The Lord Bishop of St Albans has tabled the following question for short debate in the House of Lords:

To ask Her Majesty’s Government what assessment they have made of (1) the ‘Pandora Papers’, and (2) the role of the United Kingdom in facilitating international money laundering and corruption.

At the time of writing, a date for the debate is yet to be scheduled.

What are the pandora papers?

The so-called ‘pandora papers’ are a leak of almost 12 million files obtained by the International Consortium of Investigative Journalists (ICIJ). They detail the activities of companies that specialise in creating offshore companies and trusts, which can help their clients avoid taxation and disclosing the ownership of assets or the origins of funds.

The pandora papers are the latest in a series of such leaks, which included the ‘panama papers’ in 2016 and the ‘paradise papers’ in 2017. At 2.94 terrabytes of data, or 6 million documents, almost 3 million images, more than a million emails, and half a million spreadsheets, the pandora papers represents the largest such leak to date. The ICIJ shared access to the data with partners including the Guardian, BBC Panorama, Le Monde, and the Washington Post and more than 600 journalists have sifted through the files as part of a wide-ranging global investigation.

The data illustrates the mechanisms used by some highly wealthy individuals to use tax havens and other mechanisms such as shell corporations and incognito bank accounts to either avoid tax (which is legal) or evade tax (which is not). The files also detail how such mechanisms are reportedly being used to launder funds from illegal activities and to facilitate payments to and from individuals involved in, or convicted of, bribery and fraud. From a UK perspective, there are also fears that the high-value London property market is being used as a means of obscuring wealth or laundering funds.

Who is mentioned in the files?

The files refer to a range of high-profile individuals and companies, not all of whom are accused of wrongdoing. BBC News and the Guardian have highlighted the following findings from the files:

How has the UK Government responded?

Asked what action the Government was planning to take “in respect of foreign leaders and officials found guilty of bribery, corruption or tax violations as a result of revelations in the Pandora Papers”, the Foreign, Commonwealth and Development Office (FCDO) minister, Amanda Milling, said the Government was monitoring the ongoing results of the leaks and remained committed to fighting global corruption and illicit finance:

Through the network of overseas Posts, the FCDO is monitoring the consequences of several of the stories associated with the recent Pandora Papers leaks. We understand some investigations are being considered in some countries, but it is too early to say who, if anyone, might ultimately be found guilty of bribery, corruption or tax violations. Irrespective of this, the FCDO remains committed to fighting global corruption and illicit finance. Under our Global Anti-Corruption Sanctions regime established in April this year, the UK has so far imposed travel bans and asset freezes on 27 individuals from 10 countries for their involvement in serious corruption.

We continue to fund the vital work of the National Crime Agency’s International Corruption Unit, which has restrained, confiscated, or returned over £1.1billion of assets stolen from developing countries since 2006. And we continue to encourage countries everywhere, including through our ongoing Presidency of the G7, to take steps to improve beneficial ownership transparency, so that we can limit the role of anonymous shell companies, as highlighted by the Pandora Papers, in enabling international illicit finance.

Answering a related question on closing the financial loopholes provided by the British Virgin Islands, the minister added:

The British Virgin Islands (BVI) regularly share confidential information on beneficial ownership and tax with UK law enforcement and tax authorities. They provided information that made the UK’s first Unexplained Wealth Order possible. The BVI have committed to work towards introducing a publicly accessible register of company beneficial ownership, along with the other Overseas Territories.

The BVI participate in the Organisation for Economic Co-operation and Development’s (OECD) Common Reporting Standard, which is an agreement to automatically exchange financial account information with other jurisdictions. This means that they supply information on account holders who are foreign tax residents. This reciprocal, automatic exchange of financial information addresses the secrecy that facilitates offshore tax evasion and provides evidence of tax non-compliance. The BVI are a member of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), signalling their commitment to fighting BEPS risks by implementing the BEPS minimum standards. They have also committed to implementing the OECD’s two pillar solution to address the tax challenges arising from the digitalisation of the economy. The UK is providing assistance and support ahead of BVI’s evaluation by the Financial Action Task Force.

UK overseas property register

In 2018, in response to questions about the foreign ownership of property in the UK, the Government published the draft Registration of Overseas Entities Bill, which set out provisions to establish a new beneficial ownership register of overseas entities that own UK property. It followed a commitment made at the Anti-Corruption Summit in 2016 to establish such a register, in order to combat money laundering and achieve greater transparency in the UK property market.

The draft bill was consulted upon in 2018, and the Government has said it remains its intention to introduce the legislation, most recently during debate of foreign ownership of UK property in the House of Lords on 13 October 2021. Asked by Lord Wallace of Saltaire what plans they had to increase the transparency of UK property ownership following the pandora papers leaks, Business, Enterprise, Innovation and Skills (BEIS) minister, Lord Callanan, reiterated that a new register of overseas entities that own UK property would be introduced when parliamentary time allowed:

[…] the Government remain committed to establishing a new beneficial ownership register of overseas entities that own UK property in order to combat money laundering and achieve greater transparency in the UK property market.

The register requires primary legislation for it to be established, and the Government will legislate when parliamentary time allows.

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Cover image by Albrecht Fietz from Pixabay.