Source · Select Committees · Foreign Affairs Committee
Recommendation 7
7
Accepted
Paragraph: 20
Greater public access to information about beneficial ownership would improve private sector compliance with sanctions,...
Recommendation
Greater public access to information about beneficial ownership would improve private sector compliance with sanctions, pre-empt sanctions evasion and improve transparency about designated individuals. If the Government and Overseas Territories had achieved this by December 2020, as originally expected, these public The cost of complacency: illicit finance and the war in kraine 25 registers would have been in place before sanctions on Russia were imposed in response to the invasion of Ukraine. We recognise and appreciate the progress made by many Overseas Territories and Crown Dependency jurisdictions. We recommend that the FCDO ensures that public registers of beneficial ownership in the Overseas Territories and Crown Dependencies are faithfully implemented by early 2023 with full and free access to company data, not limited to single entries. In its response to this report, we ask the Government to explain what is causing the delay and what steps it is taking to speed the process. In the meantime, we recommend that the Government leverages its access to information through the Exchange of Notes procedure to proactively request information about non-transparent companies and assets, which it could then make available to banks and partner countries to support sanctions against Russia or publish publicly, where appropriate to do so.
Government Response Summary
The government states that Overseas Territories and Crown Dependencies are separate, self-governing jurisdictions with their own governments responsible for domestic affairs, including fiscal matters and financial services policy. They point to the freezing of Russian assets and the Exchange of Notes procedure to proactively request information about non-transparent companies and assets.
Paragraph Reference:
20
Government Response
Accepted
HM Government
Accepted
The Overseas Territories (OTs) and Crown Dependencies (CDs) are separate, self-governing jurisdictions with their own democratically-elected governments that are responsible for domestic affairs, including fiscal matters and financial services policy. UK sanctions apply in all OTs and CDs. The OTs have frozen Russian assets with a combined estimated value The cost of complacency: illicit finance and the war in Ukraine: Government Response 7 in excess of $9 billion. Examples include the Cayman Islands government who publicly reported that Russian assets with an estimated value of US $8.4 billion have been frozen. The British Virgin Islands (BVI) government has also publicly reported assets with an estimated value of more than US $400 million have been frozen to date. The CDs have publicly reported that they have frozen assets worth over £1 billion: Isle of Man, £1.9 million; Guernsey, £5 million; Jersey, £1.15 billion. These figures are likely to change. All OTs and CDs have agreed to introduce publicly accessible registers of company beneficial ownership. The Government does not accept that work towards these publicly accessible registers is delayed. The Government expects these to be in place by the end of 2023, which is the milestone towards which the OTs and CDs have been working since making their initial commitments to introduce them. The end of 2023 is a reasonable deadline, as it takes account of the limited capability and capacity many of the OTs have in this area, and the many other commitments they are required to deliver on within a similar timescale. The UK took three years to develop its register. For these reasons, bringing the deadline forward to early 2023 would not be achievable. Significant progress has been made by several of these jurisdictions. For example, Gibraltar’s register is already live and operational, and the Cayman Islands are working at pace, including issuing a consultation on the approach to introducing their register and recently meeting UK Government departments. BVI recently passed legislation to enable the framework for regulations to be made for their publicly accessible register in preparation for 2023. Smaller OTs, such as Montserrat and Anguilla, are working with the FCDO to update their systems to enable public access. The minimum standards that the Government expects to see from the OTs’ registers have already been set out alongside a written ministerial statement (HLWS361/HCWS369) on 14 December 2020. The FCDO is supporting the OTs with this commitment. Not only has the FCDO purchased a new company register for Anguilla, which will allow for public access, but the FCDO has been funding Open Ownership, a specialist NGO, to provide technical assistance to each OT. The Government notes the recommendation about the Exchange of Notes (EoN). Under the EoN arrangements, the CDs and six OTs with global financial centres share beneficial ownership information with UK law enforcement agencies. The EoN are voluntary arrangements and any changes to their terms would need to be agreed with all the relevant jurisdictions. The latest annual review of the implementation of EoN found that the arrangements are continuing to function well and provide valuable tools for UK law enforcement agencies. Information provided has enabled the seizing and freezing of illicit funds, including supporting the NCA’s efforts to secure the first Unexplained Wealth Order which led to the freezing of approximately £25 million. The information received under EoN has supported progress in complex investigations into the financial affairs of individuals believed to be involved in serious and organised crime. The next review is currently being conducted. The Exchange of Notes programme is open to all UK law enforcement agencies, and the NCA cooperates regularly through it with the CDs and OTs. If a third country wants beneficial ownership information from one of these jurisdictions, it is free to submit an MLA request to the CD or OT in question. 8 The cost of complacency: illicit finance and the war in Ukraine: Government Response