This is the fourth story in a series on the public company registers amendment passed in the House of Commons on May 1. The first piece looked at the background behind the decision and speculation on its potential impact. The second examined recent industry trends and how they could be affected. The third focused on the territory’s potential next steps. This week’s story looks at the House of Lords’ decision to accept the Commons’ amendment.
As Virgin Islands residents planned a major protest march, the United Kingdom House of Lords on Monday accepted the House of Commons’ amendment requiring public company registers in the British overseas territories, all but guaranteeing that the provision will be made into law.
Though some of the Lords criticised the decision and voiced their support for the territories, the amendment still passed in the UK Parliament’s upper house in spite of last week’s lobbying efforts from Premier Dr. Orlando Smith, Opposition Leader Andrew Fahie (R-D1) and various other officials from fellow OTs.
After meeting with UK officials and politicians last week, Dr. Smith (R-at large) continued to promise the territory would hold off on implementing a public company register until such a system becomes a global standard, echoing his comments from the week prior.
“Honourable Fahie and I have had a full and frank exchange of views with senior members of the House of Lords and other persons and are gratified for the support we have received,” the premier said in a press release on Friday.
“There is currently no global standard on public registers of company beneficial ownership and until there is we will not implement one.
“However, be in no doubt that if the UK Parliament proceeds with seeking to impose public registers on the British Virgin Islands that this could fundamentally alter our relationship with the UK, and we will take all necessary steps to protect our constitutional rights.”
Change in tone
His strong language changed slightly after the Lords’ decision this week, however. Though the premier remained defiant in tone and maintained nothing had changed, he didn’t use the same words.
“Our view on public registers of beneficial ownership has not changed,” Dr. Smith said in a statement.“They are not required by any global standard and we will continue to defend our right not to have a public register until such time that they do become a global standard.”
Neither he nor Communications Director Arliene Penn could be reached for comment to clarify whether saying “defend our right not to have a public register” meant the same thing as “we will not implement one.”
Implementing the registers could have a drastic impact on the financial services industry, a bread-winning sector responsible for some 60 percent of the government’s yearly revenue: In evidence submitted to the UK Parliament before the current amendment surfaced, VI officials claimed the imposition of registers could cause a funding gap of $1 billion here over the next decade.
House of Lords debate
The public registers requirement came in the form of an amendment to the UK’s Sanctions and Anti-Money Laundering Bill, which passed in the House of Commons earlier this month.
A similar amendment was previously shot down in the House of Lords in January.
Though the Lords accepted the Commons’ amendment this time around, several members of the chamber criticised it during the debate on Monday.
“Financial services are an area of domestic responsibility for territory governments, where they surpass — an important point to remember — international standards in the context of beneficial ownership,” said Lord Tariq Ahmad, the minister for the Commonwealth and United Nations.
“Legislating for these jurisdictions without their consent in this field effectively disenfranchises their elected representatives.”
Mr. Ahmad, who is also the minister responsible for the overseas territories, said the public registers requirement exceeds current global standards set out by the Financial Action Task Force and presents a business risk for the OTs.
He also promised to collaborate with the OTs to derive the best possible outcome in the wake of the amendment’s passage.
“The government will use their best endeavours, diplomatically and with international partners, to promote public registers of company beneficial ownership as the global standard by 2023,” Mr. Ahmad said. “We would also expect the Crown dependencies to adopt public registers in that event.”
The dependencies were excluded from the register amendment due in part to legal questions about Parliament’s ability to legislate for them.
The House of Lords ultimately respected the will of the lower house and accepted the Commons amendment despite a string of comments criticising it.
The elected House of Commons, however, would have had the authority to pass the amendment in a subsequent session without any approval from the unelected Lords should the upper house have struck it down.
The bill will need to receive royal assent from Queen Elizabeth II before becoming law.
Anti-Russia argument
Arguments in support of public registers, both this week and in previous months, have been fueled in part by the anti-Russia fervour coursing through UK public consciousness since former Russian military officer Sergei Skripal and his daughter were allegedly poisoned by a nerve agent in early March in Salisbury, England.
After the public registers amendment was introduced, international nongovernmental organisation Global Witness tapped that nerve, publishing an analysis indicating that at least £34 billion worth of Russian money is invested in the OTs, more than £30 billion of which is invested in the VI.
The research utilised data from the Russian Central Bank and the International Monetary Fund, according to Global Witness.
A House of Commons Foreign Affairs Committee report on Russian corruption in the UK published on Monday also touched on that issue.
“The overseas territories and Crown dependencies are important routes through which dirty money enters the UK. This cannot continue,” the report stated. “While we recognise the important innovations that overseas territories such as the British Virgin Islands have made in making registers of beneficial ownership available to UK law enforcement, the scale of the problem and the implications for the UK’s security now demand a greater response.”
In turn, the Foreign Affairs Committee also called on the UK government to recognise the potential economic impact on the OT’s economies and to share the burden of those, like the VI, that are struggling to rebuild after the destruction caused by last year’s hurricanes.
“We look forward to receiving the government’s detailed strategy for widening the economic bases of the overseas territories, as promised in its response to our March 2018 report on the UK’s response to hurricanes, by Sept. 1,” the committee stated.
Guv ‘disappointed’
Governor Gus Jaspert has expressed his disappointment about the amendment, tweeting negatively about it shortly after its passage in the House of Commons on May 1.
“Very disappointing news in UK Parliament on public registers for the overseas territories,” he wrote. “Need to support #BVI’s well regulated financial services as we continue our #hurricane recovery.”
During a press conference last week, he reiterated that disappointment.
“My view, as I’ve said previously, is that I’m disappointed in the amendment that was put forward in the way that it was,” Mr. Jaspert said. “I made the case very clearly about where the BVI is both in terms of our recovery but also in terms of our financial services. In the end it’s the will of Parliament as a democratic body to do so, but that debate is still ongoing.”
Protest march
Community members have organised a march tomorrow to protest the public registers amendment. It is scheduled to begin at 4 p.m. at the Sunday Morning Well in Road Town and end at the Government House, according to Government Information Services.
During the press conference last week, Deputy Premier Dr. Kedrick Pickering (R-D7) said the premier plans to ask businesses to allow workers the afternoon off to participate in the demonstration.
Earlier in the week, Dr. Smith voiced his support for the protest.
“I fully endorse this march, which from all indications will be a seminal event for reflection and solidarity,” the premier said. “I also call on all participants to maintain a peaceful albeit resolute posture throughout all events.”