An attempt to push British overseas territories to create publicly accessible beneficial ownership registries for companies, if necessary through an order in council, has been rejected by the U.K. House of Lords.
In its debate of the proposed Sanctions and Anti-Money Laundering Bill, the upper house of the U.K. parliament on Wednesday voted down an amendment to insert a clause into the bill that would have required the responsible minister to issue an order in council to force all overseas territories to implement a publicly accessible register of beneficial ownership of companies by Jan. 1, 2020, if they had not done so already.
The clause defined public registers as broadly equivalent to the U.K.’s own register of persons of significant control.
Cayman has established a beneficial ownership registry that is accessible by law enforcement and tax authorities during the course of active investigations. However, it is not open to the public.
Baroness Stern, who had tabled a similar amendment during the debate of the U.K. Criminal Finances Bill, said with each leak or hack, such as the Panama Papers and Paradise Papers, the argument for transparency becomes stronger. While she acknowledged that not all owners of offshore companies have something to hide, she said those that do are well served by anonymous shell companies.
Lord Collins of Highbury, who moved the amendment, said setting the highest standards and taking the lead is the way to reach international agreement. The proposal received significant pushback.
The Earl of Kinnoull said he disagreed with the amendment “wholly.” He noted that the overseas territories have their own legislators and the U.K. would not normally legislate with regard to devolved matters. “Were we to legislate without even to consult with those parliaments, it would be wrong, just as it would be wrong with regard to Scotland and Wales.”
He also argued that none of the overseas territories were cited for a lack of transparency by the recently published EU tax blacklist and graylist. The amendment would jeopardize goodwill and undermine the continual progress the overseas territories had made on the issue.
“This amendment is constitutionally wrong and unjust and causing unwarranted aspersions with a number of our loyal overseas territories,” he added.
Lord Ahmad of Wimbledon, the Foreign and Commonwealth Office minister, emphasized the efforts made by the Cayman Islands and other territories in establishing centralized registries and providing beneficial ownership information to U.K. authorities.
Rather than impose new requirements on overseas territories without their consent, the U.K. should focus on the existing cooperation and the progress that has been made, he said.
In cooperation with the U.K. government, the overseas territories had passed their own legislation and made technological investments. And as a result, “They are already meeting international regulations.” Changing the rules again “would be unacceptable,” he said.
Imposing public registers would only drive business to other less well-regulated jurisdictions, where British law enforcement authorities would not have the same level of access, Lord Ahmad said.
The House of Lords rejected the amendment by 211 to 201 votes.