London (AFP) – Britain’s overseas territories will be required to publicly reveal who ultimately owns the companies registered there after the government on Tuesday bowed to MPs’ demands to improve transparency in tax havens.
Territories such as the Cayman Islands, the British Virgin Islands and the Turks and Caicos will have until December 31, 2020 to create public registers of so-called beneficial ownership or face direct intervention by London.
Prime Minister Theresa May’s minority government had favoured a more consensual approach but acknowledged Tuesday that it would not be able to block an amendment in the House of Commons backed by many of its own MPs.
Margaret Hodge, an opposition Labour MP who tabled the amendment to the sanctions and anti-money laundering bill, welcomed the concession.
“When it is passed, this simple measure of requiring British overseas territories — our tax havens — to publish public registers of beneficial ownership will transform the landscape,” she said.
“Whether it is a tax avoider or tax evader, a kleptocrat, a criminal, gangs involved in organised crime, money launderers or those wanting to fund terrorism, it will stop them exploiting our secret regime, hiding their toxic wealth and laundering money into the legitimate system.
“Transparency is a very powerful tool. With open registers we will then know who owns what and where. And we will be able to see where the money flows.”
Transparency International, a campaign group, said it was a “hugely significant moment in the fight against corruption” around the world.
“These jurisdictions have long been the Achilles Heel of our defences against dirty money,” said director of policy Duncan Hames.
Foreign Office minister Alan Duncan said Britain had helped lead coordinated global action to promote transparency. It has established its own register for British firms, and was planning another for overseas companies.
He noted many overseas territories had created central registers of ownership accessible to law enforcement agencies, but expressed concern about the “significant” economic impact of forcing them to go further.
He also noted the democratic questions raised by directly intervening in the affairs of autonomous states.
But he told MPs: “It is without a doubt the majority view of this House that the overseas territories should have public registers ahead of it becoming the international standard.”