Sanctions and Anti-Money Laundering Bill [HL]

Baroness Stern Excerpts

Wednesday 17th January 2018 Lords Chamber

Moved by

[Baroness Stern]

73: After Clause 41, insert the following new Clause—
“Public registers of beneficial ownership of companies in the British overseas territories
(1) For the purpose of preventing money-laundering, the appropriate Minister must provide all reasonable assistance to the governments of—(a) Anguilla;(b) Bermuda;(c) the British Virgin Islands;(d) the Cayman Islands;(e) Montserrat; and(f) the Turks and Caicos Islands,to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in that government’s jurisdiction.(2) No later than 1 January 2020 the appropriate Minister must prepare an Order in Council, and take all reasonable steps to ensure its implementation, in respect of any British overseas territories listed in subsection (1) that have not by that date introduced a publicly accessible register of the beneficial ownership of companies within their jurisdiction, requiring them to adopt such a register.(3) In this section a “publicly accessible register of beneficial ownership of companies” means a register which, in the opinion of the appropriate Minister, provides information broadly equivalent to that available in accordance with the provisions of Part 21A of the Companies Act 2006 (information about people with significant control).”

[Baroness Stern (CB)]

My Lords, Amendment 73 is tabled in my name and those of the noble Lords, Lord Kirkhope and Lord Collins, and the noble Baroness, Lady Kramer. I welcome the cross-party support this amendment has attracted. I am grateful to Mrs Kimberly Durrant, the representative of Bermuda in the UK, and Mr Benito Wheatley, director of the British Virgin Islands London office, for the useful briefing they have provided.

The amendment aims to bring transparency to the financial operations in the six British Overseas Territories that have financial centres by creating public registers of beneficial ownership of the companies based in them. One of the six—Montserrat—has already agreed to do this. Noble Lords will be aware that, since 2013, the Government have been working with these territories to develop registers of beneficial ownership that are rapidly accessible to law enforcement agencies. Amendment 73 would require the Government to go further and to give all reasonable help and support to those territories so as to make their registers publicly accessible. If this is not done, the Government should ensure it is done by making Orders in Council.

There is one change in the amendment since Committee, in that it requires the registers to be made public not by January 2019 but by January 2020. In a very useful meeting with the Minister last week—I add my voice to those who have expressed their admiration for him—he made clear that January 2019 was quite impractical for implementation. He is of course right: 2020 is much more realistic and would give a reasonable length of time for the change the amendment proposes to be brought in. When this amendment was discussed in Committee, the Minister very helpfully indicated the progress that had been made. He reported that Bermuda, the British Virgin Islands and the Cayman Islands have central registers of beneficial ownership information, or similarly effective systems, now in place. This is much to be welcomed.

This is the fourth time we have discussed in your Lordships’ House the need for the overseas territories to produce public registers. Each time, the case for ending secrecy becomes stronger as more information emerges about how illicitly obtained money is protected from discovery by anonymity. It is clear that not all those who set up shell companies in offshore locations are doing so because they have something to hide, but for those who do have something to hide—drug barons, arms traders, tax evaders, government Ministers in resource-rich countries stealing money that should go to the good of the people—anonymous shell companies meet their needs very well. They assume they will not be discovered, exposed to the public gaze or prosecuted. They can pursue their criminal activities with impunity.

In the absence of the transparency this amendment calls for, we have had to depend on whistleblowers and hackers to take great personal risks in order to expose this criminality. Thanks to the work of these whistleblowers and hackers, a flow of information has emerged, from the offshore secrets database in 2013, through the Panama papers of 2016 to the Paradise papers last year. It should be noted that more than 100,000 of the accounts revealed in the Panama papers were registered in the British Virgin Islands.

This information has given law enforcement and tax collection agencies a chance to pursue a considerable amount of criminality. For instance, Europol reported at the end of 2016 that it had found in the Panama papers database nearly 3,500 probable matches to organised crime, tax fraud and other criminal activities. The report on the recent work of the Government’s Panama papers task force revealed that in October last year 66 investigations were under way into tax evasion, organised crime and money laundering—and all that is the tip of the iceberg.

In Committee, the Minister explained very helpfully to your Lordships’ House why the Government were resisting the transparency required by this amendment. He argued that, as the overseas territories have their own democratically elected Governments, it is rare for this Government to legislate for them without their consent. Where this has occurred it has related to our international human rights obligations—that is, on the abolition of the death penalty and the decriminalisation of homosexuality. He told the House:

“Financial services are the domestic responsibility of territory Governments”.


