Crown dependencies and territories will not have to create registry of ownership that is open to public, minister says

Britain will not make fresh demands of its overseas territories to end tax secrecy at an upcoming anti-corruption summit, the minister for the territories has confirmed.



James Duddridge praised the leadership of the territories on tax transparency on Tuesday, saying they had taken a big step by agreeing to set up central registers of beneficial ownership that would be open to law enforcement agencies.

Speaking in the Commons, Dudderidge, a junior Foreign Office minister, said it was only fair to congratulate the territories on their “superb progress”, especially as some states in the US continued to allow companies to be formed without the need for a registry of beneficial ownership.



There are 17 overseas territories and crown dependencies under British sovereignty, including Bermuda, Gibraltar, Jersey and the Falkland Islands. They run their own domestic affairs and are not part of the UK itself.



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More than half of the companies implicated in the leaked Panama Papers are registered in UK overseas territories and crown dependencies.

The shadow foreign secretary, Hilary Benn, had asked the Foreign Office to explain why it was not pressing for a central registry of ownership that was open to the public, in line with the one being introduced by law in the UK in June.

“If openness is good enough for the UK, why should we accept a different position for our overseas territories?” Benn asked during Foreign Office questions in the Commons. He pointed out that the prime minister had said a public registry was necessary to help combat crime.

In a statement on Monday, David Cameron said all overseas territories apart from Anguilla and Guernsey had agreed to set up registries that were automatically open to law enforcement agencies, primarily the National Crime Agency and the Serious Fraud Office.

Among the contentious issues has been the degree of notice those agencies will be required to give to access the registry, and whether companies should be told they are being investigated.

One overseas territory said it was pleased with the agreement. The Cayman Islands premier, Alden McLaughlin, said: “This is what we wanted, this is what we have been pushing for three years, for a disaggregated system which leaves the beneficial ownership information intact with the service providers.”



The Labour MP Helen Hayes said Cameron should use the anti-corruption summit as a deadline by which the overseas territories should fall into line with UK policy, but Duddridge said there were other issues for the summit to tackle and further progress with the overseas territories was for the longer term.



Cameron has argued it would have been wrong to press the crown dependencies to follow the UK lead, saying: “If we had [done so] straight away, we would not have got nearly as far as we have”.

The new arrangements will not come into force immediately; for instance, no change will be introduced in the Cayman Islands until June 2017. But once the arrangement is working the ministry of financial services will have access to the data in the corporate services companies’ databases without the target companies or the service providers knowing. There will be no central registry run by the government.



The public registries agreement followed years of hard negotiations with largely resistant overseas territory administrations, but the partial deal is seen by campaigners as a blot on the effort to keep Britain at the forefront of the anti-corruption campaign.

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It is likely that Cameron will instead use the summit to declare that foreign companies that own property or bid on public contracts will be required to provide their beneficial ownership information.



Toby Quantrill, the principal adviser on economic justice at Christian Aid, said: “The prime minister himself knows that central registers do not solve the problem and that to curb the sort of activities exposed in the Panama Papers, the public, journalists and other businesses must be able to see those registers.”

Labour has said that if it was in government the Department for International Development would stop using the services of the “big four” accountancy firms to deliver aid projects if they or their clients continued to use tax havens.



The party said the Luxleaks scandal demonstrated how the firms promoted international tax avoidance, which costs developing nations $200bn (£140bn) a year, 50% more than the total amount they receive in aid from rich countries.

Diane Abbott, the shadow secretary for international development, said: “There is a clear conflict of interest in Dfid spending aid through these firms to reduce global poverty because these companies are themselves fuelling legal theft of the developing world’s public finances. This practice undermines development work.”

Cameron hopes that an action plan will be agreed at the summit, to which he has invited the leaders of Afghanistan and Nigeria, which have had significant corruption problems.

Cameron said he would “ask people, not on the basis that they run perfect countries or perfect governments, but on the basis of whether they will commit to public declarations on things like open beneficial ownership registration, sharing tax information and making sure that when assets are looted we can confiscate them and restore them to the people they belong to.



“If countries want to sign up to that, we will be encouraging them to come and do just that, however imperfect their record may have been in the past.”

Labour said the fact the Cayman Islands was claiming a victory against the UK showed Cameron’s “grand claims about his record on tax transparency are coming apart at the seams”.

John McDonnell, the shadow chancellor, said: “The Cayman Islands premier has let the cat out the bag, the truth is that the Tories are really playing into the hands of those who want to dodge their taxes.

“A register of beneficial ownership will be accessible only to local tax officials and only on request. Labour is clear that any register must be public so that wrongdoing can be spotted, rather than only when a company is already under suspicion.”