U.K. Government Agrees to Target Dirty Money in its Tax Havens

Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts

(Bloomberg) -- U.K. lawmakers backed a change to legislation on Tuesday that would force the government to push offshore tax havens to boost transparency in a bid to tackle money laundering.

Facing defeat, Prime Minister Theresa May’s government said it wouldn’t vote against a cross-party amendment to the Sanctions and Anti-Money Laundering Bill, which aims to ensure the U.K.’s overseas territories -- including the British Virgin Islands and Cayman Islands -- publish open registers of company ownership by Dec. 31, 2020.

“Transparency is a powerful tool,” Labour lawmaker Margaret Hodge said in a debate before the vote. “This simple measure of requiring British overseas territories, our tax havens, to publish public registers of beneficial ownership will transform the landscape.”

Former Prime Minister David Cameron had pushed for open registers as part of a broader global crackdown on corruption and tax avoidance. The government has faced mounting pressure on the issue, especially after the British Virgin Islands was caught up in the scandal triggered by a leak of documents from Panamanian law firm Mossack Fonseca.

It has also been in the spotlight since the poisoning of former Russian double agent Sergei Skripal in southwest England in March, an attack the U.K. blamed on the Kremlin. May has pledged to crackdown on illicit Russian assets, with lawmakers calling on ministers to do more to tackle the web of offshore shell companies used to invest in the U.K.

Russian Money

As much as 68 billion pounds ($93 billion) has flowed from Russia through British overseas territories, Hodge said. “These are all ways that dirty money finds its way into the legitimate system, and it infects all our economy and our culture,” she told the BBC.

Ahead of the vote, Labour economy spokesman John McDonnell called on Conservative lawmakers to support the amendment to show they are “serious about clamping down on tax avoidance and taking on the interests of the super rich.”

Foreign Office Minister Alan Duncan told the House of Commons that the government wouldn’t oppose the amendment, after its own proposed change intended to head off a vote wasn’t included for debate.

“We’ve listened to the strength of feeling in this house on this issue and accept that it is without a doubt the majority view,” he said. The government will offer the territories “the fullest possible” legal and logistical support to implement the measures.

‘Totally False’

However, May’s spokesman James Slack underscored the government’s reservations. “While we are committed to supporting the overseas territories in taking further action to tackle illicit finance, it is our view that legislating for them would be in breach of our longstanding constitutional arrangements and would disrespect their autonomy,” he said.

Lorna Smith, executive director of BVI Finance, told the BBC that accusations of corruption and money-laundering are “totally false,” and that the proposed amendment “smacked of colonialism” because it would infringe on the constitution of the British Virgin Islands.

©2018 Bloomberg L.P.

Bloomberg
Follow All The Political News In India On BloombergQuint
Subscribe to Bloomberg | Quint
The Daily Newsletter
News & Stock Alerts