Today I am laying before the House the 18-month Statutory Review of the implementation of the Exchange of Notes on Beneficial Ownership between the United Kingdom, Crown Dependencies and Relevant Overseas Territories.
In 2016, the UK, the three Crown Dependencies (CDs: the Bailiwick of Jersey, the Bailiwick of Guernsey including Alderney but not Sark, and the Isle of Man) and the six Overseas Territories with global financial centres (OTs: Anguilla, Bermuda, British Virgin Islands, Cayman Islands, Gibraltar and Turks & Caicos Islands) committed to enhance the effectiveness of long-standing cooperation between law enforcement agencies (LEAs) in sharing beneficial ownership information for corporate and legal entities incorporated in their respective jurisdictions. These bilateral arrangements between the UK and each of the OT and CD jurisdictions are called the Exchange of Notes (EoN) and came into force on 1 July 2017. Law enforcement authorities for each participant can submit a request for information to another participating dependency or territory, who can also do likewise with the UK.
The UK, CDs and participating OTs jointly completed a six-month internal review of the EoN Arrangements covering the period 1 July 2017 to 31 December 2017. A written ministerial statement covering that review was laid before Parliament on 1 May 2018.
Under section 445A of the Proceeds of Crime Act 2002, I am required to prepare a report covering the first 18 months of implementation of the EoN, including an assessment of their effectiveness, to cover the period 1 July 2017 to 31 December 2018.
Officials from the Joint Anti-Corruption Unit in the Home Office carried out this review in collaboration with officials from the other participating jurisdictions. During the course of this review, the CDs and OTs have reiterated to the UK authorities their commitment to the EoNs, as demonstrated by their positive and proactive approach to implementation and engagement in the review process.
I am pleased to provide the following key findings of the review and recommendations for the future of these arrangements.
The findings and recommendations of this review are based on material supplied by, and discussions with, all of the participating jurisdictions. The position varies across these different jurisdictions, and not all of the findings and recommendations of this review apply to all. Where a jurisdiction already complies with the points covered by a particular finding or recommendation, it should continue to do so.
• UK Law Enforcement Agencies (LEAs) report that the EoN have been extremely useful in accessing the information needed to support ongoing criminal investigations.
• This process gives UK LEAs rapid access to beneficial ownership information on over half a million entities based in the three CDs and six participating OTs. This represents 87% of businesses in scope of the scheme. Plans are in place for this to reach 100% by December 2020. In addition, these jurisdictions have reciprocal access to information on 3.8 million UK entities through the UK’s People with Significant Control public register.
• During the first 18 months of operation 296 requests were made, of which 118 asked for multiple pieces of information in a single request. This equates on average to nearly four requests per week. Responses were provided for all requests made, and all but four were provided within the agreed time frame.
• As many of these requests are in support of long-running investigations, it is too soon to quantify the full outcome in terms of successful investigations, but interim indicators are positive.
• The Statutory Review notes a number of challenges during the first six months (July–December 2017), including some information being shared with caveats on its use and the occasional use of out-of-date contact address lists when making or responding to an information request. Substantial progress was made on all of these issues following an internal review, but some residual administrative issues remain.
• This Review did not identify any instances in which a search, or any details about a search, became public knowledge, including in relation to the beneficial owners of companies being investigated.
This review has made seven recommendations:
1. All registers should be completed by the end of 2020 at the latest;
2. Participants may wish to review best practice on verifying information in the beneficial ownership registers;
3. If third parties need to be contacted to respond to a query, the requesting LEA should be informed before communication takes place, and suitable legally binding agreements should be in place to prevent disclosure;
4. LEAs should use the correct contact details when making requests;
5. Existing dialogue and engagement should continue;
6. Consideration and discussion on the appropriateness of expanding the scope of EoN to include civil tax cases or beneficial ownership information for trusts should continue; and
7. Evidence should continue to be gathered on the impact of the process with regard to long term benefits.
Participants in the EoN Arrangements will take forward the recommendations of this Statutory Review, and will take responsibility for tracking progress. The next joint internal annual review of the EoN arrangements will take place next year and will cover the performance for 2019.
It should be noted that this review is in addition to ongoing monitoring of the practical application of the commitment by all participants.
Copies of the Statutory Review will be available from the Vote Office and it will also be available on the Gov.uk website.
This statement has also been made in the House of Lords: