Threat to finance industry averted at eleventh hour
UK politicians have dropped proposals to impose a public register of company ownership on Jersey that could have threatened the future of the Island’s finance sector.
Yesterday, the UK government accepted Labour MP Dame Margaret Hodge’s proposals for the British Overseas Territories, such as the Cayman Islands and the British Virgin Islands, to publish beneficial ownership details of all companies registered within their jurisdiction, which will reveal who actually owns assets.
But another proposed amendment – New Clause 14 – to the Sanctions and Anti-Money Laundering Bill, which would have seen the UK also try to impose a similar regime on the Crown Dependencies, was dropped.
It was feared in the Island that such an amendment would have undermined client confidentiality arrangements in the finance sector and would have been likely to pass because a number of Tory MPs had agreed to vote in line with the Opposition and other parties.
The proposals were dropped, however, following lobbying by politicians from the Crown Dependencies – including Chief Minister Ian Gorst and External Relations Minister Sir Philip Bailhache – who argued that the UK did not have the legal right to to impose its will upon them and that doing so would be ‘unconstitutional’.
Senator Gorst said that the UK Parliament had recognised the ‘constitutional autonomy’ of the Island with its decision, as well as its high level of regulation in its finance sector.
‘I am pleased that the UK Parliament has chosen not to seek to impose its will on Jersey, in direct contradiction to constitutional convention and ignoring the substantial work of the Island in matters of transparency and robust financial regulation,’ he said.
‘This decision recognises the constitutional autonomy of the Island, and preserves the established historical relationship between Jersey and the United Kingdom. It also acknowledges our position as a leading jurisdiction in matters of transparency and in the prevention of financial crime and money laundering.’
He added: ‘We will continue to pursue the highest international standards and will consult with the UK in relation to their implementation – including of the fourth and fifth Anti-Money Laundering Directives, the EU’s progressive legislation designed to counter money laundering.
‘This is in line with our existing good neighbour relationship with the EU and the fact that we have considered the implementation of previous EU Directives in this area. However, we will do this in our own time.
‘We will also continue active engagement with UK Parliamentarians to ensure that our regulatory and constitutional position are well understood in Westminster and continue to be respected.’
Calls for greater transparency have increased in recent years for greater transparency among the UK’s offshore jurisdictions, which are accused of assisting with money laundering and tax evasion operations – allegations that have been fuelled by widely publicised data leaks such as the Panama and Paradise Papers.
As things stand, Jersey has a register of beneficial ownership, but it is not publicly accessible. It is, however, made available to other countries’ tax and law enforcement authorities on request.
During yesterday’s debate, Andrew Mitchell MP, the leader of the Tory rebels, said that he hoped the Crown Dependencies would move towards introducing fully transparent registers as well.
‘They have a different governance structure but I do believe that Parliament will expect Her Majesty’s government to make the point persuasively that we hope the Crown Dependencies will embrace the same ethical position and equal transparency [as the British Overseas Territories],’ he said.
Mr Mitchell said that Lord Chancellor David Gauke, who is also the Justice Secretary, had been ‘most persuasive’ in making the case to drop New Clause 14.