LONDON, England (CNS) — Britain’s House of Lords has rejected a proposal calling for the Cayman Islands and five other British Overseas Territories (BOTs) to implement a public register of beneficial owners behind offshore companies registered in the jurisdictions.
The vote took place during a debate on the proposed Sanctions and Anti-Money Laundering Bill, when a public register requirement was put forward as an amendment by cross-bench peer, Baroness Vivien Stern, who said it was for the purposes of “preventing money-laundering”. However, the peers voted down the amendment by 211 to 201.
In addition to the Cayman Islands, the jurisdictions that were the focus of the amendment were Anguilla, Bermuda, the British Virgin Islands, Montserrat and the Turks and Caicos Islands.
According to the Hansard record, Stern said that Montserrat has already agreed to a public register. She said the aim was “to bring transparency to the financial operations” in the territories with financial centres.
The amendment would have given the UK government power to demand that the offshore territories provide details of all the owners operating behind companies registered in the regional territories — a step that the Cayman Islands’ government and other territory leaders have been battling hard to avoid.
It was the fourth time the Lords debated the idea of the overseas territories producing public registers.
“Each time, the case for ending secrecy becomes stronger as more information emerges about how illicitly obtained money is protected from discovery by anonymity,” Stern said. “It is clear that not all those who set up shell companies in offshore locations are doing so because they have something to hide, but for those who do have something to hide — drug barons, arms traders, tax evaders, government ministers in resource-rich countries stealing money that should go to the good of the people — anonymous shell companies meet their needs very well.”
But Lord Flight, a Conservative member of the Lords argued against the proposal. He said that law enforcement agencies do not support public registers as they don’t help law enforcement and the UK’s dependencies have already shown themselves “extremely efficient in responding to the requests of policing and other agencies”. He also raised the concern that public registers of beneficial ownership can facilitate identity theft.
His fellow Conservative, Lord Naseby, who is a vice-chairman of the All-Party Parliamentary Group for the Cayman Islands, came to the defence of the jurisdiction and said that forcing the BOTs to have public registers when no other major competitors do so would see business move away. He also warned against legislating for overseas territories that are self-governing.
“To use an Order in Council for financial regulation, when the overseas territories have already adopted international standards while the UK has not, would expose the UK to legal challenge as potentially irrational,” he added.
Republished with permission of Cayman News Service