The British Virgin Islands said the plan threatened its relationship with the UK

Tax havens operating under the British flag must expose their clients to public scrutiny after Theresa May backed down in the face of a Tory rebellion.

Overseas territories such as the British Virgin Islands (BVI) and the Cayman Islands have two years to fall into line with UK rules to identify those benefiting from assets held under their jurisdictions. Campaigners welcomed the move as a significant blow against corruption and criminality, including in Vladimir Putin’s Russia.

Opponents, however, warned that it set London on a constitutional collision course with the directly elected administrations of the territories and could precipitate their departure from the “British family”. Orlando Smith, premier of the BVI, said the “flawed” decision “calls into question our very relationship with the UK”.

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