Council, will the hon. Gentleman confirm that his understanding is the same as mine, namely that an Order in Council is not a discretionary matter for the Government, and that it is there in the legislation that he just referred to? Parliament insists that if these territories do not comply and provide open registers, an Order in Council should be issued.
Charlie Maynard
Yes; I fully agree with the right hon. Gentleman.
Direct legislation should be a last resort, but it is necessary and we need to move quickly. SAMLA came into force in 2018, and we are now nearly in 2026. This is just playing for time, which is bad. Since 2022, the UK’s register of overseas entities regime has required that the details of all corporate trustees in the chain of an overseas entity’s ownership structure are registered and that the ultimate beneficial owners of real estate are identified. Information on the overseas entity and the beneficial owners should be accessible to all, online and for free.
I will review those top three overseas territories. Bermuda and the Cayman Islands now have registers of beneficial interest that are up and running. The BVI is getting there slowly, with existing companies having been given until the end of this year to file their information. However, and importantly, none of these three territories has a publicly open and accessible register. Instead, there is all sorts of obfuscation. I will give some examples.
Some of these registers require inquiries to have “legitimate interest”, whatever that may be. Access is possible only
“at the Commission’s Secretariat’s office by appointment, with no copying or scanning allowed, on written request, payment of a fee, and some limitations, during working hours”.
That is not complying with the spirit of the law—indeed, it is really unhelpful—and we have it in our power as a country to stop it. It leaves a strong impression that all three are doing their damnedest to withhold information on such a scale as to make the existence of the registers completely pointless.
Online, fully accessible and public access for all is not in place in any of the three jurisdictions, so I have two requests. First, can our Government set a deadline beyond which they will not tolerate a failure to provide an open, transparent register? They must use all their powers and leverage to work with these democratically governed British overseas territories to find a way to bring them quickly into line with UK standards of transparency and accessibility regarding these registers.
My second request is about the Crown dependencies—Jersey, Guernsey and the Isle of Man. I understand that the Minister is here under the auspices of the FCDO, and they fall under the Ministry of Justice, but I hope that the Labour Government will very quickly look hard at applying the same UK standards to those Crown dependencies.
Mr Andrew Snowden (Fylde) (Con)
It is a pleasure to serve under your chairmanship, Mr Twigg. I thank the hon. Member for Bolton West (Phil Brickell) for securing this debate. Given that he represents the constituency I was born and raised in, I follow his contributions in Parliament more than he probably realises. His contribution today was as knowledgeable and constructive as everybody has come to expect.
I will comment on two points from his contribution. The first point is around the high street shops that we all see being used as a front for moving money, criminal gangs or hiding assets. When I was the Lancashire police and crime commissioner, that was a huge concern not only for the local communities, because of the damage it does to their high streets, but for the police in terms of being able to actually shut down different elements of organised crime gangs. The second point, which is linked to that, is the cryptocurrency element and finding out how the money—the cash—that has been generated in the UK by organised crime gangs disappears. I have sat in the room with the economic crime units of the Lancashire constabulary, looking at the cryptocurrency maps, and I could see where the dead ends suddenly appeared.
I also thank my right hon. Friend the Member for Sutton Coldfield (Sir Andrew Mitchell) for his long-standing work in this area and his articulation of how there has been a cross-party effort for a considerable time, particularly from the 2016 G8 onwards. It is always daunting to respond from the Dispatch Box with such an esteemed and experienced colleague sitting behind me.
We recognise that financial services are integral to the economies, employment and prosperity of many of our British overseas territories and Crown dependencies, as has been outlined today. The sector underpins livelihoods, sustains local public services and contributes significantly to overall trade within our shared British family, and we want to see it thrive.
From Gibraltar to Bermuda, those jurisdictions have been world-class financial centres. They attract investment, foster innovation and connect our economies to global markets. That success should be celebrated and, of course, accompanied by sound regulation and transparency to ensure that success can continue. Registers of beneficial ownership have been one of the most powerful tools in our fight against economic crime. They have enabled law enforcement here in the UK and in our overseas territories to track and expose those who seek to abuse our financial systems for criminal gain.
