On 1 May 2018, the Minister of State for Europe and the Americas Sir Alan Duncan conceded the UK government accepted a cross party amendment that will force British overseas territories such as the British Virgin Irelands and Gibraltar to establish public registers of companies incorporated within their jurisdictions.
The government’s initial position was not to legislate for the overseas territories on this matter in order not to damage the territories’ autonomy. However, following strong support for the measure being voiced by a number of MPs during debate in the House of Commons, the government has agreed to the amendment.
The Bill passed all its House of Commons stages and will now be returned to the House of Lords in a stage known as ping pong.
Similar transparency initiatives were originally proposed by David Cameron and George Osborne in 2013 and gained more support in the wake of the publication of the Panama Papers. According to Transparency International, more than half of the offshore companies referred to in the Panama Papers registered in the British Virgin Islands.
The amendment instructs the Secretary of State, by the end of 2020, to prepare a draft Order in Council requiring the governments of any British Overseas Territory that has not introduced a “publicly accessible register of the beneficial ownership of companies registered in each government’s jurisdiction” to do so. The similar amendment applying to the Crown Dependencies (places such as Jersey, Guernsey and the Isle of Man) was not carried forward.
Commenting on the developments, the CEO of Jersey Finance, Geoff Cook welcomed the fact that these transparency measures were limited to British Overseas Territories, “underlining the contention that the UK Parliament cannot and should not seek to legislate for the Crown Dependencies”. Mr Cook emphasised the benefits of Jersey’s approach of maintaining a central register of ultimate beneficial ownership which “is available to the people who request that vital information”. Mr Cook noted that under such an approach, the right to personal privacy is better balanced against the interests of transparency than it would be if the register was public.
The governments of the British Overseas Territories and some of the bodies representing their financial industries expressed concern that the new measures will damage the economies of those jurisdictions. For example, the government of the British Virgin Islands “vehemently reject[s] the idea that [its] democratically elected government should be superseded by the UK parliament,” while the chief minister of Gibraltar, Fabian Picardo, described the measures as an “unacceptable act of modern colonialism”.