Gibraltar ‘saluted’ as example to follow as UK puts focus on anti-corruption transparency measures

The UK Government said it remains committed to “greater transparency” as part of efforts to tackle financial crime in the UK’s overseas territories, as Gibraltar was “saluted” during a House of Commons debate as the example to follow.

Westminster previously legislated in 2018 for the introduction of public registers of beneficial ownership – seen as a key tool in the fight against corruption – and the overseas territories committed to introducing them in 2020.

The 2018 legislation required overseas territories and Crown Dependencies to voluntarily establish registers within two years or face an Order in Council forcing them to do so, a step that would prove controversial.

But despite the 2020 commitment, little progress has been made since.

Gibraltar opened a public register of beneficial ownership of companies in 2020, the only overseas territory to do so until now.

That point was flagged numerous times during a debate in the House of Commons tabled by Labour former minister Dame Margaret Hodge, who noted that “…the only overseas territory to comply with the legislation is Gibraltar, which I salute.”

Dame Margaret acknowledged that many countries in the European Union had closed their own registers following a judgement of the European Court of Justice a year ago that raised privacy concerns.

But she said using the judgement to delay implementation was “a convenient but lame excuse”, singling out in particular the UK’s Crown Dependencies for criticism.

“It actually has not deterred Gibraltar,” she added.

“While some countries have closed their registers, others have kept them open.”

“Crown dependencies in particular are acting in a completely dishonourable way.”

“Their role in facilitating economic crime and tax avoidance is indisputable, and their protestations to the contrary are simply untrue.”

“Their behaviour in providing public assurances that they will move towards public registers but claiming that the European court ruling prevents them from doing so is, in my view, unforgivable.”

Sir Bob Neill, the Conservative MP who chairs the all-party parliamentary group on Gibraltar, said the UK should not treat all the overseas territories as “homogenous”, even while cautioning against dismissing the wider concerns raised by the European court ruling.

“In one respect, Gibraltar, with its particular links both to the United Kingdom and Europe, has chosen to go in that direction [of having a public register of beneficial ownership], and we should support it in having done so,” Sir Bob said.

“That was its decision as a self-governing overseas territory.”

“It has continued to do that, even though it must be observed—and we should not make light of this fact—that the ruling of the European Court of Justice has now meant that some 23 of the 27 EU states have closed their registers.”

“We should be careful about dismissing that.”

“It does not apply to us anymore, because we have left the European Union, but we should not dismiss that fact and simply pooh-pooh it, because it has an impact on others.”

“Gibraltar chose, despite that, to continue with its register.”

Stephen Doughty, Labour’s shadow Minister for Europe, also acknowledged Gibraltar’s register and noted too that despite the criticism, other overseas territories and Crown Dependencies had been “integral” to international efforts to freeze Russian assets following Russia’s “illegal and barbarous” invasion of Ukraine.

But the message from the UK Government was clear.

Foreign Office minister David Rutley said “intense” talks had taken place to ensure publicly accessible registers showing the real owners of companies were available next year in a bid to improve corporate transparency.

Speaking in the Commons, Mr Rutley said: “The UK’s overseas territories and crown dependencies have a history of working together as partners to strengthen our economic defences against elicit finance, publicly accessible registers of beneficially ownership are an essential tool in this fight and we want greater transparency here and we’re working hard to deliver it.”

Mr Rutley acknowledged that the European court ruling on publicly accessible registers last year had “changed the international context” and that as a result, some territories were reluctant to “get on board”.

But he added: “The UK was, however, satisfied with the lawfulness of our own publicly accessible register, we continue to believe that Crown Dependencies and overseas territories could legally implement public registers of their own.”

Mr Rutley said other areas such as Montserrat and the Falkland Islands were following in Gibraltar’s footsteps.

However, territories such as Bermuda, Angola and the British Virgin Islands continued to have concerns, MPs heard.

“Given the differing views of this ruling, we’re continuing to find ways to make positive progress, this includes discussing an interim step that would make significant progress towards these commitments to improve corporate transparency,” Mr Rutley said.

“This interim step would be the implementation next year of publicly accessible registers of beneficial ownership with legitimate interest access filter.”

“This would allow access to beneficial ownership information by members of the public who have a legitimate interest in doing so, such as media and civil society organisations who are involved in the fight against elicit finance and money laundering.”

Analysis by Transparency International has linked numerous companies registered in British overseas territories such as the British Virgin Islands to corruption cases, saying they have “aided gross abuses of entrusted power for private gain around the world”.

Conservative MP Sir Julian Lewis questioned if the purpose of the filter was “only to be obstructive and create legal barriers”.

Labour’s Dame Angela Eagle (Wallasey) asked how the “legitimate public interest” would be defined, therefore who will be able to access the register, saying: “What appears to be the case at the moment is it’s being narrowly, far, far too narrowly defined, which undermines the purpose of the transparency.”

“So will he take into account the fact that this filter as it already exists is actually not letting any light really through it which means that the filter is actually rendering the openness of the list moot.”

In response, Mr Rutley said: “This is not the intention, we want the light to shine on these issues and that will involve media organisations and non-governmental organisations as well.”

Opening the debate, Dame Margaret had urged the UK Government to take steps to make progress on the public registers.

She said: “The epidemic of tax avoidance, tax evasion and economic crime flourishes in an environment of secrecy, and our overseas territories and crown dependencies facilitate that secrecy.”

“We know from the ever-growing number of leaks of data on financial misdemeanours that their role is central to enabling economic crime.”