News 13th Nov 2023

Toward transparency in Britain's offshore financial centres

Jem Mills-Sheehy

Advocacy Officer

Jem is an Advocacy Officer working on Transparency International UK’s strategic engagement with Parliament and civil society to further the organisation’s goal of eradicating corruption in the UK and abroad. Jem joined in February 2023 and prior to this worked in partnerships at the Institute for Government, where he secured funding by engaging with commercial, academic and foundation-based partners in the UK and internationally. He completed a Master of Public Policy from the University of Sydney in 2019.

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As senior representatives of the Overseas Territories meet with the UK Government this week, a new poll shows the public want the government to work with these jurisdictions to tackle economic crime. Advocacy Officer Jem Mills-Sheehy explains what it means, and why it matters.  

With the UK Government and senior government figures from Britain’s Overseas Territories (OTs) meeting this week for the second Joint Ministerial Council (JMC) of the year, the timelines for the introduction of public beneficial ownership registers will be on the agenda. And with the end-of-year deadline for implementation fast approaching, the meeting couldn’t be timelier.  

This comes at a time when new polling from the UK Anti-Corruption Coalition shows more than 72% of the British public believe the UK government should take more responsibility to work with Britain’s offshore financial centres to tackle money laundering and tax evasion. With the OTs having committed to their introduction, this meeting presents a crucial opportunity to reaffirm they will deliver on their promises to open-up their corporate registries to public scrutiny. Doing so is vital to tackling corruption and economic crime.  

Some OTs are routinely exploited by criminals and the corrupt to launder their dirty money. Our research has identified at least 1,201 corporate vehicles from these jurisdictions alleged to have been used in 237 large scale corruption and money laundering cases worth more than £250 billion. The British Virgin Islands featured most prominently in our analysis – of the 1,201 entities identified, 1,107 (92 per cent) were registered in this jurisdiction.  

This is not to suggest the UK is immune to such issues. As our research has shown (time and again), the UK has also facilitated the international flow of dirty money. But, with two pieces of legislation designed to prevent economic crime having become law in the past two years, it is clear that a concerted effort is being made here in the UK to tackle this problem. Unless the OTs keep pace, they risk providing a backdoor that undermines this ambition.  

Because of the scale of economic crime exploiting some of Britain’s offshore financial centres, and the damage that it causes around the world, experts in corruption, money laundering, sanctions evasion and all other manner of economic crime have called for years for greater transparency over company ownership in the OTs. Westminster’s Foreign Affairs Committee also recently emphasised the advantages of publicly accessible registers, including for the UK’s sanctions regime and those of our allies, which they argue are “severely hindered by the failure to establish greater transparency of ownership”. Or in the words of the same Committee in 2019, under a different Chair: public registers are “a matter of national security”.

In the years since, the OTs have made their own public commitments to introduce these registers. These commitments, and the glimpses of progress we have seen, are to be welcomed. For example, both Anguilla and the British Virgin Islands have passed the primary legislation necessary for their implementation, while the Cayman Islands and Montserrat have published a draft bill and completed consultations respectively.  

But we also have concerns. For a start, despite this progress, it is not at all evident that this is sufficient for meeting the stated deadline at the end of this year.  

And while a ruling at the Court of Justice of the European Union last year, which has limited public access to company registers on privacy grounds within the EU, is being taken into account by some of the OTs as the timeline for delivery is confirmed with the UK next week, the EU’s court decision should not result in any further delay. The EU court’s ruling has no legal standing in places like the Cayman Islands or British Virgin Islands, and further, Britain has stayed firmly committed to beneficial ownership transparency here.  

Terms like ‘beneficial ownership transparency’ and ‘publicly accessible company ownership registers’ fail to capture why they are so very important. This is not, and should not be, a begrudging box-ticking exercise. The consequences of allowing corruption to flourish unchecked can be deadly. Corruption undermines health systems around the world, costing billions of dollars and resulting in thousands of needless deaths a year. It emboldens our adversaries and undermines international development, to the detriment of us all. But there are solutions. Time and time again, public beneficial ownership registers have been used to uncover criminality and expose the corrupt. We know they work because we’ve seen them work here. And while the best time to introduce these registers in the OTs was years ago, the second-best time is now.