Beneficial Ownership Registers: Overseas Territories and Crown Dependencies

Stephen Doughty Excerpts

Thursday 7th December 2023 Commons Chamber

[Richard Thomson]

Lib? Well, it shows that there is perhaps a future for progressive alliances of one kind or another, Mr Deputy Speaker.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Maybe on cups of water.

[Richard Thomson]

Yes.

We are regularly invited to believe that the greatest threat to our public services and our quality of life comes not from a lack of resources, but from immigration. Indeed, the governing party is tearing itself to bits today over the difficulties that it has set itself in pursuit of the votes of those they believe might be influenced by such sentiments. I cannot help but feel that we would be in a significantly better place if only the Government put half the effort into clamping down on the opportunities for tax avoidance, evasion and lack of transparency as they put into telling us that there is a problem about boats.

The three countries that ranked highest in the corporate tax haven index 2021, compiled by the Tax Justice Network, were the British Virgin Islands, the Cayman Islands and Bermuda, which is not an accolade to be proud of. Where a score of 100 is the most permissive system and zero is the least permissive, the UK itself scored a less than clever 69. Greece scored 46.4, but seven of the eight territories that scored a perfect 100— I use the word “perfect” advisedly—are British overseas territories or Crown dependencies.

The UK Government and the territory Governments held a joint ministerial council in November, but there has been no statement. Will the Minister update the House on the progress that has been made? How will that affect the December deadline?

In 2014 the Foreign Secretary, who was then Prime Minister, made a number of strides forward in addressing this issue. We on the Opposition Benches are struggling with many things, including my voice, but we can see the benefits that come from Lord Cameron’s appointment. On these matters, we very much hope that he is able to pick up where he left off when he demitted office as Prime Minister.

If not the clock, certainly my voice is telling me that it is probably time to wind things up.

--- Later in debate ---

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

This has been a hugely useful debate on the implementation of public registers of beneficial ownership in the UK’s overseas territories and Crown dependencies. I thank my right hon. Friend the Member for Barking (Dame Margaret Hodge) for securing this crucial debate and for her tireless and unrelenting work on combating illicit finance, fighting for transparency and opposing corruption. As shadow Minister for the overseas territories, I draw attention to my declaration of interest.

We have heard some important, passionate speeches, not least from my right hon. Friend. The campaigning motivations behind her speech have been clear and transparent in what she has attempted to achieve over many years, as many hon. and right hon. colleagues have reflected on.

Important points have been made, including by my hon. Friends the Members for Mitcham and Morden (Siobhain McDonagh) and for Hackney South and Shoreditch (Dame Meg Hillier), on one of the key reasons for transparency, which is understanding who owns buildings, for example, and in what way they own them. I have had the same experience in my Cardiff South and Penarth constituency, with many residents affected by fire and building safety issues having difficulty establishing who is the freeholder and how the ownership is structured.

In an equally passionate speech, my hon. Friend the Member for Wallasey (Dame Angela Eagle) clearly exposed why this matters in so many different regards. My hon. Friend the Member for Hackney South and Shoreditch also explained the importance to the public purse of dealing with these matters. My hon. Friend the Member for St Helens South and Whiston (Ms Rimmer) made an equally passionate speech about why this matters to our efforts against Russia and its illegal and barbarous war in Ukraine, and in relation to our responsibilities elsewhere in the world, including in Africa and many other locations.

We heard strong comments from the Father of the House, as well as from my hon. Friend the Member for Huddersfield (Mr Sheerman), the right hon. Member for New Forest East (Sir Julian Lewis), my hon. Friend the Member for Hammersmith (Andy Slaughter) and the hon. Member for Hendon (Dr Offord). The Chair of the Justice Committee, the hon. Member for Bromley and Chislehurst (Sir Robert Neill), also made important points on the constitutional position of the Crown dependencies. I am no expert on the different legal opinions that have been expressed on that matter, but I have certainly had it put to me clearly by representatives of the Crown dependencies.

As Labour’s shadow Minister for the UK overseas territories, I want to begin by reiterating our unwavering commitment to each member of our global British family, their sovereignty and their right to self-determination. We are committed to a respectful but candid, productive but principled partnership between the UK and each territory, and the same is true in many respects of the Crown dependencies. It was a pleasure to meet the premiers, Chief Ministers and representatives of each overseas territory earlier this month during the week of the joint ministerial council and to hear their insights, concerns and perspectives on issues from security to sovereignty, climate change to infrastructure, and constitutional relationships to this very issue of financial services and beneficial ownership.

As I have said in previous debates, we need to be careful that we do not pursue misconceptions about the overseas territories and Crown dependencies. Each territory and dependency is distinctive and unique. Many of the overseas territories do not engage in financial services, and this debate applies less to them. We must also recognise that steps have been taken and that there has been progress in some areas. Indeed, reference was made to the public register of beneficial ownership in Gibraltar, to the exchange of notes agreement, which has existed since 2017, and to a number of other steps that have been taken. I also want to acknowledge— I have discussed this with them over the last two years—that a number of the overseas territories, and indeed Crown dependencies, have been integral to efforts on freezing Russian state and other assets since the onset of Putin’s illegal and barbarous war in Ukraine.

