Their comments come as the UK takes an increasingly hard line against Russia on the international stage, following the poisoning of former-spy Sergei Skripal in Salisbury, which has been blamed on the Kremlin.
The UK views using its economic and financial influence as one of its key weapons against Moscow and has been reviewing its policy towards British-based assets held by wealthy Russian individuals.
The report says that the national security issue is enough to give the UK ‘jurisdiction’ over its normally independent offshore finance centres, which it claims act as a ‘laundromat’ for dirty money entering the UK, including from Russia.
It also indicates support for the UK imposing transparent company registers on the Crown Dependencies – Jersey, Guernsey and the Isle of Man – and British Overseas Territories, such as Cayman, Bermuda and the British Virgin Islands.
Such a move would allow the public, including the media and non-governmental organisations, to inspect the true ownerships of assets held by companies based in the jurisdictions.
Is Jersey a route for dirty money?
The Select Committee report describes the Overseas Territories and Crown Dependencies as ‘important routes through which dirty money enters the UK’ and says that this ‘cannot continue’.
In response, Jersey Finance chief executive Geoff Cook said that this statement is ‘unfair and untrue’.
‘Money laundering is a crime in Jersey and we have robust and clear regulations in place to detect and deter it,’ he said
‘In fact, Jersey achieved the joint highest score among all states assessed by MONEYVAL [the Council of Europe’s anti-money laundering experts] which found Jersey to be compliant or largely compliant with 48 out of 49 of the Financial Action Task Force principles and recommendations. ‘FATF set the current international standards for anti-money laundering.’
He added: ‘Jersey has a robust regulatory framework in place for anti-money laundering and counter-terrorist financing. This requires all regulated financial service providers, including banks and trust company service providers, to gather evidence on beneficial ownership and source of wealth in relation to their clients. This information must be regularly refreshed in line with a risk-based approach.
‘MONEYVAL described Jersey as having a “mature and sophisticated regime” for tackling money laundering and the financing of terrorism.’
Mr Cook said that information on Jersey’s central company register, which has been in place for almost three decades, is available to law enforcement agencies and other authorities in other jurisdictions to ensure they have ‘everything they need’.
‘In 2016, Jersey entered into an agreement to exchange information with the UK law enforcement authorities within 24 hours of a request, or within one hour if the request is urgent,’ he said.
‘In fact, this month HM Government acknowledged that this arrangement had “provided law enforcement officers with enhanced access to company beneficial ownership information”.’
Is it now inevitable that Jersey will need to publish a fully transparent register of beneficial ownership of companies?
Voices in the UK parliament are ramping up the rhetoric calling for the Crown Dependencies to introduce transparent company registers.
Last month, the House of Commons passed an amendment to the Sanctions and Anti-Money Laundering Bill to impose a publicly-accessible register on the British Overseas Territories by 2020.
The Crown Dependencies narrowly avoided a similar fate following lobbying by their governments in Westminster.
Many voices in the Commons – both Labour and Conservative – are still calling for Jersey, Guernsey and the Isle of Man to introduce the same level of financial transparency as the Overseas Territories
Mr Cook said that Jersey would only consider introducing a public register if it becomes the ‘agreed global standard’ and that a ‘level playing field’ would have to apply for all jurisdictions globally.
‘Public registers of beneficial ownership have been presented by NGOs and transparency campaigners as the only viable solution to financial crime and tax evasion, but they are as yet unproven,’ he said.
‘Issues surrounding the effectiveness of public registers have been raised and acknowledged and further work is likely to be required in order to address these.
‘Jersey’s proven model ensures that accurate beneficial ownership information is accessible to law enforcement bodies which are best placed to analyse, assess and act on the information exchanged.’
He added: ‘Jersey’s approach to compliant confidentiality means that while no one remains anonymous to the relevant authorities, they are afforded the human right to privacy.’
Can the UK force Jersey to introduce a public register and does the Island need to be ready for this?
Mr Cook said that the withdrawal of the bill amendment last month ‘underlined the contention’ that the UK Parliament cannot and should not seek to legislate for the Crown Dependencies.
‘The constitutional autonomy of the Island was recognised, and the established historical relationship between Jersey and the United Kingdom preserved,’ he said.
‘The withdrawal also acknowledged our position as a leading jurisdiction in matters of transparency and in the prevention of financial crime and money laundering, for which we have been recognised by the Organisation for Economic Cooperation and Development, MONEYVAL and the FATF.’
He added that Jersey Finance ‘cannot speculate’ on whether the finance sector should start preparing itself in case a transparent register is introduced.
‘Jersey’s position is clear: Jersey is fully committed to the global transparency agenda and stands side by side with the UK in terms of our shared ambition to fight financial crime and tackle corruption,’ he said.
The UK views using its economic and financial influence as one of its key weapons against Moscow and has been reviewing its policy towards British-based assets held by wealthy Russian individuals.
