The UK government drew the wrath of transparency groups on Monday by delaying proposed legislation aimed at ending secret company ownership in offshore territories such as Jersey.
Britain has been gradually ramping up its fight against money laundering and various tax avoidance and evasion schemes.
But it has less say in the rules governing the Isle of Man – a region of 85,000 people in the Irish Sea – and its fellow crown dependencies of Jersey and Guernsey.
The European Union has threatened to include the tiny territories in its 2019 list of tax havens if they fail to improve their transparency rules.
A cross-party amendment, that had been scheduled for debate in the British parliament on Monday, is aimed at obliging the islands introduce registers disclosing companies’ ownership structures.
The law would require the names of parties owning at least 25 percent of any firm registered in the dependencies to be made publicly available by the end of 2020.
But the government on Monday unexpectedly withdrew from debate the bill to which the amendment was attached.
The UK Treasury said it wanted to give the proposed amendments ‘proper and thorough consideration’ before putting them up for a vote.
It did not say when the next debate might be held.
‘Crown dependencies are separate jurisdictions with their own democratically elected governments,’ a spokesman for Prime Minister Theresa May’s office had earlier told reporters.
‘They are responsible for their own fiscal matters’.
The three crown dependencies are internally self-governing possessions of the British crown for which the United Kingdom is responsible under international law.
The BBC reported that they are home to 76,000 companies – nearly one for every three people living there.
Their governments issued a joint statement on Saturday raising ‘strong objections’ over the proposed change.
‘It is a respected constitutional position that the UK does not legislate for the crown dependencies on domestic matters without our consent,’ their statement said.
London ‘should not attempt to pass unwarranted and inoperative legislation,’ Guernsey chief minister Gavin St Pier tweeted as he headed into the talks.
The three islands further branded the amendment as redundant because they had a ‘robust existing approach’ to fighting secret company ownership.
The Financial Times newspaper said the amendment appeared likely to succeed eventually because the proposed law change has the backing of powerful lawmakers in May’s Conservative Party.
The government’s decision to delay the amendment was swiftly condemned by the change’s supporters and global anti-corruption campaigners.
Amendment co-sponsor Margaret Hodge called the government’s decision ‘outrageous’.
‘May showing yet again not fit to lead,’ Hodge said on Twitter.
‘Every day that passes without the transparency brought by public registers is another day where corrupt individuals can hide and move wealth they have stolen,’ Transparency International said.
A similar parliamentary proposal last year imposed greater transparency rules on Britain’s overseas territories.
These include the Cayman Islands and the British Virgin Islands – two territories that are home to tens of thousands of companies with overseas owners.
Such regions are popular due to their very low tax rates and looser transparency rules.
Britain’s Foreign Office has extended the deadline by which the overseas territories have to publish their registers until the end of 2023.