UK Treasury minister Mel Stride issued the warning as he was challenged by Labour MPs in the House of Commons after legislation was pulled from debate that could have ultimately led to controversial public registers of beneficial ownership imposed on Guernsey, Jersey and the Isle of Man.
The Financial Services (Implementation of Legislation) Bill was deferred after a cross-party group of MPs – including former cabinet ministers – sought to introduce amendments requiring the Crown Dependencies to establish public registers of beneficial ownership by the end of 2020. Campaigners claim it will improve transparency and vowed to continue their fight.
Labour’s Dame Margaret Hodge, one of the leaders of the campaign, said: ‘On the Crown Dependencies, I cannot for the life of me understand how the minister can pray in aid the constitutional implications of this House legislating on a matter that was perfectly in scope in relation to the Bill that the House is considering and perfectly in order on the matters it was attempting to address.
‘Such praying in aid of inadequate and ill-thought-through reasons simply will not do. Indeed, I cannot understand why the minister does not recognise the consensus across this House on the issue.’
She added: ‘Transparency is a vital tool in fighting tax avoidance, evasion and financial crime, and all we want is that transparency to exist across the family. Would it not be better for the minister to concede gracefully to the will of Parliament, rather than battling limply to a defeat in the future?’
Mr Stride responded, saying: ‘She made the quite legitimate point that the amendment to the legislation that was due to go through this afternoon was indeed in scope and in order.
‘However, that is not the same as saying that that contradicts my earlier point that that particular amendment would have considerable and significant constitutional ramifications for our Crown Dependencies. For that reason, as I stated earlier, the Government feel that it is important to reflect carefully upon that before we come back with the legislation in due course.’
He also told MPs that the issues were ‘not directly Treasury matters but ‘more a matter for the Foreign and Commonwealth Office and the Ministry of Justice’.
The MPs attempt to impose laws on the Crown Dependencies on domestic matters without their consent has been described as an ‘unwarranted attack’ on the islands’ sovereignty.
Richard Field, a partner at law firm Appleby, also said it was depressing to see the ‘same ill-ill-informed prejudices being used to support this initiative by a minority of MPs’.
‘It is reassuring to see the governments of all three Crown Dependencies standing united against this unwarranted attack on our sovereignty.’
He highlighted how Guernsey’s government had engaged with UK politicians, explaining the island’s existing ownership register. It was not public but was robust and exceeded the standards of the UK’s own register, particularly in terms of the quality and availability of information to fiscal and law enforcement authorities nationally and internationally.
‘In some ways, it matters little that the issue is one relating to disclosure of ownership information – the attempt to undermine the rule of law should be of greater concern to us all than any single issue,’ added Mr Field.
He also said that the measure was ‘misguided’ given Guernsey’s work to meet international standards, describing the proposed amendment as ‘not only constitutionally invalid, but unnecessary and not mirrored elsewhere’.
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