26.As the FCO acknowledged in 2012, the UK Parliament has, as a matter of constitutional law, unlimited powers to legislate for the OTs. In practice it tends only to legislate in areas that are reserved to the UK, such as foreign policy and national security, and not in areas devolved to the OTs without their consent. The passage of the Sanctions and Anti-Money Laundering Act 2018, however, is an indication of the complexity of separating reserved and devolved matters. Sanctions and anti-money laundering (AML) measures are a tool of foreign policy and national security, but they are largely implemented by the financial services industry, which is a devolved matter. This specific piece of legislation, which may impact the financial services sector in the OTs, has placed a strain on Parliament’s relationships with the OTs, but the evidence we have received suggests that there are concerns within some OTs that go deeper than the material impact on financial services. This Act has raised questions about whether and how the OTs’ voices can be heard in Parliament when they are not directly represented in either House.
27.The Sanctions and Anti-Money Laundering Act (SAMLA), which became law in May 2018, makes provision for an independent post-Brexit sanctions and AML regime. It requires the Foreign Secretary to assist the OTs to establish publicly-accessible beneficial ownership registers and allows for the Foreign Secretary to impose them by Order in Council if the OTs do not do so by 31 December 2020. The need for this measure was highlighted to us by Transparency International and Global Witness, who told us that “there is a clear correlation between corruption cases and the use of the secretive corporate vehicles based in the [OTs]” and that “transparency about the beneficial owners of these companies has been identified as an important part of the solution to tackling the laundering of corrupt and illicit funds”. They point to evidence uncovered in the UK of: a company registered in BVI providing financial services to North Korea’s main arms dealer; the use of front companies in offshore locations including BVI to register North Korean ships; and the use of a BVI-registered company by the man once in charge of Muammar Gaddafi’s long-range missiles programme to buy properties in the UK.
28.This link between OT-registered companies and money tied to autocratic regimes echoes the evidence we received during our inquiry into Russian corruption in the UK. In that inquiry journalist Juliette Garside, who investigated the Panama papers and Paradise papers for the Guardian, told us that, “in Russia, one of the names for a shell company—one of the words people use—is BVI”, while Tom Keatinge, from RUSI’s Centre for Financial Crime and Security Studies, told us that “the OTs seemingly have a free rein to benefit from their association with the UK without adhering to the expectation and standards increasingly required of those operating within the UK itself”. This suggests that the lack of publicly available and transparent information on OT-registered companies has foreign policy and national security implications. The evidence we received from some OTs, however, suggests that they see it solely as a financial services matter, which is a devolved area.
29.For some OTs, SAMLA is not a problem. The Gibraltar government told us that it is already committed to publishing a register. Anguilla’s representative, Blondel Cluff, told us that Anguilla “has no problem with the beneficial ownership requirements stipulated by the UK” and is “working closely with HMG on a limited budget to upgrade its technology for recording and reporting beneficial ownership”. Other governments, notably Bermuda, BVI and the Cayman Islands, strongly oppose SAMLA. These territories’ economies depend heavily on financial services, both in terms of jobs and tax revenue. Some politicians in these territories have been heavily critical of the legislation. For example, on 24 May, the day after SAMLA was passed into law, the Deputy Premier of BVI, Kedrick Pickering, is reported to have told an audience at a public rally in the BVI capital, Road Town, that “we have declared open war against the UK”. According to local media reports, he “then told members of the BVI public to prepare for battle and stay tuned for various strategies”.
30.Dr Elise Donovan, BVI’s representative in the UK, told us that people who register companies in BVI are doing so because they want privacy not secrecy, that BVI has a strong reputation as a reputable financial services centre, and that it has Financial Action Task Force-compliant due diligence systems in place to verify ownership information and share it with law enforcement agencies in the UK and elsewhere when requested. Dr Donovan added that publishing registers of beneficial ownership before it is a global norm would make BVI uncompetitive. She also indicated that the BVI government would “explore the options” in terms of publication of the registers before the end of 2020, as envisaged in SAMLA:
The position has been clearly stated publicly by the British Virgin Islands Premier, Dr D. Orlando Smith OBE, who has said that the BVI will explore all opportunities and positions to protect the interests of our financial services industry, which, as I have pointed out, accounts for 33% of our GDP and 60% of our Government revenues. We respect the UK Parliament, but we will explore the options, including legal options, as the Premier has said, unless it becomes a global standard so that we do not feel that we are being put in a disadvantageous position. We do not feel that public registries are the solution for detecting and deterring financial crime.
31.This echoes what Bermuda told us in writing. When we asked the Bermudan Premier David Burt if Bermuda intended to publish a register, we were told that: “Bermuda is committed to meeting any properly adopted, global standard for such matters and will work with the UK Government as necessary once such a standard is promulgated”. The Cayman Islands’ government’s UK representative, Eric Bush, told us that Cayman would only publish a register once it had become a global standard.
32.In 2016 the OTs committed to establishing central registers of beneficial ownership by June 2017 and by late 2017 the FCO said that all of them had either done so or were on track to do so. This enables relevant law enforcement agencies in the UK and elsewhere to request beneficial ownership information from the OTs if they have grounds to do so, though Eric Bush indicated that this happens rarely. Yet, when Lord Ahmad appeared before us in December 2018, he told us that it could be 2023 before registers were published. The Minister said that the Government was providing the OT governments with any technical and other assistance they need to publish registers and that he and his officials had had constructive conversations with OT governments about this, including the BVI government. Lord Ahmad added that, “we have also been very clear that the law has been passed and there is a requirement now for public registers in all our Overseas Territories”. FCO Minister for Europe and the Americas Sir Alan Duncan subsequently confirmed to the House that 2023 was the goal for introducing registers but, he said, “a lot of work has already been done so that they could perhaps be in place before that date”.
33.Parliament has judged public registers of beneficial ownership to be a matter of national security. Those who seek to undermine our security and that of our allies must not be able to use the OTs to launder their funds. We cannot wait until public registers are a global norm and we cannot let considerations of competitiveness prevent us from taking action now. The lowest common denominator is not enough. While law enforcement agencies in the UK appear to have made relatively little use of their powers to request company information from the OTs, it is vital that this information can be accessed by the public, both in the UK and in countries where public money has been stolen by kleptocrats whose actions harm the UK and its allies. We welcome the FCO’s assurances that it is working with the OTs to help them implement the Sanctions and Anti-Money Laundering Act. We commend the constructive approach the FCO has taken on this, despite the language used by some OT politicians. We profoundly regret, however, that public registers may not be published before 2023. It is simply not acceptable that this will be long after the deadline set out in the Act. The Foreign Secretary, in co-operation with the elected governments of the OTs, should lay out before the Summer recess a clear and detailed timetable for the publication of registers of beneficial ownership in each OT.
34.Some OTs told us that SAMLA raised questions about the principles underpinning their relationships with Parliament. The Cayman Islands’ government said that once the public registers issue is resolved, it wants a conversation with Parliament about how it engages with the OTs and that:
We would particularly like this to include a conversation on sanctions against individual members, parliamentary committees, and [All Party Parliamentary Groups], who are found to have either failed to engage with the Government of the Cayman Islands in relation to reports or inquiries which directly affect our reputation, or who have misused parliamentary privilege to malign our Islands without a sufficient factual basis.
Other OT leaders and representatives similarly said that SAMLA raised points of principle. Turks and Caicos Islands Premier Sharlene-Cartwright Robinson said: “Today, it is financial services; tomorrow, it is something else. That is our concern”. Montserrat Premier Donaldson Romeo said: “Montserrat is not as affected as other territories. However, we support their positions in principle, in that our main concern is that legislation without consultation is not right”. The Falkland Islands told us that “There is a growing concern amongst many UK Overseas Territories, including the Falkland Islands, with regard to the manner with which some legislation is imposed on us from Westminster”.