He said that to legislate without their consent to require publicly accessible registers of beneficial ownership,

“would create considerable ill-feeling”,—[Official Report, 6/12/17; col. 1117.]

and jeopardise current co-operation. He did not argue, and this is most welcome, that requiring the registers in the British Overseas Territories to be publicly accessible would put the territories at a competitive disadvantage compared with other jurisdictions that provide similar secret financial services.

The Minister quite properly sees that what this amendment asks would be difficult and would require much patient negotiation. He is right. I too see the difficulties, but I also see hospitals and schools unbuilt because the money for them has been siphoned off; women trafficked and drawn into prostitution because there is no other way to feed their family or get healthcare for sick parents; mothers dying in childbirth because there is no money for maternity services; and much more.

The British Overseas Territories are British, and Britain is a global leader in fighting corruption. At the G20 summit in 2013, David Cameron promised that the UK would create a central register of companies’ beneficial ownership information. The UK is now the only country in the G20 to have established such a register. He was a strong advocate of such registers in the British Overseas Territories and elsewhere. The 2016 summit hosted by the UK was a significant event that moved anti-corruption work higher up the global agenda. Furthermore, the UK is at the forefront of providing development aid and promoting human rights internationally.

The Minister has an undoubted commitment to human rights and the rule of law. It has become very clear during the proceedings of the Bill that the levels of fraud, tax evasion and corruption that are causing so much misery in the poorest parts of the world are an abuse of human rights and the rule of law. I therefore urge the Minister to reconsider his view that we can wait until public registers become the global standard and only then require the British Overseas Territories to move to greater transparency. I beg to move.

[Lord Kirkhope of Harrogate (Con)]

My Lords, as a co-signatory to the amendment I support the noble Baroness, Lady Stern. I shall speak for only a few moments because we have already heard from her a very good explanation of the amendment.

I speak from the point of view of my support for the initiative that was originally taken by this country at the G20 summit in 2013 by my then right honourable friend David Cameron, and pursued by him very vigorously in the further widely supported summit in 2016, to provide this country with a position as a leader in the area of financial propriety. In my view, that is something that needs to be continued, particularly because this country is entering into a very uncertain future.

Whatever one’s views are about our present negotiations with the EU, and indeed the other negotiations that it will be necessary for us to have with the rest of the world, one of the areas in which this country has an enviable reputation—the noble Baroness referred to this a few moments ago—is the way in which we deal with financial matters. We are not perfect; everyone knows that, and other amendments that we are considering tonight will perhaps suggest that. Nevertheless, we are a country that has shown an example of being open and transparent and having standards. We have extended those things to public life, quality of products, the environment, health and, particularly, our financial conduct. Because of the uncertain future, we need constantly to look at this on the basis of David Cameron’s gold standard, rather than simply following behind global standards.

The Government have made progress, and I pay tribute to my noble friend, who has listened carefully to the concerns of those of us who wish to move in this direction. I also acknowledge that great progress has been made by both the Crown dependencies and the overseas territories in moving towards openness and transparency. However, what I believe to be a reasonable compromise on an ultimate date for the conclusion of public registers open to access will in my view tie in extremely well with this country’s future negotiations and arrangements, and the need for this country to attract more support all over the world from a great number of new investors and others who wish to be part of what we control.

This is a modest measure in many ways, but I am convinced that it gives a clear, positive and attractive measure that the world can see, so that it can continue to have total faith in this country’s integrity.

--- Later in debate ---

The concerns highlighted by the noble Baroness, Lady Stern, whom I respect greatly, and the noble Baroness, Lady Kramer, are of course concerns that we all share, but let us recognise that progress is being made and that the OTs have taken progressive action, and let us give them a chance to report back accordingly. Therefore, while I respect the intent behind the noble Baroness’s amendment, it is not something that I or the Government can accept. On the arguments we have heard today, and perhaps from the exposition and the detailed review I have given of the genuine progress that I know she acknowledges the territories are making, I hope that she is minded to withdraw her amendment.

[Baroness Stern]

My Lords, I am grateful to all those who have spoken—my co-signatories and those who supported the amendment, and those who did not. I say to them that I have never thought it was acceptable to say that one has to carry on doing dodgy business because, if we do not do it, someone else will. If one followed that line, nothing would ever get better. Since the amount of corrupt criminal money being hidden in various parts of the world grows every month, and the number of those who suffer from that is growing all the time, I would like to test the opinion of the House.