The decision by the UK government to defer its debate on the amendment to the UK’s Financial Services bill has been welcomed by the crown dependencies.
The vote was meant to be on 4 March 2019, but prime minister Theresa May delayed it to an unspecified date, with the Jersey government suggesting the UK is “committed to passing this bill by Brexit day of 29 March”.
The bill would force the crown dependencies and British overseas territories to reveal the ultimate beneficial owners of companies registered on the islands.
A joint statement by the UK crown dependencies said: “This deferral provides the opportunity for meaningful engagement with UK ministers and parliamentarians on the matter of public registers of beneficial ownership, in a way that does not contravene the well-established constitutional relationships between our islands and the crown.
“In particular, we want to move forward in a way that does not breach the rule that the UK does not legislate for the crown dependencies on domestic matters without our consent.
“We share a common policy aim with the UK of preventing international financial systems being used for criminal activity.
“We are determined to work with the UK government, the Organisation for Economic Co-operation and Development and Financial Action Task Force in order to develop an effective global standard that addresses the global problems of financial crime and tax evasion.”
The purpose of the amendment is to strengthen the detection, investigation and prevention of money laundering; it comes after all three jurisdictions amended their legislation in order to comply with European code of conduct rules to avoid being ‘blacklisted’ as tax havens.
Rigorously assessed systems
Jersey is set against the amendment because it believes that it already is battling financial crime with the “highest standards and transparency”.
Joe Moynihan, chief executive of promotional body Jersey Finance, said: “Our system, which has been rigorously assessed by the respected global standard setters on many occasions over the years, includes careful verification by the service providers, who are regulated and required to undertake checks on the ownership data provided.
“Such ownership information is then freely available on request to the people that need it, the regulators and law enforcement officials; and through this approach, we also ensure that the individuals’ right to confidentiality in financial affairs is retained.
“The government of Jersey has made clear that it is a respected constitutional position that the UK does not legislate for Jersey on domestic matters, without its consent.”
Overruling the crown dependencies
Guernsey is also unhappy with the issue of damaging the current relationship boundaries between the UK and the crown dependencies.
Currently, the three governments’ relationship with the UK goes directly through the Queen and not via parliament, which is why they are not represented in the House of Commons.
Lyndon Trott, chairman of Guernsey Finance and deputy chief minister of the States of Guernsey, said: “This delay now gives us an opportunity to explain exactly why I described this political move as ‘misguided and wrong’.
“It is misguided as our track record on tackling money laundering and financial crime have been rightly lauded by regulators, and our standards of regulation and private register of beneficial ownership works.
“It is wrong because the move was counter to the centuries-old relationship between the UK and the crown dependencies, and that is not helpful at all.
“We cannot allow anything to undermine our position of stability and security in self-government and in the delivery of financial services.”
But International Adviser reported recently that parliament could force the crown dependencies into complying with the amendment by changing the way the bill applies to them.
The current Anti-Money Laundering Act 2018 refers to “British overseas territories”.
The amendment is looking to change that into “an order in council”, providing the Queen with the authority to make the jurisdictions comply with the bill.