Critics Worry That Delaying Public Registers of Tax Havens in the UK Threatens National Security
There has been a great deal of debate in the United Kingdom over tax havens. Much of this debate involves introducing public registers of share ownership in the major tax havens commonly used by British people and companies. Critics feel that the delay in public registers of these tax havens is not only inconvenient but also threatens the country’s national security.
The Concern
The select committee on foreign affairs has expressed its concerns during a general inquiry that examined the UK’s relationship with its overseas territories. The committee’s MPs noted that the plans to introduce publicly available registers of beneficial share ownership by the Foreign Office will be delayed until 2023. This is in sharp contrast to the 2020 deadline that the MPs had set. Those in favor of these public registers argue that they are essential for reducing tax evasion, corruption, and money laundering.
What Happened
The Commons set a deadline of the end of 2020 to release the public registers and felt this deadline was clear. That deadline was the result of a backbench rebellion involving multiple parties that took place when the UK was passing last year’s bill against anti-money laundering and introducing sanctions. Instead of following what the MPs felt was clearly outlined as a 2020 deadline, the government interpreted it as requiring ministers to indicate their intention to introduce the registers by 2020. The government then set the date for its introduction a full three years after the 2020 deadline, so it would follow the next election.
Reactions to the Delay
The overseas territories are likely in favor of this delay. After all, they had warned that there would probably be conflicts if that 2020 date were to be imposed. Those in favor of the delay are concerned that the introduction of public registers will cause businesses to leave, hurting the economy.
The Foreign Affairs Committee is very disappointed by the delay. They also call it “not acceptable” and added that the government determined these public registers for beneficial ownership are important to “national security.” Going into detail, their report indicates that those who want to undermine the country’s security are able to use overseas territories for money laundering. With a delay in public registers, this ability continues.
What Will Happen Now
The Labour frontbench is strongly considering tabling any amendments made to the finance bill. This would clarify the restoration of the 2020 deadline. Additionally, the released report encourages ministers to require overseas territories to legalize same-sex marriage and choose a date by which they must do so.
That said, the FCO feels that it is in the right. A statement by the FCO indicates that they intend to create draft legislation by the time 2020 ends. The overseas territories will need to have their public registers fully functional by the time 2023 ends.
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