In a report entitled Moscow’s Gold: Russian Corruption in the UK, the Foreign Affairs Select Committee urges the British government to continue pursuing its drive to increase transparency in the UK’s offshore finance centres.
These include the Crown Dependencies – Jersey, Guernsey and the Isle of Man – and the British Overseas Territories, such as Cayman, Bermuda and the British Virgin Islands.
The report argues that too much ‘dirty’ Russian money is entering the UK, with the offshore jurisdictions acting as ‘laundromats’, due to the secrecy of their banking systems, before the money is funnelled into the UK.
The UK is taking an increasingly tough stance against Russia on the international stage, particularly after the poisoning of former spy Sergei Skripal in Salisbury, and views targeting the finances of wealthy Russians as one of its most effective weapons against Moscow.
Last month, the House of Commons passed an amendment to the Sanctions and Anti-Money Laundering bill calling for the British Overseas Territories, such as Cayman, Bermuda and the British Virgin Islands, to introduce a transparent register of beneficial ownership of companies by 2020.
The UK intends to legislate for the Overseas Territories if they do not voluntarily introduce transparent registers by the deadline.
The move, which would reveal who owns assets held by companies in the territories, has provoked an outcry from their governments who say that it is unconstitutional for the UK to legislate for them and that their financial services industries, where client confidentiality is important, will be damaged.
Another bill amendment to impose a similar register on the Crown Dependencies was dropped at the last minute following lobbying from the governments of the three islands. Jersey’s representatives said at the time that the UK had no power to legislate for Jersey.
The new report says: ‘While the government should continue to respect the autonomy and constitutional integrity of the Overseas Territories and Crown Dependencies on devolved matters, money laundering is now a matter of national security, and therefore constitutionally under the jurisdiction of the UK.
‘The Overseas Territories and Crown Dependencies are important routes through which dirty money enters the UK. This cannot continue.
‘While we recognise the important innovations that Overseas Territories such as the British Virgin Islands have made in making registers of beneficial ownership available to UK law enforcement, the scale of the problem and the implications for the UK’s security now demand a greater response.
‘We welcome the government’s commitment, now included in the Sanctions and Anti-Money Laundering Bill, to assist the Overseas Territories in establishing publicly accessible registers of beneficial ownership.
It adds: ‘We also call on the government to provide the same level of assistance to the Crown Dependencies, and to encourage them to take steps to meet the same standard of transparency.’
Jersey has a register of ownership which it makes available to law enforcement agencies and other authorities, but it is not publicly accessible.
The report accepts that transparent registers could damage the financial services industries of offshore centres and suggests the UK should assist in rebuilding their economies.
Jersey Finance chairman Geoff Cook said that accusing Jersey of being a route for ‘dirty money’ to the UK was ‘unfair and untrue’.
‘To be clear, Jersey is not a route for dirty money to enter the UK.
‘Money laundering is a crime in Jersey and we have robust and clear regulations in place to detect and deter it,’ said Mr Cook.
The Foreign Affairs Select Committee is made up of five Conservative, five Labour and one SNP MPs and is chaired by Tom Tugendhat MP.
