Beneficial Ownership in Overseas Territories and Crown Dependencies

Alan Duncan Excerpts

Tuesday 1st May 2018 Written Statements

[The Minister for Europe and the Americas (Sir Alan Duncan)]

Illicit financial flows are a global threat to prosperity and the rule of law. The IMF has estimated that money laundering globally represents between 2 and 5% of GDP. This criminal activity facilitates other crimes—including corruption, tax evasion and fraud. Successive Governments have led on this issue by promoting transparency, including through the OECD, G20 and Financial Action Task Force (FATF), and UK-led initiatives such as the 2016 anti-corruption summit. Increasing transparency about who owns companies registered or residing in the UK (beneficial ownership) is part of this agenda. We were the first country in the G20 to establish a public register of company beneficial ownership and—in December of last year—published our anti-corruption strategy covering the period from 2017 to 2022. The UK is rightly seen as a global leader on this agenda and, last month, Transparency International listed us as one of just three G20 countries with a “very strong” legal framework around beneficial ownership.

We recognise the concerns about money laundering and corruption in the Crown dependencies and overseas territories and we are committed to increasing transparency about the companies who operate there. We have worked co-operatively with the Crown dependencies and overseas territories over the last four years, including through entering into the exchange of notes in 2016 through which UK law enforcement has near real-time access to beneficial ownership information on companies incorporated in those jurisdictions. This has resulted in tangible benefits to law enforcement; as of February, the exchange of notes arrangements have been used over 70 times to provide enhanced law enforcement access to beneficial ownership data. This information has enhanced intelligence leads and investigations on illicit finance. We continue to work closely with the Crown dependencies and overseas territories to further strengthen their approach in this area.

At EU level, the UK went beyond the requirements of the fourth anti-money laundering directive in establishing a public register, and supported the inclusion in the fifth anti-money laundering directive of a provision that will require all EU member states to have the legislation in place to establish publicly accessible registers by the end of 2019. Non-EU countries including Afghanistan, Ghana, Nigeria and Ukraine have all either committed to establishing public registers or are in the process of doing so.

Domestically, the UK has committed to create a new register for overseas companies and to pass legislation by 2021. Once in place, overseas companies will not be able to buy property in the UK, or secure UK Government contracts, without submitting the necessary beneficial ownership information. We will urge and support other countries to take similar action.

Internationally, the UK has been promoting beneficial ownership transparency at relevant international fora—including the G20, FATF and the OECD. The UK is supporting the open ownership register (the global register holding beneficial ownership information) and is working with countries that are committed to using the beneficial ownership data standard. The UK is also supporting the extractive industries transparency initiative to implement its enhanced standard which requires the collection of beneficial ownership information. The UK has and will continue to offer technical assistance to other nations looking to establish beneficial ownership registers.

In 2016 the overseas territories and Crown dependencies agreed the exchanges of notes with the UK on the exchange of beneficial ownership information. They have made significant progress in implementing the commitments by introducing legislation and establishing, where they did not already exist, central registers or similarly effective systems. We are continually monitoring the implementation of the arrangements and the latest six-month review demonstrates that these are now in force and delivering benefits to UK law enforcement. They enable UK law enforcement authorities to establish the ultimate owner of companies registered in the overseas territories and Crown dependencies, and strengthen their ability to investigate serious and organised crime, including money laundering and tax evasion. The commitments they have made in the exchanges of notes with the UK exceed current Financial Action Task Force standards and put them ahead of most jurisdictions, including many of our G20 partners and some states in the United States. The bilateral arrangements provide for further, annual reviews and the basis for taking further action if required. In addition, there will be a statutory review of the arrangements next year, which will ensure parliamentary scrutiny. It is right that we continue to focus on the effective implementation of these arrangements, rather than imposing new requirements on the territories.

Furthermore, I can today confirm that the Government will use their best endeavours, diplomatically and with international partners, including through multilateral fora (such as the G20, FATF and the OECD), to promote public registers of company beneficial ownership as the global standard by 2023.

When all of this is put together, it is clear that the UK is the international leader on setting high standards for transparency on beneficial ownership. The Government are committed to influencing others in this regard, including the UK’s overseas territories and Crown dependencies.

[HCWS660]