Following Russia’s invasion of Ukraine, those registers have been vital in tracing hidden assets, enforcing sanctions and going after dirty money, but there is clearly much more work to do on successfully and fully implementing them across all the overseas territories. Gibraltar already leads with a fully public register of beneficial ownership; the Cayman Islands and the Turks and Caicos Islands have now published legitimate interest registers; and others are due to follow in the next year or two. However, as has been recognised by my right hon. Friend and others, there is a significant delay.
The Sanctions and Anti-Money Laundering Act 2018, the Economic Crime (Transparency and Enforcement) Act 2022, the Economic Crime and Corporate Transparency Act 2023 and the new illicit finance campaign announced in 2024 all point to one shared goal—a clean, competitive and transparent financial system across the British family. There can be no place for dirty money, either at home or in British territories overseas.
The British family stand united against illicit finance. Together, we can ensure that our financial centres remain engines of good growth, rooted in trust and respected across the world. We want the financial services of our overseas territories and Crown dependencies not merely to survive but to flourish. However, they must be anchored in openness, accountability and the shared values that define our global reputation. I look forward to hearing the Minister answer the questions that have been posed by hon. Members, particularly on the Government’s approach to the countering illicit finance summit. At what point will the Government push harder for further measures?
The Minister of State, Foreign, Commonwealth and Development Office (Stephen Doughty)
I thank all right hon. and hon. Members, and particularly my hon. Friend the Member for Bolton West (Phil Brickell), for this well-informed and genuinely passionate debate. I have listened with great interest to a number of the examples that they raised. As he and others acknowledged, this issue is a personal priority for me, the Foreign Secretary, the Deputy Prime Minister and the Government as a whole. We must ensure the greatest standards of transparency, tackle illicit finance and tackle global corruption.
Members referred to our plans for the illicit finance summit next year, which I am working on closely with ministerial colleagues, and the anti-corruption strategy, which I have been working on closely with colleagues in the Home Office, the Treasury and elsewhere. We hope to present that strategy before the end of the year, and I hope that it will allay many of the broad concerns that have been raised by Members. I also pay tribute to Baroness Hodge for her incredible work as our anti-corruption champion. She has worked on these issues for many years, and I had the pleasure of working on them with her, but she is an independent voice, a challenge to the Government and a partner. She genuinely wants to find constructive solutions, and that has very much been the tenor of her work in the role so far.
I acknowledge the nuance in the contributions of right hon. and hon. Members on the subject of our overseas territories family and our wider British family. They recognised that substantial progress has been made in a number of them, that there are challenges in others and that not all overseas territories are heavily involved in financial services—in fact, some are barely involved at all. Some substantial progress has been made by the Government as a result of pressure and questioning not only from Members of this House but from the overseas territories, the wider NGO media and the global community. They want to see transparency and action against corruption and illicit finance for the purposes that were set out clearly by my hon. Friend the Member for Bolton West, as well as by many other right hon. and hon. Members.
Many Members drew connections between their constituencies, the priorities of the UK Government and the priorities of the Governments in the overseas territories. It is important to remember that lack of transparency, reputational damage, and the activities of very problematic individuals and serious and organised crime gangs, including sanctioned individuals, do damage not only in our constituencies but in the overseas territories. As the right hon. Member for Sutton Coldfield (Sir Andrew Mitchell) pointed out, that also does damage elsewhere in the world, particularly in the global south, Africa and other locations that, as he knows, I share his passion for.
My hon. Friend the Member for Bolton West set out very clearly how this problem impacts growth, housing and property, security and national security, and our national standing. That is why it matters, and that is why I know that this debate will not go away. The elected leaders in the overseas territories and their Governments will have heard clearly the strength of cross-party feeling, although I note with interest the absence of one party in this Chamber. I will leave Members to make their own minds up about that, but those Governments will see the strength of cross-party desire for action.
