BRITAIN will order its tax haven islands to name the owners of offshore firms in what campaigners called a "great leap forward" in the war on global corruption.

The Conservative government on Tuesday gave in to pressure from a cross-party group of MPs, including some of its own backbenchers, to force overseas territories to end decades of corporate secrecy.

Ministers had been reluctant to resort to old imperial power to impose new rules on autonomous island communities like the British Virgin Islands.

However, former ministers Margaret Hodge of Labour and Andrew Mitchell of the Conservatives secured enough support in the Commons - not least from the SNP and Liberal Democrats - for an amendment to its Sanctions and Money-Laundering bill under which such islands must produce a register of beneficial ownership. The government, rather than lose, decided not to oppose their move.

READ MORE: Thousands of Scotland’s tax haven firms face being struck off

Duncan Hames of anti-corruption group Transparency International said: "These jurisdictions have long been the Achilles Heel of our defences against dirty money.

"Agreement on this represents a hugely significant moment in the fight against corruption, not just in the UK but around the world.”

The former Liberal Democrat MP added: “This afternoon, corrupt individuals everywhere will be deeply concerned that they are about to lose the secrecy afforded by the British Overseas Territories that has until now given them an easy route to launder their ill-gotten gains."

This weekend campaign group Global Witness revealed that more than $100 billion had been laundered out of Russia alone in to British Overseas Territories. Companies forged in such secrecy jurisdictions also add to opacity in UK structures and are used, for example, to buy property.

Under Ms Hodge and Mr Mitchell's amendment the UK must, no later than 31st December 2020, prepare a draft Order in Council requiring the Government of any British Overseas Territories that has not introduced such a register to do so. This present a diplomatic and political hurdle for the British government in its relations with its self-governing territories. Mr Hames said: "We hope that those territories will now use the opportunity they have over the next 18 months to implement these registers and shut the door to dirty money."

HeraldScotland: Duncan Hames

Duncan Hames

The victory for corporate transparency comes after a group of MPs, including Ms Hodge and her Labour colleague Anneliese Dodds, Tory Tom Tugendhat and the SNP's Alison Thewliss and Kirsty Blackman worked behind scenes and across party lines to seek action.

READ MORE: Thousands of Scotland’s tax haven firms face being struck off

In the Commons, the Foreign Minister Alan Duncan said the government did not want to "legislate directly" for the overseas territories. He added: "Nor do we wish to damage our long-standing constitutional arrangements, which respects their autonomy. We have listened to the strength of feeling in this house and accept that it is the majority view that the overseas territories should have public registers."Firms based in overseas territories frequently serve as the untraceable partners in Scottish limited partnerships (SLPs), a kind of structure widely abused for money-laundering. The Conservatives moved to reform SLPs this week after a three-year investigation by this newspaper, launching a consultation.
SNP MP Alison Thewliss tried to move reform faster in the debate. She lodged an amendment to the Money laundering bill under which SLPs would have to have partners with UK bank accounts. She was narrowly defeated. 
She said: "UK Government had an opportunity to legislate this afternoon and failed to do so. Shame the 13 Scottish Tories wouldn’t vote with us on this."

HeraldScotland: Glasgow Central MP Alison Thewliss has called for an urgent investigation into the DWP database problems. Photograph by Colin Mearns

Alison Thewliss

The premier of the British Virgin Islands said he was "deeply disturbed" by the amendment on overseas territories, which he claimed threated the constitutional rights of corporations and individuals to privacy.

Orlando Smith said: "It is not only a breach of trust but calls into question our very relationship with the UK and the constitutional rights of the people of the BVI."

Mr Smith said he was committed to fighting financial crime and said he would ensure law enforcement agencies had acces to verified beneficial ownership information. He added: "In cooperation with our partners across the Caribbean and beyond, we will ensure that this constitutional overreach does not set a precedent and that the rights of the people whom I represent are respected."