The UK parliament has voted for legislation that requires Britain’s overseas territories to make public the real owners of all their registered companies by the end of 2020.
Transparency campaigners welcomed the move as a significant push by the UK against money laundering typologies that use shell companies or otherwise take advantage of low disclosure requirements.
But some of the overseas territories, including the financial havens of the Cayman Islands and the British Virgin Islands, say the decision is unfair, unconstitutional and will hurt their economies.
The UK government was dramatically forced on 1 May 2018 to agree to the measure for the territories to declare beneficial ownership of companies after the speaker of the House of Commons rejected the government’s last-minute compromise proposal.
Several members of the ruling Conservative party then voted against their own government to push the measure through the House of Commons.
The bill is seen as a major win for the financial transparency campaign but even before the vote, there had been substantial resistance to the legislation.
The British Virgin Islands complained that if the UK imposed a public register, it would “undermine the constitutional relationship” and hurt the islands’ economies.
The legislation had also been opposed in the UK. In January, the UK’s House of Lords – which cannot make legislation but can ask the government to amend proposed legislation – voted to block the government’s proposal for the territories to implement a publicly accessible register of beneficial ownership by the first day of 2020 (Trade-based Financial Crime, 31 January 2018).
Unconstitutional and unfair
After the vote, the Cayman Island’s Premier, Alden McLaughlin, said he was “deeply aggrieved” by the decision, which he sees as an “imposition of legislation, through powers that date back to the colonial era, over and above the wishes of the democratically elected legislative bodies of the overseas territories”.
The bill applies to territories including Anguilla, Bermuda, the British Virgin Islands, the Cayman Islands, Gibraltar, Montserrat and the Turks and Caicos Islands but not the crown dependencies of Jersey, Guernsey and the Isle of Man.
McLaughlin believes this creates an unfair anomaly. “Imposing such an obligation on the overseas territories while exempting the crown dependencies discriminates unfairly against the overseas territories,” he maintains.
Categories: Trade Based Financial crimes News