British investigators and prosecutors should be deployed to enforce money-laundering and other financial regulation in tax havens operating among the 14 remaining British overseas territories, the Commons Public Accounts Committee has urged.

In a report it called on the FSA, the Treasury and the Serious Organised Crime Agency ‘to deploy their expertise and capacity jointly’ to manage risks in financial centres.

MPs also urged greater efforts to improve public accountability arrangements amid evidence that state bodies handling billions of dollars are up to six years in arrears producing reports and lack accountancy expertise.

Seven of the territories run offshore financial centres with Bermuda, the Cayman Islands and the British Virgin Islands of ‘high importance’ in the global financial system.

But it warned while these three have achieved major improvements in regulatory capacity since 2000, there is ‘a serious risk of money laundering’ in the smaller territories.

The FCO agreed more needs to be done, but stressed the self-governing nature of the territories and accepted their evolution as tax havens to diversify their economies.