Baroness Margaret Hodge, pictured, was making such headlines in the Financial Times as she flew to Guernsey yesterday, with a junior minister from the Ministry of Justice, the island’s constitutional link with the UK Government.
The FT said that the two parliamentarians were trying to force the island, and Jersey and the Isle of Man, to go further in tackling illicit finance.
But although they can pressure the Overseas Territories, there is a huge constitutional hurdle for that to apply to the Crown Dependencies and that was reinforced by senior Guernsey politicians in yesterday afternoon’s meeting.
Baroness Hodge told the newspaper that the transparency regime of the ‘CDOTs’ needed to catch up with the EU and the development of its directives to tackle money laundering and terrorism financing.
She said access to beneficial ownership was ‘hugely important in the fight against economic crime and security threats’ and was reported as having made clear her ‘patience was wearing thin’ as the conciliatory approach the UK has largely pursued has achieved relatively small concessions from the islands.
‘I think we’re coming to the end of the road trying to do this through agreement,’ she told the FT, threatening that the government ‘could consider revisiting the advantages’ of being linked to the UK, or the nuclear option of legislating to force the island’s hand.
The islands have justified their resistance by citing privacy considerations after a 2022 European Court of Justice ruling found that public registers of beneficial ownership – which list the person who ultimately controls or owns an asset – solely aimed at tackling money laundering, unduly undermined privacy rights.
The three Crown Dependencies have a self-governing regime, prompting caution in the past that tough tactics by the UK parliament could ‘trigger a constitutional crisis’.
Baroness Hodge said that she had received legal advice that made it clear it would be ‘perfectly constitutional to intervene’.
Some of the Overseas Territories have created public registers, while others have legitimate access registers, but Baroness Hodge has warned that they were not allowing the proper levels of access.
Mr Richards told the FT that the Crown Dependencies and Overseas Territories were ‘an important part of the British family’, but added: ‘They have too often been used to facilitate aggressive tax avoidance, hide illicit gains and wash the proceeds of crime.’
He said that progress on transparency had been ‘painfully slow’ and there was now a ‘moral and security imperative for further action’.
Jersey and Guernsey are consulting on legitimate access registers. All three Crown Dependencies have committed to expanding beneficial ownership access to those with a legitimate interest, and they currently have obliged entity-access registers, which are open to people in anti-corruption, anti-money laundering and certain due diligence roles.
New P&R member Deputy Andrew Niles, an experienced financial services professional, reinforced the island’s role in supporting investment into the UK and global economy, investment supported by the current, respected framework and highlighted the island’s Moneyval result.
‘Guernsey has demonstrated that it is possible to facilitate international capital flows while maintaining some of the highest regulatory and beneficial ownership standards in the world,’ he said.
‘That is why independent assessments such as Moneyval matter. They provide objective evidence that Guernsey is not simply committed to tackling financial crime in principle, but is delivering effective outcomes in practice.’