The National Audit Office has published a review for the Foreign and Commonwealth Office on Managing risk in the Overseas Territories. I have only had a chance to review the summary as yet, but it's not good news. Take this for starters:
Progress has been made in developing the Regulation of Offshore Financial Services, though the four larger offshore financial centres are leaving in their wake the weaker regulatory capability of the three smaller centres where the UK retains most direct responsibility. The main challenge across all Territories is to respond adequately to growing pressures to reinforce defences against money laundering and terrorist financing.
The four large Offshore Financial Centres are Bermuda, the British Virgin Islands, the Cayman Islands and Gibraltar. Anguilla, Montserrat and the Turks and Caicos Islands comprise the smaller three.
Then, form the recommendations:
Capacity limitations in the offshore financial sector have limited Territories' ability to investigate suspicious activity reports, and, in the case of the Turks and Caicos Islands, Anguilla and Montserrat, resources are below the critical mass necessary to keep up with increasingly sophisticated international standards and products in offshore financial services. The Department, with the support of relevant UK agencies, (Treasury, Financial Services Authority, Serious Organised Crime Agency) should develop a strategy to ensure stronger investigative and prosecution capacity, bolster regulatory standards and support increased legislative drafting capacity.
And this, also from the recommendations:
Accountability and audit in the Territories tends to lag behind UK standards due to capacity limitations and a lack of suitably experienced local participants. Public Accounts Committees in many Territories struggle to provide effective, apolitical, and timely scrutiny of the executive. The Department and DFID should promote the appointment of Ex Officio members with relevant skills, as in UK local government and in Montserrat.
It's not pretty stuff. The impression is clear: some of these places for which Britain is directly responsible are not fulfilling even their most basic responsibilities with regard to money laundering, but are continuing to offer offshore financial services facilities none the less. This is criminal, and the UK government is culpable. As far as I am concerned this is a scandal that massively outweighs the loss of 25 million sets of fairly insignificant data records. Here we have proven systemic failure with undoubted cost. And no indication that anything is being done about it.
There's another staggering omission though. There's not one single note on the ability of these places to control tax evasion based in their domains. It would seem that this has been completely overlooked. Which is astonishing. And negligent of the auditors.
I can assure you, I will be returning to this report.