23/03/22

BRITISH VIRGIN ISLANDS: UK minister in jurisdiction for urgent talks on sanctioning Russian oligarchs.

As published on theguardian.com, Wednesday 23 March, 2022.

A Foreign Office minister has flown to the British Virgin Islands (BVI) to hold urgent discussions on how sanctions against Russian oligarchs with cash stored in the secretive islands can be implemented, amid fears. UK tax havens may provide a loophole for those trying to escape the international clampdown.

Amanda Milling’s visit follows news that a succession of oligarchs appeared to have hidden their assets in trusts based in the BVI in a bid to put them beyond reach of UK sanctions. British sanctions laws apply in the overseas territories, and enforcement officers are supposed to have full access to registers of beneficial ownerships.

It comes after the Guardian has published a series of stories tracking the assets held outside Russia of some of the country’s all-powerful oligarchs and officials.

Milling’s four-day visit also came weeks before the report of a UK government-commissioned public inquiry into corruption in the government of the island is due to be published. The inquiry chaired by a retired appeal court judge Sir Gary Hickinbottom is expected to be critical of the management of the island’s government by its prime minister, Andrew Fahie.

The island’s prime minister has claimed the inquiry has not unearthed the predicted widespread corruption, but some of the most sensitive aspects of the inquiry were conducted in private.

Milling met both 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 BVI has promised, as it is required by British law, to impose the sanctions levied by the UK government on individual oligarchs sanctioned in the UK, but there have already been reports of oligarchs shifting large sums to the BVI in an attempt to prevent their fortunes being frozen.

A Russian oligarch, Alexei Mordashov, was reported to have moved $1.3bn shares to the BVI the day he was sanctioned in the UK. The Guardian, in conjunction with other news outlets, has identified that Arsenal shareholder Alisher Usmanov’s £82m London home and Surrey mansion were put in BVI-based trusts linked to the oligarch.

An FCDO spokesperson said: “The BVI and other overseas territories already share confidential information on company beneficial ownership with UK law enforcement bodies and have agreed to introduce public registers. UK sanctions apply in all overseas territories and we will continue to support their implementation.”

During her visit Milling urged the government to get on with preparations for a central publicly available register of beneficial ownership, seen by campaigners as a key weapon in fighting money laundering.

UK ministers have insisted a public register must be in place by the end of 2023, but some of the overseas territories are resisting the proposal by planning to insert loopholes so that beneficial owners can continue to keep their identities secret.

In 2018 the UK voted that these registers should be installed by 2020, but the Foreign Office reinterpreted the legislation to give the overseas territories an extra three years. The Cayman Islands, another British overseas territory, is further down the road since it has published a consultation paper on how the register would operate in 2023.

The paper contains plans to introduce a major potential loophole into the legislation that will allow anyone to ask for their name not to be publicly available “due to the nature of activities of the associated entity, or because of their characteristics or personal attributes when associated with that entity, that will put the beneficial owner, or any person living with them, at 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.

The BVI cabinet on 19 January took its first steps to set up a publicly accessible register by 2023.

Fahie told a press conference on 11 March he was fully committed to the register coming into force, but then added caveats saying he was making the case for a different strategic approach.

The BVI premier said: “As such, while we continue to monitor developments on the subject of publicly accessible registers as they feature in various international fora, and while we continue to make the case for a slightly different strategic approach, we must, of course, take the appropriate steps to honour our commitment if and when called upon.”

In 2018, a report by Global Witness, the transparency campaign group, said £34bn was currently invested by Russians in the UK’s OTs. The British Virgin Islands was identified as the second most popular destination for money leaving Russia, behind Cyprus. The BVI was last month on the EU grey list for lack of tax transparency.