A Foreign Office minister has flown to the British Virgin Islands (BVI) to hold urgent talks on how sanctions against Russian oligarchs with cash stored in the secret islands can be implemented, in the midst of fears. UK tax havens can be a loophole for those trying to escape international repression.
Amanda Milling’s visit follows news that a succession of oligarchs appeared to have hidden their assets in BVI-based trusts in a bid to shield them from UK sanctions. UK sanctions laws apply in Overseas Territories and enforcement agents are expected to have full access to beneficial ownership records.
It comes after the Guardian published a series of articles tracking the assets held outside Russia by some of the country’s all-powerful oligarchs and officials.
Milling’s four-day visit also came weeks before the publication of the report of a British government-commissioned public inquiry into corruption in the island’s government. The inquiry chaired by a retired Court of Appeal judge, Sir Gary Hickinbottom, is expected to criticize the management of the island’s government by its first minister, Andrew Fahie.
The island’s prime minister claimed the probe failed to uncover the widespread corruption that was planned, but some of the more sensitive aspects of the investigation were carried out in private.
Milling met with Fahie and representatives of the BVI financial services industry to explain that they needed to implement the new sanctions laws passed by the UK government.
The BVIs have promised, as required by UK law, to impose the sanctions imposed by the UK government on sanctioned individual oligarchs in the UK, but there have already been reports of oligarchs transferring large sums to the BVIs in the purpose of preventing their fortunes being frozen.
A Russian oligarch, Alexei Mordashov, reportedly transferred $1.3 billion worth of shares to the BVI on the day he was sanctioned in the UK. The Guardian, in conjunction with other news outlets, has identified that Arsenal shareholder Alisher Usmanov’s £82million London home and Surrey mansion have been placed in BVI-based trusts linked to the oligarch.
A FCDO spokesperson said: “The BVI and other overseas territories already share confidential company beneficial ownership information with UK law enforcement agencies and have agreed to introduce public records. UK sanctions apply in all Overseas Territories and we will continue to support their implementation.
During his visit, Milling urged the government to continue preparations for a publicly accessible central beneficial ownership register, seen by campaigners as a key weapon in the fight against money laundering.
UK ministers have insisted that a public register must be in place by the end of 2023, but some overseas territories are resisting the proposal with plans to insert loopholes so that beneficial owners can continue to keep their identities secret.
In 2018, the UK voted to have these registers installed by 2020, but the Foreign Office reinterpreted the legislation to give overseas territories an additional three years. The Cayman Islands, another British Overseas Territory, has been further along since releasing a consultation paper on how the register will operate in 2023.
The document contains plans to introduce a major potential loophole in the legislation that will allow anyone to request that their name not be publicly available “due to the nature of the associated entity’s business, or due to its characteristics or personal attributes when associated with that entity, which will expose the beneficial owner, or anyone living with them, to a serious risk of harm or intimidation”.
Some of those seeking anonymity say they want to protect their privacy not because of wrongdoing, but to reduce the risk of threats from terrorists, kidnappers or stalkers.
On January 19, the BVI cabinet took its first steps to set up a publicly accessible register by 2023.
Fahie told a press conference on March 11 that he was fully committed to the register coming into force, but later added caveats that he was advocating for a different strategic approach.
The BVI Premier said: “As such, as we continue to monitor developments on the subject of publicly accessible registers as they appear in various international forums, and as we continue to advocate for a slightly different strategic approach, we must, of course, take the appropriate steps to honor our commitment if and when we are asked to do so. »
In 2018, a report by Global Witness, the campaign group for transparency, indicated that £34 billion was currently invested by Russians in UK TOs. The British Virgin Islands have been identified as the second most popular destination for money leaving Russia, behind Cyprus. The BVI was last month on the EU’s gray list for lack of tax transparency.