A bid by the UK’s House of Lords to force Bermuda and other overseas territories to introduce a public record of company ownership has been dropped.
Bermuda, which already has a register of beneficial owners accessible on request by overseas governments, was in line to be hit by Amendment 14 to the UK Criminal Finance Bill, aimed at clamping down on crime and money-laundering.
But the proposal has been withdrawn in favour of a an amendment requiring UK authorities to report on the effectiveness of beneficial ownership sharing between the UK and its Overseas Territories by July 2019.
During the Lords debate, the Scottish Earl of Kinnoull, formerly Charles Dupplin, who headed reinsurer Hiscox in Bermuda, spoke out against the move.
He said: “People often do not understand how big a jurisdiction Bermuda is. Bermuda overtook London as a centre of reinsurance in 2004. London remains number two in the world.
“No major insurer in this country would be able to trade without the reinsurance that it purchases from Bermuda.
“The amount of money, capital and sophistication in Bermuda is enormous. The BMA, the chief regulator there, of which more in a second, is an extremely professional and very tough regulator.
“Bermuda was not responsible for even one of the revelations in the Panama papers and is a very clean jurisdiction, and it is particularly unfair that it is named in this amendment.”
The Earl added that it would be wrong for Britain and Westminster to interfere in the affairs of self-governing territories.
He said: “The second is a general point about shifting the problem to another jurisdiction. I agree that shifting a bad thing is a good thing in many ways, but shifting a good company is a bad thing because you are simply damaging the jurisdiction.
“There are many good companies, and I will explain in a second why this amendment would have the effect of shifting good companies. It would be very wrong for us to impose damage on our loyal overseas territories and possessions.”
The Earl added that tax authorities, the police and regulators all looked for irregularity in financial services, with regulators wielding the most power.
He said: “A person running the support business in a high-integrity environment such as Bermuda would not allow someone — one bad client — to come in and kill off their whole business.
“They would be very careful to make sure that that does not happen. You are scared of regulators. You are, of course, scared of tax and police authorities, and you are more than willing to give up any information that will protect your business because no one client is worth it.
“Your business is your business; your staff are your staff. That is how everyone feels — I hope noble Lords can hear a level of emotion in my voice.”
And he added: “A sub point is that in our society we rely on the forces of law enforcement to deal with naughtiness on our behalf.
“We do not have vigilante posses running around trying to do things.
“I worry that if everything were publicly available people would suddenly see themselves as being promoted into some sort of enforcement environment.
“That is wrong. We should leave these things to the professionals — the tax authorities, the police authorities and the regulators — and trust.
“If they do not do a good enough job, we should bash them. We should not allow vigilante posses.”
The decision to drop the amendment was welcomed by the Bermuda Government.
Bob Richards, the Minister of Finance, said: “This is a good day for Bermuda. I am pleased that we have won this battle, although I expect that this issue will return again.”
He added: “While the UK has indicated that it will implement its own beneficial ownership list of British companies and make it public, they are at the beginning of the process that we’ve had in place for several decades.
“It would have been detrimental to Bermuda’s international business to be the only country with a complete register and be forced to make it public.
“Few other countries have registers of any kind. Bermuda is a leader in the issue of beneficial ownership and continues to comply with global standards.
“The Ministry of Finance team and our office in London have been successful over several years informing UK legislators and others of the true facts related to issues that threaten our business.
“The Bermuda Monetary Authority and the National Anti-Money Laundering Committee have also been integral to our cross-border outreach.”