The Committee of Public Accounts of the House of Commons issued a report concerning managing risk in the overseas territories of the UK, undertaken by the Foreign and Commonwealth Office. The report came after the Common Treasury Committee announced its own inquiry into offshore centres, to decide whether they have contributed to international financial instability. It was specially noted that the UK's reputation in the financial services industry is linked to how well its Territories perform against international standards.
Among 14 Overseas Territories in the UK, seven have offshore financial centres, which vary in their size and significance to their economies. Major financial operations are made in the British Virgin Islands, Bermuda and Cayman Islands, smaller centres are in the Turks and Caicos Islands, Montserrat, Anguilla and Gibraltar. Having estimated the level of risk in these jurisdictions, the Committee warned that especially those minor offshore centres lack regulatory and investigative capacity fully to solve problems like money laundering, thus somehow damaging UK's position in the global financial system. At the same time it was noted that regulators in Bermuda, the Cayman Islands and the British Virgin Islands, which have the ability to levy fees on their rapidly developing financial sectors, achieved major capacity improvements since 2000.
It should be said that the data on BVI used in the report are not so new. Since the year 2004 when they were gathered many changes occurred in BVI financial legislation and real measures undertaken during that time against money laundering in BVI.
Committee's report also included the analysis of the disasters other than connected with financial crimes, frauds and money laundering. It was said that the standard of disaster management in the UK's offshore territories is improving, but Territories are at very different stages, some of them, such as the British Virgin Islands and the Cayman Islands, having more advanced systems.
PAC chairman Edward Leigh concluded that the Foreign and Commonwealth Office is not doing enough to manage risks arising from the UK's liability for the 14 Overseas Territories remaining under British sovereignty, especially in the smaller jurisdictions like the Turks and Caicos Islands, Montserrat and Anguilla, which have weaker regulation standards in banking, money laundering, insurance and securities sectors.
The Committee recommended the Foreign Office and UK crime-fighting agencies to bring in these offshore financial centres more UK investigators and prosecutors, to increase its ability to monitor financial service industries in the territories.
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