Overseas Territories: Tax Transparency

Mark Garnier Excerpts

Wednesday 5th February 2025 Westminster Hall

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to serve under your leadership, Mr Turner, as it is to respond to the debate called for by the hon. Member for Kensington and Bayswater (Joe Powell). This will be one of those debates where there is ferocious agreement in all parts of the House. Before I get into the substance of my speech, it is worth mentioning that there is a legitimate role for tax havens. The City of London will certainly have investment funds located in tax havens in order to have tax neutrality for investors into those funds. Those investors have to pay their domestic tax, but they do not want to pay tax on the funds as they go forward.

It is also worth mentioning that, in some cases, small islands will look to see if they can grow their economies by providing financial services. Again, if they are doing that in a legitimate way, and one that fits with the wishes of the world, there is nothing wrong with that. But that is the important point: it is incredibly important that what they are doing is seen to be legitimate, right and fair for everybody else.

Turning to the substance of the debate, as hon. Members have rightly pointed out, there is still much work to be done on tax transparency. As part of the Sanctions and Anti-Money Laundering Act 2018, overseas territories were required to introduce public registers of beneficial ownership. In 2020, the previous Government set out in a written ministerial statement the expectation that the territories would implement registers by the end of 2023.

Intense discussions took place with overseas territories over the implications of the ruling by the Court of Justice of the European Union that publicly accessible registers were contrary to the EU charter of fundamental rights. Despite some overseas territories’ raising concerns over the ruling, which does not apply to the UK, the previous Government were satisfied with the lawfulness of the public register. I am sure the Minister will confirm that today. However, the impact of the EU ruling has led to delays in the overseas territories implementing the public register. The previous Government made it clear that they expected progress in 2024, yet, as we would all agree, progress remains far too slow.

Too many jurisdictions under our responsibility continue to allow opaque corporate structures that enable illicit finance to flow unchecked. That is particularly concerning in the light of recent geopolitical developments, including the increase in money from sanctioned countries—Russia —being laundered through offshore entities. I am looking forward to the Exchequer Secretary updating us on what progress has followed the November joint ministerial council for overseas territories. The Opposition welcome the communiqué, which reaffirmed the Government’s expectation that overseas territories should provide public access to beneficial ownership registers. It is right to commend Gibraltar and Montserrat, which have implemented public registers, and the Falkland Islands and St Helena, which have pledged to do so by April 2025. It is worth adding that, while not directly legislated for by the UK, the Crown dependencies—Jersey, Guernsey and the Isle of Man—have made commitments to greater transparency, too.

[Mr Mitchell]

Will my hon. Friend give way?

[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.