I am glad to say that we are taking an approach of co-operation and collaboration with our overseas territories. It is important to remind all Members of the constitutional relationship with our overseas territories. The Government and I respect their autonomy, decision making and elected Governments. They have extraordinarily robust debates in their own countries, and it is absolutely right that they should do so. I have set out my respect for them and my principles about working with them in partnership, and that will be reflected in the Joint Ministerial Council. Of course, the nature of the relationship with the Crown dependencies is distinct, and is for colleagues in the Ministry of Justice, Home Office and elsewhere to respond to, although I note the strong comments made on progress in the CDs.
It is also true that with our respect for their rights, the constitutional settlement and their autonomy, which I want to empower and strengthen, come responsibilities for overseas territories as part of the British family—responsibilities not only to the global rules-based order and the highest standards of financial transparency, but to their own populations and citizens. Hon. Members have made that point very clear.
Work in this area is vital. Illicit finance, corruption and kleptocracy are not abstract threats; they are direct challenges to our national security, our economy and the integrity of the global financial system. As has rightly been pointed out, these practices make it easier for criminal gangs to operate, undermine economies, make it easier to break sanctions and weaken the rule of law. The Government are leading the way when it comes to confronting these challenges, safeguarding our security and promoting integrity across the global financial system.
I was glad that hon. Members pointed out the excellent work on sanctions co-operation, including with the Cayman Islands. I had a chance to compliment the Cayman Islands on work on Operation Hektor on a recent visit there. We have also done excellent work with the British Virgin Islands, where our authorities have worked together on sanctions enforcement, and resource has gone into that. For all that to work effectively, of course, there needs to be transparency, because we cannot see what is really happening without understanding who owns what, where and how.
Sir Andrew Mitchell
Of course, the Minister is right about transparency—sunlight is the best disinfectant—but may I just pin him down on one point? He is heavy on collaboration and trying to get agreement, and he is right about that, but let us be absolutely clear that the constitutional relationship with the overseas territories and Crown dependencies is that Britain and Parliament are responsible for security issues and foreign affairs. These are security issues, and they relate directly to foreign matters. If the overseas territories do not agree to accept the will of Parliament, the Minister must make it clear to them that the Westminster Government will act via an Order in Council. That is not a voluntary thing; it is our duty. That is the nature of the constitutional arrangement, and the very clear legal opinion that Baroness Hodge and I secured underlines the point.
Stephen Doughty
The right hon. Gentleman is right about the legal and constitutional position. My position is that I want to work very closely and co-operatively, and that approach has succeeded in producing very welcome progress over the past year and a half. That is the way that I always try to approach our relationship with our friends in the overseas territories and the wider family. However, he is absolutely right, and the strength of feeling today should leave nobody in any doubt about the wider impact of the challenge and the concern, among many right hon. and hon. Members, about its direct impact in their communities. As I said, this is about the direct impact on citizens in the overseas territories themselves, as well as in the wider world.
I do not rule out any option in the future, but I hope that at first we can keep to and deliver on the commitments that were made at the Joint Ministerial Council last year. Some of those have been met; some have not. I have been very candid about that with the current president of the UK Overseas Territories Association, and have had very direct conversations with Premiers and others.
My hon. Friend the Member for Bolton West asked three specific questions. He asked about a visit with Baroness Hodge. I do not want to divulge our personal conversations, but he can be absolutely sure that we have met to discuss her findings, which she shared in great candour, as one would expect. I will take those on board. My expectation is that we will discuss this matter at the Joint Ministerial Council. The Premiers and elected representatives understand our position. Our expectation on fully public registers of beneficial ownership has not changed; nor has our expectation about the functioning of legitimate interest access registers in the meantime. I can assure my hon. Friend and others that we are engaging in forensic detail on how each of those works. For example, I had constructive conversations with the Premier of the Cayman Islands on my recent visit about the progress that it is making, and I expect further improvements in the months to come.
