The U.K. has indicated that it will issue an order in council instructing British Overseas Territories to establish fully operational public registers of beneficial ownership by 2023, if they have not done so by the end of 2020.
The U.K. revealed the timeline in discussions with the Overseas Territories at the Joint Ministerial Council earlier this month.
The House of Commons passed the Sanctions and Anti-Money Laundering Act in May, including a controversial opposition amendment calling for the U.K. government to force Overseas Territories to make information on the owners of companies and other entities registered there available to the general public.
British lawmakers believe having this type of information accessible on the internet would help in the fight against tax evasion, money laundering and financial crime.
Although most of Britain’s 14 Overseas Territories, including Cayman, have beneficial ownership registers that grant access to British law enforcement and tax authorities, the registers are not public.
The Cayman Islands government has described the action by the U.K. parliament as “a potential constitutional overreach” as it touches on financial services, an area of policy that is devolved to the territory. The government announced that it would therefore mount a legal challenge to such an order if it were ever made.
Although members of the Legislative Assembly in a session on Monday, Dec. 17, hailed the more detailed timeline as “a delay” resulting from the significant push-back against the measure, it does not change when an order in council would be issued. This is fixed in the U.K. act.
It just specifies and sets a deadline when the U.K. government expects the public registers to be operational, once an order has been made.
Testifying before the House of Commons Foreign Affairs Committee, Lord Tariq Ahmad, the minister responsible for Overseas Territories, said it is the U.K. government’s intention to work constructively with the territories and to provide technical and legal support.
“If by 2020 there is no public register, we will then issue an order in council which will then have a requirement for an operational register by 2023,” he said on Tuesday last week.
Gibraltar is currently the only overseas territory expected to have a public register by 2020.
The U.K. chose the year 2023 because it was the date set by a previous government under David Cameron for the worldwide sharing of beneficial ownership information.
Lord Ahmad said the U.K. would continue to lobby other countries to make public registers of beneficial ownership a global standard by then. But he noted, “In my personal view, seeing every territory across the world having public registers by 2023, I don’t think that will be the case.”
Asked whether this might then risk a flight of assets and economic damage to the territories, the Foreign Office minister said, “There is the risk that there will be some asset flow from certain territories to others which have a more liberal regime,” although he had not seen any evidence of that yet.