The secrecy clampdown on UK’s overseas territories is welcome – and overdue
Its rare that backbench amendments get adopted by the government without a vote, and rarer still that they become landmark changes. Yet yesterday opposition MPs and Conservative backbenchers forced the government into a major u-turn. The UKs overseas territories – such as the Cayman Islands, the British Virgin Islands (BVI), and Bermuda – will now have to introduce a public register of companies beneficial ownership, removing a cloak of legal anonymity that is often used to hide dirty money and illicit transactions.
The territories are either vital cogs in an efficient global financial system or unreconstructed tax havens used by firms and individuals to avoid paying their dues, depending on your point of view. But while setting appropriate tax rates is always up for political debate, corporate secrecy is a more fundamental issue concerning the rule of law.
Publishing the names people behind complex corporate structures is hardly a panacea for all financial crime, but it would remove the ability to hide inside the Russian doll layers of shell companies. At the moment civil society, journalists or businesses doing due diligence have little chance of finding out who owns a firm if the owner really does not want to reveal it.
Read more: Government agrees to make offshore tax havens more transparent
The BVI government makes the eyebrow-raising argument that the changes will threaten its long-term economic sustainability – why would secrecy scare off legitimate business? The UK version of the register already allows applications for exemption on legitimate grounds such as protecting child trustees or people under serious kidnap threat.
The overseas territories have reasonable grounds for complaint that enforcement of a public register from afar represents interference in matters which are customarily reserved for their legislatures. Yet it would be wrong to say that the UK should have no say in their affairs; the overseas territories still benefit from British defence and economic support.
Ex-Prime Minister David Cameron promised to “rip away the cloak of secrecy” from offshore territories, but decided to pursue a consensual approach rather than Westminster imposition. That approach has clearly failed. The time for action was overdue.
Few issues unite anti-corruption campaigners and opposition figures such as Margaret Hodge, Ed Miliband and Vince Cable with prominent Conservative backbenchers such as Andrew Mitchell and Tom Tugendhat. They have pushed through a cross-party amendment which will make Britain a leader in tackling global corruption. Yesterday was a good day in Parliament.
Read more: Q&A: MPs on verge of backing "historic" crackdown on corporate secrecy
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