New Rules Posted for Financial Transparency in the 14 British Overseas Territories

Public registers naming the owners of companies in the 14 British Overseas Territories will have to be produced by 2020. 

          The UK government has made the ruling to stop the laundering of dirty money in the territories, which are nations, including the British Virgin Islands and the Cayman Islands, outside the UK but falling within its jurisdiction and sovereignty. 

             If any territory fails to bring in the measure the UK will impose its ruling.

          Transparency International, the Berlin-based campaigning NGO, has called the decision “a major victory in the fight against cross-border corruption”. 

          Research by Transparency’s UK Office in 2015 showed that shell companies registered in secrecy jurisdictions – a name often given to overseas territories – were involved in more than three quarters of property corruption cases investigated by the Metropolitan Police in London. 

          Nearly 80 per cent were registered in the British Overseas Territories, or in Crown Dependencies, self-governing British possessions comprising Jersey, Guernsey and the Isle of Man, for which the UK is responsible. 

          The number of businesses and individuals involved is a minute proportion as most companies conduct their affairs by the rules, certainly in the UK, but a fortune in illicit money has nevertheless flowed into shell companies in the Overseas Territories. 

          Transparency’s London office observed last year that suspicious sources in overseas havens, nearly half based in the British Virgin Islands, supplied £4.4bn ($5.84bn, €5bn) to buy UK property. 

          A BBC programme revealed that a Ukrainian gang bought eight high-end London properties using companies in the British Virgin Islands. The BBC conducted an investigation with Transparency and the Organized Crime and Corruption Reporting Project, a consortium of investigative centers, media and journalists in Eastern Europe, the Caucasus, central Asia and Central America.  

          Russia, too, was said to be implicated in the corruption. The London non-profit Global Witness, which campaigns against corruption and the exploitation of natural resources, estimates that Russian companies channeled £68bn through the British Overseas Territories between 2007 and 2016. 

          Some of the British Overseas Territories questioned the UK’s competence to impose disclosure. Orlando Smith, Prime Minister of the British Virgin Islands, complained: “It … calls into question our very relationship with the UK and the constitutional rights of [our] people.”

          Aid charities, by contrast, welcomed the intervention. Jon Date, ActionAid UK’s senior advocacy manager, said: “These measures will help flush out the corruption and tax evasion the keeps the most vulnerable people in the world, including women and girls, locked in poverty. 

          “Ministers will ensure that Britain will lead, not follow, when it comes to UK-linked tax havens.” 

          Margaret Hodge, one of the UK MPs behind the ruling, said: “I can’t think of another issue which is more moral than trying to intervene to prevent the traffic in corrupt money and illicit finance across the world.” 

          The ruling excludes the Crown Dependencies because the UK Parliament lacks the authority to impose its will on them.    

          However, Andrew Mitchell, another UK MP who asked for the ruling, expected the government “to make the point persuasively that we hope that the Crown Dependencies embrace the same ethical position and equal transparency”.