The government has stalled on extending the current UK register of ownership of UK-based companies, introduced in 2017 to tackle money laundering and improve corporate transparency, to overseas territories and possibly even the three Crown dependencies, Jersey, Guernsey and the Isle of Man.

A longer than expected delay has now been confirmed by economic secretary to the Treasury, John Glen, who told MPs this week that the extension would not happen until 2023, despite original expectations of a launch date of 2021.

The issue was raised in a question on money laundering in the House of Commons on 5 March, when Lib Dem leader Sir Vince Cable questioned the minister on plans for extension of the transparency register.

Cable said: ‘Britain is now a world leader in financial transparency and dealing with money laundering owing to the public register of beneficial ownership.

‘What action do the Government propose to take to stop those standards being undermined by Crown dependencies, which rely on the British passport and British defence protection, but operate in a much more opaque manner?’

Glen told MPs: ‘We are committed to introducing those registers by 2023. Since 2017, we have worked closely with law enforcement agencies through the mechanism of the exchange of notes with the overseas territories, and that has led us to unexplained wealth orders and the forfeiture of bank accounts.’

When the Sanctions and Anti-Money Laundering Act 2018 was passed, it stated that the government needed to regularly update MPs with progress reports about progress towards register of beneficial owners of overseas entities and stated: ‘For the purposes of the detection, investigation or prevention of money laundering, the Secretary of State must provide all reasonable assistance to the governments of the British Overseas Territories to enable each of those governments to establish a publicly accessible register of the beneficial ownership of companies registered in each government's jurisdiction.’

The Act also included a deadline of 31 December 2020 for the government ‘to prepare a draft Order in Council requiring the government of any British Overseas Territory that has not introduced a publicly accessible register of the beneficial ownership of companies within its jurisdiction to do so’.

The original draft proposals sought to require the overseas territories to provide public information about the beneficial ownership of companies by the end of 2020. Those on the list included Anguilla, Bermuda, Cayman Islands, Gibraltar, Montserrat, Turks and Caicos Islands, and the British Virgin Islands.

Geoff Cook, former CEO of Jersey Finance and a consultant at law firm Mourant, said: ‘All this is troubling from a democracy point of view. Imposing the will of the British parliament, which in this instance is a relatively small number of actively engaged MPs, on other parliaments, against the will of their elected governments, undermining the constitutional integrity of the CDs (Crown dependencies) in the process. 

‘The CDs are actually already meeting or exceeding international standards (imposed by the FATF and OECD) in fighting financial crime. Companies in the CDs are not secret – beneficial ownership information is already shared with authorities in the UK, and with other countries through the OECD’s Common Reporting Standard. There is no evidence of the CDs facilitating the large-scale money laundering the amendment proposers suggest.

‘Making the CDs registers public would not bring them and the UK in line – although the UK’s register is public, it is not populated by verified data. It is self-reported and therefore carries no guarantees of accuracy. The CDs’ register is populated, by law, with accurate, up to date and verified information,’ he added.

Recent government initiatives to tackle money laundering include the creation of the economic crime strategic board and National Economic Crime Centre, a new oversight body - the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), as well as a review of suspicious activity reports and plans to curb abuse of Scottish limited partnerships.

Report by Sara White

Sanctions and Anti-Money Laundering Act 2018 Part 2 Anti-Money Laundering