Proposed legislation being tabled at Westminster regarding financial transparency is being resisted fiercely by leaders of the Channel Islands and the Isle of Man. Senior officials from the Crown dependencies have stated that the legislation is wholly unnecessary and that Westminster has no right to impose new rules without their full consent.
The cross-party parliamentary amendment is being pushed by a group of Westminster MPs led my Margaret Hodge of Labour and Andrew Mitchell of the Conservatives. With the backing of more than 20 MPs from the leadership party, the amendment stands a good chance of being passed. The aim, according to the MPs backing it, is to tackle issues such as tax evasion and money laundering. A brief description of money laundering can be found in the short video attachment to this post.
However, a statement from Gavin St Pier, the Chief Minister of Guernsey, in response to the proposals pointed out that Guernsey’s standards of financial transparency currently far exceed the UK’s own. Matthew Ledvina is a specialist tax adviser with a background in overseas and multi-jurisdictional tax issues. One of the points raised by St Pier is that Guernsey has long been recognised as a separate jurisdiction from the UK, with complete domestic autonomy.
A Constitutional Overreach
The Channel Islands and the Isle of Man are unrepresented in Westminster and have operated autonomously for centuries. UK parliament is not allowed, under constitutional rules, to legislate for Guernsey or the other Crown dependencies on domestic matters without first gaining the consent of the islands. St Pier therefore argues that any attempt to impose new financial transparency legislation by Westminster is a constitutional overreach.
Robust Data Sharing Policies
The second argument being put forward by leaders of the Crown dependencies is one of policy. St Pier commented on the UK public register, which is updated annually and based on self-declared data. He then compared this to the registry in Guernsey of beneficial ownership, which is not public but can be accessed by the tax authorities and law enforcement agencies. Guernsey’s system meets and exceeds the highest standards of both Moneyval and the OECD and is judged objectively by those two bodies to represent higher standards that those in place in the UK.
Leaders of the Crown dependencies argue that it is more likely individuals will share a company’s information about real owners if they are assured that information will not be accessed by the public. This information, under current legislation, is passed onto the relevant bodies should a request be made.
Statistics on the current Guernsey population can be viewed in the embedded infographic.
No-Deal Brexit
One of the reasons cited by the MPs in Westminster for tabling the amendment is to protect the City of London should the nation go ahead with a no-deal Brexit. Hodge and Mitchell described the Isle of Man and the Channel Islands as secret tax havens, facilitating tax evasion, tax avoidance and economic crime, in a letter to supportive MPs. However, should a public register be imposed on the islands, it will have serious consequences for the continued relationship between these regions and the UK. As St Pier emphasises, the current system has better standards of financial transparency than that in the UK, so these amendments are wholly unnecessary.
The embedded PDF takes a closer look at the history of the Crown dependencies.