UK Money-Laundering Bill fails to address tax havens

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MPs will tomorrow (20th February) debate measures to address money laundering, amid concerns from NGOs that a current Government proposal fails to address a lack of transparency in UK-linked tax havens such as the British Virgin Islands. The UK Government has weakened its stance towards these tax havens since the Brexit referendum vote.

Campaigners are calling on the UK Government to ensure that public registers of the so-called ‘beneficial ownership’ of companies are introduced in the UK’s Overseas Territories that have financial centres, such as the BVI. A public register allows anyone worldwide – including governments, civil society and journalists – to see who owns or ultimately benefits from a company, and helps to prevent criminals and tax evaders from hiding ill-gotten assets anonymously.

In 2015, the UK led the world in legislating for a public central register of beneficial ownership in the UK. Former Prime Minister David Cameron wrote to and lobbied the Overseas Territories to introduce public registers. In 2016, Mr Cameron called such registers the “gold standard” in tackling money laundering and corruption.

However, under Theresa May, the UK Government’s position on public registers has weakened. The current Government says only that if public registers become the “global standard”, they expect UK Overseas Territories to “follow suit”.

The UK’s public register does not currently extend to its Overseas Territories, which include well known tax havens such as the BVI, Cayman Islands and Bermuda. The BVI was the most popular tax haven named in the Panama Papers. One out of every two companies that appear in the leak were incorporated in the BVI.

A poll of MPs commissioned by ActionAid in December 2016 found that 56% of MPs thought that before the UK leaves the EU, it should set a date by which it will require UK-linked tax havens to introduce public registers of beneficial ownership. Only 25% were opposed.

Commenting, Jon Date – Senior Advocacy Manager at ActionAid UK – said:

“The UK Government can’t effectively tackle money laundering while it allows criminals and tax evaders to hide their assets secretly in Overseas Territories like the British Virgin Islands.

“The use of UK-linked tax havens continues to rob the poorest people in the world of public funds that could help alleviate crippling poverty. We know from our own work on the ground that tax revenues are vital for promoting women’s rights – because when the public purse dries up and the social safety net collapses, women and girls suffer the most.

“If the Government is serious about the UK being a responsible global player, it should strengthen the Bill by setting a timeline for UK-linked tax havens to introduce public registers.”


Notes to editors:

1. ActionAid is an international charity working with the poorest women and girls in the world (charity number 01295174).

2. UK overseas territories such as the BVI have previously been used to hide money. For example, Nigerian dictator Sani Abacha used the BVI to hide at least $450 million of $2 billion he stole from the Nigerian government while in power.

3. The  Sanctions and Anti-Money Laundering Bill, which will have its Second Reading in the House of Commons tomorrow (20th), does not contain provisions to set a deadline by which the UK’s Overseas Territories with financial centres will be required to introduce public registers of beneficial ownership. The Government could amend the Bill to set a timeline. This measure is supported by a number of cross-party MPs including former Chair of the Public Accounts Committee Rt Hon Dame Margaret Hodge, and former International Development Secretary Rt Hon Andrew Mitchell, as well as NGOs including ActionAid UK, Christian Aid, Global Witness and Transparency International.