The UK has caved in to overseas territories over public ownership registers as the government has decided to delay the requirement until 2023 at the earliest.
The decision to let slip the compulsory public registries of company beneficial ownership has drawn ire from MPs and anti-corruption campaigners who wanted the 2020 deadline to be honoured.
The decision follows fierce opposition from the British Overseas Territories such as BVI or Cayman that included threats to take the government to court or even to secede from the UK. Most territories have been campaigning in London against the measure and even calling the requirement colonialist, undemocratic and a breach of previous agreements.
A cross-party alliance of MPs last May, led by the former Conservative cabinet minister Andrew Mitchell and the former chair of the public accounts committee Margaret Hodge, had forced the government to concede that it would introduce an order in council by 2020 requiring public registers to be set up if the overseas territories had not done so voluntarily by that date.
The 2023 new deadline means public registers in the overseas territories, critical to curbing tax avoidance, will not be introduced until a decade after David Cameron first raised the issue as a flagship anti-corruption measure ahead of the UK chairmanship of the G7 industrialised economies.
The 2023 timetable was set out by Lord Ahmad, the minister responsible for the overseas territories, in evidence to the foreign affairs select committee. He told the committee: "It is our intention that if by 2020 there is no public register, for whatever territory, we will then issue an order in council, which will then have a requirement for an operational public register by 2023."
He added that the only obligation provided in the legislation was to pass an order in council by 2020, but no date for the actual introduction of the public register was set. He has formally advised the overseas territories of this new timetable in writing.
Overseas territories worried that the 2020 timetable for disclosure requirements would lead to an exodus of business moving towards more secretive tax havens. Territories including the Cayman Islands argued that public registers should only be compulsory when they are introduced worldwide.
However, there is no sign of the feared flight of assets from these jurisdictions, Ahmad said. "We have made it clear - for example, when I was in the BVI and the Caymans - that if there was concern about, or indeed evidence of, a flight of assets to other territories, we should be alerted to it. That has not been the case."
The public register policy is an amendment to the UK's Sanctions and Anti-Money Laundering Act, which is forcing the BVI and other Overseas Territories to publicise the names of ‘secret' owners of offshore companies registered in those jurisdictions.