Overseas Territories: Tax Transparency

Karl Turner Excerpts

Wednesday 5th February 2025 Westminster Hall

[Joe Powell]

I completely agree. Without transparency, we cannot follow the money. We have some prominent examples of properties owned by sanctioned oligarchs that came into the sanctions regime only after investigations uncovered those assets. Keeping the anonymous trust option available, without the requirement to declare the true owners, allows for exactly the sort of behaviour that my hon. Friend outlines.

The main opposition is from some highly self-interested trust lawyers, so I urge the Government to take on those claims and bring trust-owned property into the register, which would help us not only to fight economic crime but to revitalise our high streets, where buildings often sit empty because enforcement action cannot be taken when the true owners cannot be tracked down. Indeed, some of my constituents were evicted using a spurious section 21 notice by an anonymous landlord who was based overseas in a tax haven.

My local walking tour, as part of the Kensington Against Dirty Money campaign, ends outside Roman Abramovich’s frozen mansion, which he purchased for £120 million, on Kensington Palace Gardens. In the past week or so, Abramovich has again been in the news, this time for allegations that he owes approximately £1 billion in UK taxes. At the heart of this story are, again, the UK overseas territories. Abramovich and his advisers used a complex web of corporate structures, via Cyprus and the BVI, to use money from the sale of Sibneft back to the Russian Government at huge profit in 2005. They set up approximately 200 hedge funds and maintained that the operations were happening in the BVI, but it has now been uncovered that the real activity was continuing in London—indeed, in Stamford Bridge itself.

This is potentially the biggest tax case since Bernie Ecclestone, and it is vital that His Majesty’s Revenue and Customs has the resources it needs to investigate. Enforcement of the rules and regulations is critical to recovering as much money as possible for the Exchequer and supporting the Minister’s efforts to improve the public finances. It is also time to upgrade our anti-money laundering supervision regime for professional bodies such as accountancy and legal firms, so that dirty money does not flow through the City. The previous Government opened a consultation, but it has not been responded to.

This is urgent, because Abramovich’s is not an isolated case. For years, the BVI has been the global destination of choice for those seeking maximum secrecy for their money. It featured prominently in the Panama papers, in which half of the exposed entities were linked to the BVI. That is why Parliament has clearly stated its will that public registries of beneficial ownership should be implemented across the overseas territories and Crown dependencies.

At the first Joint Ministerial Council of this new Government, in November last year, the BVI, alongside other overseas territories, promised reforms to ensure maximum transparency, and the Government reiterated their commitment to full public access in due course. I absolutely support the Government in this mission, which is why it was so deeply disappointing to see the BVI’s proposals around company registries, which were published last month. Access would be severely restricted. One provision would even allow company owners to be notified not only that someone is attempting to uncover their identity, but of who is making the request and why, putting investigative journalists and anti-corruption activists at risk of legal or physical intimidation. Worse still, that warning system could tip off criminals and give them a head start, allowing them to move illicit assets before enforcement agencies can act. Such measures do not protect business or privacy; they protect kleptocrats and criminals.

We know it can be done: Gibraltar has shown us what can be achieved. It introduced a public register that is similar to the one that the UK has had for several years. If Gibraltar can do it and we can do it, so can the BVI, the Cayman Islands, Bermuda and all the overseas territories. We must not let our Crown dependencies off the hook, either.

Many overseas territories have cited the privacy concerns outlined in the European Court of Justice rulings, but I encourage them all to review the sixth anti-money laundering directive, which would ensure that journalists, civil society, law enforcement and businesses with anti-money laundering duties all have access to the register anonymously and in full. I continue to believe that public registers are the best solution for the overseas territories and Crown dependencies, but minimum progress would be to meet that European regulatory standard.

It is clear from all the evidence—I expect we will hear much more today—that we need to do far more collectively to support the overseas territories to make progress on economic crime. The path forward is challenging, but I know the Government are seized of its importance. The overseas territories must meet the June deadline to make progress towards public registers. There must be no further delays. Trust-owned property should be included in the register of overseas entities. AML supervision should be strengthened to halt the enablers of dirty money. HMRC, the National Crime Agency and other enforcement agencies must proactively make cases and have the skills and resources they need.

To galvanise our international partners, the Foreign Secretary’s proposal for a summit of financial centres here in London would create a focal point for aligning rules and policies. I hope this debate will galvanise support across the House for the vital mission of tackling corruption and economic crime.

[Karl Turner (in the Chair)]

I remind Members that they should bob if they wish to take part in the debate.

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[Several hon. Members rose—]

[Karl Turner (in the Chair)]

Order. Before I call the next speaker, I will impose an informal time limit of five minutes.

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[Several hon. Members rose—]

[Karl Turner (in the Chair)]

Order. With a time limit of four minutes, I call Bobby Dean.

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[Mark Garnier]

I hope my right hon. Friend will not mind if I do not, because I am conscious that we have very little time.

It remains a concern that major financial centres such as the British Virgin Islands, Bermuda and the Cayman Islands remain resistant to these measures. Will the Exchequer Secretary provide an update on what pressure the UK Government are placing on those overseas territories that are not fully complying with the Sanctions and Anti-Money Laundering Act 2018?

The UK Parliament has sovereign powers over the overseas territories. Therefore, we cannot allow any jurisdiction to water down these proposals. The previous Government allowed for an interim step of a legitimate interest model, which would allow access to beneficial ownership information by members of the public with a legitimate interest in accessing it, including media and civil society organisations involved in the fight against illicit finance and money laundering. Even if that might be a stepping-stone for some overseas territories, I hope the Minister will confirm that it should not dilute efforts to create a public register.

Overseas territories must align with the UK’s own standards and comply with UK law. What is the Government’s plan if further delays occur? Will there be consequences for non-compliance? This Government and the previous Government have repeatedly stated that tackling illicit finance is a priority—we agree on that point. The current Foreign Secretary has declared:

“The golden age of money laundering is over”.

I am sure the Minister would agree that our overseas territories and Crown dependencies must not become the weak link in the fight against money laundering and corruption.

[Karl Turner (in the Chair)]

Before I call the Minister, I remind hon. Members that the Member in charge normally has two minutes at the end to wind up. I would be grateful if the Minister bore that in mind.

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[Joe Powell]

If I am allowed to.

[Karl Turner (in the Chair)]

Sure.

[Mr Mitchell]

We have another three minutes, so I am keen to help out.

To be clear, we are talking here about dirty money and the source of this money—money stolen from Africa and from Africans. The baddies have all the best tunes, and they have the money to get their way, so the forces of law and order are always fighting to catch up. It is important to emphasise the open registers. The mist fell from all our eyes when, thanks to the BBC and The Guardian newspaper, the Paradise and Panama papers were published. They showed that, without this open register approach, we cannot join up the dots to see what those clever villains are doing, catch them, trap the money and hopefully return it. The hon. Gentleman and I agree completely, but I hope that we can carry the Government with us.