However, Labour believes that being part of the British family comes with clear responsibilities. We share common values, obligations and principles, including a robust commitment to democracy, the rule of law and liberty, and the protection of human rights. We also believe in the advancement of good governance and in ensuring proper democratic accountability and regulation, which of course includes transparency in financial services.

The 2018 Foreign Affairs Committee report was referred to, and I note the comments in it and comments made today about the interdependence between proper regulation and transparency and our wider national security and foreign policy objectives. That is why we must respond to the calls made by my right hon. Friend the Member for Barking and many others today for us to tackle these issues by urgently bringing about the full implementation of public registers of beneficial ownership in the UK’s overseas territories and, I hope, Crown dependencies.

Sadly, action on economic crime has been held back by years of Conservative delay and dithering. As has been referenced, we were first promised a register of overseas ownership by Lord Cameron in 2016, and it beggars belief that we are still debating how it should be implemented.

Section 51 of the Sanctions and Anti-Money Laundering Act 2018 required the Secretary of State

“no later than 31 December 2020”

to

“prepare a draft Order in Council requiring the government of any British Overseas Territory that has not introduced a publicly accessible register of the beneficial ownership of companies within its jurisdiction to do so.”

Yet here we are in 2023.

We should also remember the Economic Crime (Transparency and Enforcement) Act 2022, which was passed as emergency legislation in the light of the situation in Ukraine and the need to sanction Russian state entities and others involved in the invasion. Its primary purpose included setting up a register of overseas entities and their beneficial owners and requiring overseas entities that own land in the UK to register in certain circumstances.

We have repeatedly been clear that overseas entities should not be able to hide behind trusts, and it is important to explain why that matters. A recent article by Advani, Poux and Summers from the London School of Economics tells us that

“63 per cent of cases where beneficial ownership is not publicly reported”

involve “the use of trusts”. It also states:

“The Crown Dependencies and Overseas Territories are…heavily implicated here. Over 85 per cent of all trust arrangements come from…Jersey (32 per cent), Guernsey (25 per cent), British Virgin Islands (17 per cent) and Isle of Man (11 per cent).”

Russia’s invasion of Ukraine only highlighted why we need to see who owns what and in a way that is transparent and publicly available.

We have made clear time and again the need to bring forward much-needed reforms to Companies House, alongside a review of the register of overseas entities, to ensure that the right balance is struck between privacy and the public interest, including our ability, for example, to apply sanctions effectively. Here in the UK I am afraid we have been playing a game of catch-up. We need to move forward in that respect, working co-operatively with the overseas territories and the Crown dependencies, but taking action if it has not yet been forthcoming.

The views of the British public are clear. The results of a poll for the UK Anti-Corruption Coalition show that 72% of the British public believe that the Government should take more responsibility, working with offshore financial centres to tackle money laundering and tax evasion. That will require the opening up of corporate registries to public scrutiny, and for the end-of-year deadline to be met as a matter of priority. We are seeing, as never before, a confluence of the need to ensure good governance across financial centres and our own national security.

Let me ask the Minister some questions. First, will the deadline be met—yes or no? If not, what do the FCDO and the wider Government consider to be a reasonable deadline, and what will be done to meet it? Can he clarify the position in relation to the Crown dependencies in particular, given the comments that have been made today? Obviously I have seen the statement that they have made about coming forward with a public commitment—I think that was the phrase—in relation to their approach to access to information on registers of beneficial ownership by the end of December 2023, to replace the 2019 commitment.

I was pleased to read the Joint Ministerial Council’s communiqué, which said that

“the Overseas Territories and the UK…will be establishing a technical working group on beneficial ownership…and…the implementation of publicly accessible registers”.

What is happening about that, and what support is being given to smaller territories, in particular, to enable them to make progress? What is the group doing, and how will it move forward and actually deliver results? After the November JMC, the Minister pledged that he would report to Parliament before the recess on the progress toward the deadline. Is today that day, and can he provide a precise timeline? Could he also provide an update on the status of the draft Order in Council and the circumstances in which it would be invoked? Will he tell us what percentage of business covered by the 2017 exchange of notes agreement is being covered now? I understand that in 2019 it was 87%; is it now 100%, as promised? At what speed is the information being exchanged? The Cayman Islands has told us that it does it within 24 hours; is that timeline the same in every single territory?

I hope that the Minister can answer those questions today. We want to see progress as a matter of urgency, as part of a respectful, constructive but principled relationship with our overseas territories and Crown dependencies.

[Mr Deputy Speaker (Mr Nigel Evans)]

If the Minister can sit down by about two minutes to 5, that will allow Dame Margaret Hodge to sum up the debate.