We follow these matters extremely closely and offer technical support and other advice on how we can work together co-operatively to deliver the most effective registers. For a register to be in place, with the necessary legislation, is all well and good, but if it does not function effectively because of fees or other barriers to its usability in practice, that is a serious concern. Obviously, there are territories that are yet to introduce such steps; the BVI, in particular, was mentioned.
My hon. Friend the Member for Bolton West asked whether I would meet his colleague from the AUGB and I would be happy to do that. The links to Ukraine that many right hon. and hon. Members mentioned are examples of why this matters. The Government’s recent action on Cambodian scam centres was mentioned. That was a shocking scam involving fraud against our constituents up and down this country, which involved property in London and involved a UK overseas territory, the BVI. I know the Premier of the BVI shares our concern about tackling that type of activity. It is in all our interests that we have the transparency to enable more of these scams—more of this shocking activity—to be exposed.
Many links were made to property, including by my hon. Friend the Member for Kensington and Bayswater (Joe Powell). I have seen examples in my own constituency of Cardiff South and Penarth, where residents faced with issues relating to fire and building safety have been unable to work out the original beneficial owners of large apartment buildings so that they can take appropriate action to ensure the safety of the buildings and their residents. Such issues impact every aspect of all our daily lives, including, as I said, in the overseas territories.
The BVI was mentioned extensively, so I want to be clear that the Government recognise some of the challenges. In August, a vessel owned by a BVI-registered entity transferred 2 million barrels of Iranian oil, which was delivered to China. Also this year, BVI-registered entities were discovered in the corporate chains of at least three sanctioned Russian oligarchs who own £35 million-worth of UK property, undoubtedly some of it in constituencies represented in this room. BVI-registered entities accounted for over 90% of identified suspicious funds invested through OTs into UK property between 2016 and 2024. We also have the challenge of inactive or dissolved BVI companies owning UK property. That creates substantial legal challenges around bona vacantia and ownerless assets, which many of us will have encountered in our constituencies.
As was rightly pointed out, in the three decades to 2018 more than 1,100 BVI-registered companies featured in corruption cases around the world. I know the seriousness with which the Premier and the Government there take these issues. I want to work with them in addressing them, because they impact all of us and they impact the BVI’s reputation, but to do that we need transparency and progress.
Colleagues made many important contributions and I will not be able to respond to them all in the time I have today, but I note the serious concerns about Mr Abramovich raised by my hon. Friend the Member for St Helens South and Whiston (Ms Rimmer). I am not able to comment on individual tax matters at the Dispatch Box, but we remain committed to ensuring that the proceeds of the sale of Chelsea reach humanitarian causes in Ukraine. We are deeply frustrated that it has not yet been possible to reach an agreement with Mr Abramovich and his representatives. The door for negotiations remains open, but we are fully prepared to pursue the matter through the courts if required, as we have said on a number of occasions recently.
Important points were raised, including by my hon. Friend the Member for Salford (Rebecca Long Bailey), about HMRC. I am sure she will be able to raise her points with the relevant Ministers, but what she said about why transparency principles matter was very powerful. My hon. Friend the Member for Bournemouth East (Tom Hayes) spoke powerfully about the impact on public services, on housing and on the high street, and about the challenges for our constituents. We have touched on all those points of nexus during the debate.
Financial secrecy is the oxygen that allows illicit finance to thrive and sanctions breaches to go undetected; it creates blind spots. It is, of course, a transnational problem. Dirty money pushes up property prices, making it harder for people to buy homes. Overseas corruption and illicit finance undermine economies, prop up kleptocratic regimes and threaten democracy. As the right hon. Member for Sutton Coldfield made clear, it is estimated that African countries alone lose around $90 billion a year in illicit capital flows. That is more than they receive in development assistance.
Jim Shannon
I thank the Minister for his detailed response to the issues that we raised. I mentioned the properties in Belfast that were allegedly held by certain people. Will he ensure that there is a concerted plan, driven from Westminster, for Scotland, Northern Ireland and Wales, to ensure that those people are held accountable wherever they may be in the United Kingdom?