35.Some members of the public also told us in writing that it is time to rethink the principles of Parliament’s relationships with the OTs. Benjamin Roberts from Turks and Caicos said that it reflected badly on the UK that “in this 21st century, a territory such as [TCI] and all its citizenry have no representation in their so called ‘Mother of Parliaments’”. Jerzy Kolodziej, also from TCI, said: “the UK apparently reserves power to make and unmake law for the Turks and Caicos despite there being no representation of the democratic interests of the islands themselves”. Tari Trott from Bermuda said: “I, along with many people in Bermuda, believe it is time for the [OTs] to be represented in the House of Commons”, while Sylvia Gabriel from Montserrat said: “The UK parliament is our ultimate parliament so we should have pro-active representation in that body”. The Montserrat Premier told us that it was “a commonly held view” on the island that “there ought to be some direct representation for the Territories either collectively or individually in the UK parliament”. The BVI Leader of the Opposition told us that the BVI public’s view was similar:
The Overseas Territories have no direct representation in Parliament which has ultimate authority over its affairs and can pass any law that can impact the Overseas Territories disproportionately as seen with the recent [SAMLA]. A modern relationship requires each OT with a representative government to have direct representation in a body that, until independence is obtained, can make any law it pleases. There was great support for the Overseas Territories legislatures to have a veto power over laws passed by the British Parliament affecting them directly in the same way that English MPs have a veto power over laws passed affecting England.
This echoed former BVI representative Kedrick Malone, who wrote that “the ability of the UK Parliament to legislate for the OTs should be eliminated” and that in devolved areas, Parliament’s “over-reach” should be restricted.
36.The Danish and French overseas territories send members to their metropolitan parliaments. In Denmark’s case, Greenland and the Faroe Islands each send two members to the 179-seat parliament while French OTs send 27 members to the 577-seat lower house and 11 members to the 348-seat upper house, with the number depending on the size of the territory’s population. Referring to examples like this, Lawrence Sticca from Bermuda told us that he felt strongly that OTs should“be given a seat in the UK Parliament and House of Lords, just as the French and Dutch are, to give a voice to the mother country in the affairs of the [OTs]”.
37.The elected leaders and representatives of the OTs that appeared before us had mixed views on sending MPs to Parliament. Anguilla’s Chief Minister Victor Banks said that he thought it should happen, that “we need to have a voice in the House of Commons so that we can be represented by a person or persons who understand us”. Sharlene Cartwright-Robinson said: “there is no appetite in Turks and Caicos for it”. Teslyn Barkman from the Falkland Islands said: “Currently we can appeal to 650 Members of Parliament, whereas we would be funnelling and bottlenecking our issues from a vast number of [OTs], or even a singular territory, through one”. The elected leaders and representatives of Anguilla, the Falkland Islands, Montserrat, St Helena and TCI did agree, however, that a Parliamentary committee dedicated to the OTs might be “a positive way forward”, as St Helena’s Councillor Thomas put it.
38.We are aware that many people in the Overseas Territories feel that they do not receive the attention in Parliament that they might expect and that the Foreign Affairs Committee has not carried out a major OTs inquiry since 2008. Given the competing pressure of other policy areas, and the requirement to scrutinise the whole gamut of the Foreign Office’s work, it is difficult to envisage another major OTs inquiry in this Parliament. This fails to do justice to the range and complexities of the issues facing the OTs, individually and collectively. Mindful of this, we believe the time is right to give serious consideration to establishing a formal mechanism by which members of the Foreign Affairs, Justice, International Development, EFRA and other relevant Committees are able collectively to scrutinise the UK Government’s administration of, spending on and policies towards the OTs.
41 FCO White Paper, (2012), p. 14.
42 (2018), section 51
43 Transparency International UK and Global Witness ()
44 (15 May 2018), p. 22
45 HM Government of Gibraltar ()
46 The West India Committee ()
47 For background information on these territories’ financial services sectors, see: International Financial Centres Forum ()
48 BVI News, ‘’, 25 May 2018
51 Government of Bermuda ()
53 FCO response to FOI request , 6 October 2017
57 , 22 January 2019, Hansard vol 653, column 120
58 Cayman Islands Government ()
61 Falkland Islands Government ()
62 Benjamin Roberts (); Mr Jerzy Kolodziej (); Mr Tari Trott (); Sylvia Gabriel ().
63 Office of the Premier of Montserrat ()
64 Virgin Islands Public Meetings ()
65 Mr Kedrick Malone ()
66 Royal Danish Embassy, UK (); Embassy of France ()
67 Mr Lawrence Sticca ()
70 . See also: Falkland Islands Government ()
Published: 21 February 2019