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Theresa May was forced today to open up tax havens accused of sheltering “dirty money” to avoid a landmark Commons defeat.

In a major victory for campaigners, the Prime Minister accepted a plea by Labour, SNP, Lib Dem and 21 Tory MPs who were prepared to defy her government.

Their Commons amendment will force British overseas territories, like the British Virgin Islands and Cayman Islands, to set up ‘registers of beneficial ownership’ by the end of 2020.

This will weaken island paradises’ secrecy laws making it easier to see who owns what.

Labour MP Dame Margaret Hodge said her amendment to the Sanctions and Money Laundering Bill will halt tax evaders, kleptocrats and terror funders.

She told MPs: “It will stop them exploiting our secret regime, hiding their toxic wealth and laundering money into the legitimate system, often for nefarious purposes.

“Transparency is a very powerful tool. With open registers we will then know who knows what and where, and we will be able to see where the money flows.

(Image: Getty Images North America)

“We will be better equipped to root out dirty money.”

She said £68billion of Russian cash had been moved to such tax havens in a decade and 85,000 UK properties were owned by companies based there.

Former International Development Secretary Andrew Mitchell added: “Sunlight is the best disinfectant.

“We are talking about illicit money from modern day slavery, money from the sex trade, laundered in this way.

“Money that is the proceeds of crime, terrorism and corruption. Money stolen from Africa and from Africans by bent politicians, dictators and warlords.”

Ministers insisted the UK was already “the international leader” in transparency in a lengthy plea hours before the vote.

But Labour MP Toby Perkins accused ministers of trying to “buy off” 21 Tories who signed the amendment, including big hitters Tom Tugendhat, Sarah Wollaston, Nicky Morgan and Ken Clarke.

(Image: Reuters)

Foreign Office minister Sir Alan Duncan insisted overseas territories already exchange information with the British authorities.

He added: “Legislating for them without their consent effectively disenfranchises their elected representatives. We would have preferred to work consensually.”

But he said the amendment was “without a doubt the majority view of MPs”.

He admitted it may “provoke a response” in tax havens but said: “I give the overseas territories the fullest possible assurance that we will work very closely with them.”

(Image: REUTERS)

Naomi Hirst of anti-corruption campaign Global Witness branded the climbdown “a huge win in the fight against the corruption, tax dodging and money laundering.”

Rebecca Gowland, Oxfam’s head of inequality, said: “Ending secrecy in UK-linked tax havens will help developing countries to recoup billions of lost revenue that could pay for much-needed schools and hospitals.”

Duncan Hames of Transparency International UK said: “Corrupt individuals everywhere will be deeply concerned.”

Jon Date of ActionAid UK said: “These measures will help flush out the corruption and tax evasion that keeps the most vulnerable people in the world locked in poverty.”

(Image: Jack Taylor)

Labour Shadow Treasury Minister Anneliese Dodds said the climbdown was “just a first step”.

She said the Tories should also back Labour pleas to include Crown dependancies such as the Channel Islands and the Isle of Man, and give Companies House more resources to investigate.

Dame Margaret Hodge’s amendment passed without a vote tonight because no MPs opposed it.

Elsewhere the government backed ‘Magnitsky laws’ that would slap new sanctions on foreign nationals accused of violating human rights.

The measures are named after Russian lawyer Sergei Magnitsky who died in prison after testifying against corrupt officials.

(Image: Getty)

The decision prompted a furious backlash from overseas territories tonight.

Orlando Smith, Premier of the British Virgin Islands, said he was “deeply disturbed” adding: “It is not only a breach of trust but calls into question our very relationship with the UK and the constitutional rights of [our] people.”

“We will ensure that this constitutional overreach does not set a precedent and that the rights of the people whom I represent are respected.”

All 21 Tory MPs who signed the amendment

Andrew Mitchell

Richard Benyon

Tom Tugendhat

Nick Herbert

Ken Clarke

Nicky Morgan

(Image: PA Archive)

Nick Boles

Dr Sarah Wollaston

Crispin Blunt

Dominic Grieve

Stephen Crabb

Adam Holloway

Heidi Allen

Bob Stewart

Dame Caroline Spelman

Nigel Mills

Anna Soubry

Jeremy Lefroy

Grant Shapps

Mark Prisk

Bob Seely