Stephen Doughty
I absolutely agree. The hon. Member spoke powerfully for his constituency of Strangford, as he always does. The fact that this issue impacts every part of the United Kingdom has been made very clear during the debate.
I want to update the House on where there is progress and where challenges remain. At the last Joint Ministerial Council, overseas territories made important commitments to improve corporate transparency by widening access to their registers of beneficial ownership. As I set out in my written statement to the House on 22 July, all territories are making progress on their commitments to implement the registers, and that progress is welcome, but we need to keep up the pace and to challenge in cases where there has been real back-marking on the issue.
I compliment St Helena, which launched its fully public register on 30 June 2025. The Falklands has shown me its draft legislation and it will have that implemented by next year—there are some capacity constraints for its officials. As has been mentioned, Gibraltar has had a fully publicly register since 2020 without any damage to its economy; the Chief Minister speaks powerfully about that issue. I compliment Montserrat, which has had a public register since 2024. The Caymans launched its legitimate interest access register in February 2025, which allows access by a range of people, including journalists. Turks and Caicos launched an LIA register on 30 June, we understand that Anguilla will implement within the next few months, and we have talked much about Bermuda and the BVI.
I want to reassure all right hon. and hon. Members that this issue remains a major priority for the Government. The overseas territories will have heard this debate, and the strength of feeling. Our commitment on this issue sits alongside our commitments to the relationship with the overseas territories more broadly, and to tackling corruption and illicit finance globally, which will be highlighted by the summits that were mentioned.
Stephen Doughty
I am conscious that I need to leave time for my hon. Friend the Member for Bolton West to wind up the debate, so I will not.
I want to reassure Members that this issue remains a major priority for me and other Ministers, and I am very happy to continue to engage with Members on it. I hope that we can celebrate the progress as well as providing resolute challenge.
Phil Brickell
I thank all Members who contributed to this well spirited, genuinely cross-party debate, including my colleagues on the all-party parliamentary group on anti-corruption and responsible tax: the right hon. Member for Sutton Coldfield (Sir Andrew Mitchell), my hon. Friends the Members for South Dorset (Lloyd Hatton), for Bournemouth East (Tom Hayes) and for St Helens South and Whiston (Ms Rimmer), and my predecessor as the chair of the APPG, my hon. Friend the Member for Kensington and Bayswater (Joe Powell). I also thank my hon. Friends the Members for Salford (Rebecca Long Bailey) and for Leigh and Atherton (Jo Platt), the hon. Members for North Norfolk (Steff Aquarone) and for Strangford (Jim Shannon), and, for their thoughtful and impactful cross-party contributions, the hon. Members for Witney (Charlie Maynard) and for Fylde (Mr Snowden).
I especially thank the Minister for responding to the points that were raised. I know that he will continue to be a resolute champion for greater transparency in the overseas territories. I will do everything that I can to support him in that endeavour. I welcome his points that this issue is a personal priority for him; that the anti-corruption strategy on which he is working is genuinely cross-departmental with the Home Office and the Treasury; that elected leaders in the OTs will have heard and seen the cross-party strength of feeling here in Westminster today; that he has met Baroness Hodge on the subject of the British Virgin Islands—I will continue to support him in work in that jurisdiction—that the expectation around fully public registers of beneficial ownership has not changed; and that they have to function effectively. It is not just a case of having them in place; they must be properly implemented.
I acknowledge that the Minister recognised the scale of secrecy, particularly in the BVI, and the impact that has here at home. That is an important issue. As I outlined, financial secrecy in the UK’s overseas territories has real consequences on the streets here in Britain. Ultimately, this debate has been about fairness: fairness for the honest taxpayer, fairness for law-abiding businesses and fairness for every community that wants a level playing field. I look forward to working with colleagues from across the House, with Ministers across Government and with the anti-corruption champion to ensure that we are able to deliver fairness for everyone.
Question put and agreed to.
Resolved,
That this House has considered the impact of financial secrecy in the Overseas Territories on UK communities.