Jersey, Guernsey and the Isle of Man have committed to providing mutual access to each other’s beneficial ownership registers and opening them up to the EU as well.
The move follows the three jurisdictions’ fight against an amendment made by the British parliament that would have forced them to open their registers to the UK.
Despite the apparent U-turn, Joe Moynihan, chief executive of Jersey Finance, the island’s promotional body for the financial services industry, told International Adviser that the decision came from the government’s intention to “maintain our equivalence status with the EU”.
Focus on international relationships
“Our logic for our position a few months ago was around a number of things,” Moynihan said. “We don’t necessarily believe that public access to information on our beneficial ownership registry will resolve all of the issues that certain people think it will do.
“We maintain the view that we have a stronger register than many jurisdictions, on the basis that we’ve had it for many years, on the basis that the people in the registry are regulated to a very high level and our registry fits within the international standards setters criteria of being accurate, adequate and timely.
“But we’ve also been aware that changes are happening on a continuous basis and certainly the EU’s Fifth Anti Money Laundering Directive (AMLD5) is an issue of maintaining our EU equivalence and on that basis we want to ensure that we implement it.”
Moynihan also told IA that the push against the British government’s amendments was a matter of jurisdiction.
“The UK doesn’t have the authority to legislate for the Channel Islands or the Isle of Man, we make our own legislation. This is a policy decision by our government based on the EU not based on the UK.”
Key stages
The move by the crown dependencies will ensure they comply with AMLD5, which was published in June 2018 and gave jurisdictions 18 month to translate it into domestic law.
The directive focuses on enhanced powers for direct access to information and further transparency on beneficial ownership information and trusts.
Jersey, Guernsey and the Isle of Man have agreed on three key steps for the islands’ registers:
- The interconnection of the islands’ registers of beneficial ownership of companies with those within the EU for access by law enforcement authorities and financial intelligence units;
- Access for financial service businesses and certain other prescribed businesses for corporate due diligence purposes;
- Public access aligned to the approach taken in the EU Directive.
Guernsey chief minister Gavin St Pier said: “Guernsey has stated repeatedly that we would move to a public register of beneficial ownership as that becomes an international norm. We are publishing a detailed action plan to demonstrate how Guernsey will respond to global developments in regard to beneficial ownership over the next couple of years. It will also help understanding of our commitments and approach.
“The action plan also reinforces our message that it is for Guernsey to determine its own policy position. We will never compromise the high standard of our register, which is populated by verified up-to-date data, by the adoption of an inferior model. Our action plan will ensure that our register and corporate regulation continues to set a standard for larger jurisdictions to follow.”
Complying with international rules
Stuart Platt Ransom, chief executive at Oak Group, said that while there is a case for keeping beneficial ownership registers semi-private – available to tax authorities but not the public – transparency should follow international protocols.
The fund administration firm boss said: “The current registers are not secret as they are available to the authorities if needed. There were real and justifiable reasons why beneficial ownership registers were private. These structures and companies are ordinarily not private for tax driven reasons, contrary to what the groups lobbying for this public register claim.
“I think the real crux of this is quite simple. If, and to the extent, global protocol calls for this transparency then that’s fine and just. However, our registers are populated accurately by licensed and regulated trust and company service providers. It’s a regulatory requirement to do this accurately.”
Ransom also criticised the UK’s attempt at making the crown dependencies’ registers public, echoing the jurisdictions’ sentiments back in March 2019, claiming that the UK register is not as up to par.
“In the UK, for example, this is not the case as the information given to Companies House [the UK’s business register] regarding beneficial ownership is not vetted by anyone and, as such, the information is pointless and worthless,” he added. “Have a look at how many companies one Mickey Mouse owns!
“The crown dependencies are already ahead of the curve on transparency and comply with the latest international legislation and regulations. The standards that we are already held to is far greater than other jurisdictions. The important thing is that the crown dependencies are on an equal footing to other jurisdictions, that is what is fair and just. There has to be an even playing field.”
International ‘leadership’
The chief minister of the Isle of Man, Howard Quayle, said: “The Isle of Man has a longstanding, and independently verified, track record of meeting international standards. EU Member States’ implementation of public registers creates a clear direction of travel.
“It is in all our strategic interests and our standing as responsible jurisdictions to commit to further developing the accessibility and transparency of our register of beneficial ownership for companies. The EU’s review in 2022 gives us the opportunity to follow best practice and implement a register that meets the principles of the Fifth Money Laundering Directive.”
Similarly, Ian Gorst, Jersey’s external relations minister, claimed that the islands were taking a “leadership role” in putting forward these regulatory stages and that the move should push other states to raise the bar.
“We hope to encourage other jurisdictions to raise their own standards, particularly in relation to the verification of data and the regulation of the financial services sector,” he added.
