A government bill designed to protect the City in the event of a no-deal Brexit was pulled tonight in the face of almost certain defeat after MPs added an amendment that would have forced greater tax transparency on the Isle of Man, Guernsey and Jersey.
The decision sparked an outcry among MPs and campaigners who accused the government of going soft on tax evasion and money laundering.
More than 40 MPs, led by Labour's Dame Margaret Hodge and the Conservatives’ Andrew Mitchell, signed an amendment that would require the Crown dependencies to set up public share ownership registers by 2020
A Treasury spokesperson said: “The beneficial ownership amendments were tabled on Thursday, and we want to give them proper and thorough consideration. The government will not move the bill today but will reschedule it to ensure that there is sufficient time for proper debate.”
The amendment has wide cross-party backing, with signatures from veteran Conservatives David Davis, Ken Clarke and Sir Oliver Letwin, Green MP Caroline Lucas and former Labour leader Ed Miliband.
A publicly accessible register for the rest of the UK was created in 2016, but the Crown dependencies remain strongly opposed to being forced to change their laws.
Davis told City A.M. that the government was “morally in the wrong” on the issue.
“The reputation of the City rides not just on what we think in the UK but on what the greater family does,” he said.
Speaking to City A.M. anti-money laundering campaigner Bill Browder said: “If the British government really wants to stop dictators from laundering their money and causing terrible problems around the world they should accelerate this and not delay it.”
Naomi Hirst of anti-corruption campaign group Global Witness said the decision was “outrageous” and said the government “should be fighting to introduce public registers, not thwarting the will of parliament”.
The Financial Services Bill is part of a raft of legislation Theresa May’s government needs to pass to avoid constitutional chaos in the event of a no-deal Brexit.
It would provide the power for the UK to implement and make changes to European Union financial services legislation that has been agreed or is in negotiation at the time of the UK’s exit.