(The Secretary of State for the
Home Department): 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.
Key findings
• 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.
