Packed Inbox Awaits New UK Foreign Secretary and New OTs Minister

There are several important issues relating to Cayman and the other UK Overseas Territories(OTs) in the inbox of the UK’s new Foreign Secretary, Ed Miliband, and the new Minister of State/Parliamentary Under-Secretary of State for the OTs, Uma Kumaran.

Ms Kumaran succeeds Stephen Doughty, who had held the post from July 2024 until the wide-ranging Cabinet reshuffle carried out by new British Prime Minister Andy Burnham this month. Since he took over the top UK political job from Sir Keir Starmer on July 17th in a seismic political power shift in the ruling Labour Party, Prime Minister Burnham has embarked on a series of policy and personnel changes at the top tier of the British government.

In a social media post about her new role, Minister Kumaran wrote about her ‘new ministerial brief as Parliamentary Under-Secretary of State - covering: the Caribbean, the Overseas Territories, global tech and AI, and Violence Against Women and Girls (VAWG. “I look forward to working with global partners on our shared interests - from action on the climate crisis in the Caribbean, to tackling VAWG, to unlocking the shared opportunities of the AI revolution. I will always stand up for Britain’s interests, relationships, and values abroad.”

Ms Kumaran, the Labour Member of Parliament for Stratford and Bow in London, is known to have spoken out in the UK Parliament against ‘offshore tax havens’, calling them hiding places for illicit money, and has pressed the British government to close legislative loopholes on financial transparency.

THE PARBO PARADOX

A key issue is the looming deadline for the across-the-board enactment of the controversial Public Access to Registers of Beneficial Ownership (PARBO) law. This broadly relates to all companies in the OTs but has particular application to those in the offshore financial services sector that operate within a specific framework of client privacy and confidentiality.

After several years of negotiations with the British government, the OTs are facing the prospect of a UK Order-in-Council being imposed directly if they don’t have a UK-approved PARBO law in place by this summer.

That issue, which predates the previous Keir Starmer administration, has now been inherited by the new Andy Burnham UK Labour Party government. It goes back as far as 2015 to the period when the new Foreign Secretary, Ed Miliband, was the leader of the Labour Party and the Leader of the Opposition in the British Parliament.

At that time, Mr Burnham was particularly critical of the OTs’ financial services sectors, calling them ‘tax shelters’, much to the dismay of many OTs governments, which have relied on the sector as a crucial pillar of their local economies.

“A Labour government is not going to have endless consultation and dithering. We are going to give six months to these tax havens to agree to publish a register of beneficial ownership, and if they do not act we will recommend to the OECD that they are put on a blacklist,” he had insisted back then.

But he received significant pushback from several of the OTs, including the Cayman Islands, over what was rejected as a mislabelling of them as ‘tax havens’ and the negative connotations that term carries.

Cayman and other jurisdictions with offshore financial sectors have been in ongoing negotiations with the Financial Action Task Force(FATF)and other relevant agencies regarding the management and oversight of the sector, including enacting specific legislation.

The European Union officially removed the Cayman Islands from its list of non-cooperative tax jurisdictions on October 6, 2020. The territory was originally added to the blacklist earlier that year on February 18, 2020, after failing to fully enact specific private funds legislation before the EU’s deadline.

It’s now left to be seen what stance Mr Miliband adopts on the issue in his current role, along with the new Minister of State for the OTs, Uma Kumaran.

Cayman has approached the matter from the perspective of ‘legitimate interest’ and a fee to gain access to the information.

CONSTITUTION CONCERNS

At the same time as the contentious PARBO issue, several OTs have been engaged in talks with the British government on their individual demands for constitutional reform. Their concerns and demands range from curbing or otherwise redirecting some of the powers of the UK-appointed Governor to locally elected governments.

In the past decade, there have been at least three major reviews and Commissions of Inquiry into relations between the UK and its Overseas Territories by both the House of Commons and the House of Lords.

In each case, the status quo has largely been maintained, generally by agreement, although there have been steps toward streamlining the administrative processes between the locally elected OT governments and the British government. In most instances, OTs have been seeking more internal administrative autonomy. However, the issue of outright independence, although raised in some instances, has for the most part been fairly subdued, falling more under the heading of ‘self-determination’. All OTs’ constitutions have an inbuilt pathway to independence involving a referendum and negotiations with the UK government.

Presently, while the British government retains responsibility for foreign relations, the OTs have some flexibility on specific issues involving foreign governments and international organisations - generally in consultation with the British government. The UK retains overarching responsibility for defence and security in the OTS, along with the power of direct legislative intervention via Orders-in-Council to impose specific laws or overall direct rule.

An annual Joint Ministerial Council(JMC) summit has also led to some concessions and other steps toward making the relationship between the OTs and the UK less cumbersome in specific areas, largely coming out of requests and proposals put forward by the OTs.