Crown dependencies to introduce public ownership registers

The British Crown Dependencies Jersey, Guernsey and the Isle of Man announced on Wednesday they would make information on the true owners of companies in their jurisdictions more transparent.

In a joint statement, the dependencies outlined a series of steps that will move their respective centralised beneficial ownership registers “towards developing international standards of accessibility and transparency in the coming years”.

The islands’ registers will be first connected to those within the EU for access by law enforcement authorities, then opened up to financial services businesses that require access for corporate due-diligence purposes and subsequently to the public, in line with the EU’s Fifth Money Laundering Directive.

The EU directive eliminated the need to demonstrate a legitimate interest for access to beneficial ownership information, except for trusts and similar legal arrangements, and proposed an EU-wide linking of national beneficial ownership registers.

UK parliamentarians have long pushed for company ownership information to be made accessible to the public, claiming that non-public registers were enabling money laundering, tax evasion and corruption. While the UK Sanctions and Anti-Money Laundering Act, passed last year, included a clause that will force the Overseas Territories to make this type of information public, the British Crown Dependencies were excluded from the requirement.

The UK is threatening an order in council, effectively imposing the establishment of public registers in the Cayman Islands and other territories, if they have not implemented them by the end of 2020. The UK government later agreed with the overseas territories that under such circumstances the public registers would be operational by the end of 2023.
The Cayman Islands government maintains that it would only make the beneficial owners of companies public if and when that becomes a global standard.

The Crown dependencies had previously warned that a similar move by the UK regarding their islands would lead to a “constitutional crisis”.

Jersey’s External Relations Minister, Senator Ian Gorst, said on Wednesday that Jersey was among global leaders in matters of tax cooperation, transparency and in combatting money laundering. “The commitments we are announcing today, alongside Guernsey and the Isle of Man, will help to ensure that this leadership role is maintained, while taking into account the standards being developed within Europe,” he said. “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.”

Conservative MP Andrew Mitchell and Labour MP Margaret Hodge, who called for public beneficial ownership registers in the Crown dependencies by 2020, said the plans were “an important first step”, but contained “a number of get out clauses” and an “unacceptably long timetable”.

Mitchell added it was unacceptable that financial services providers, “the very people who devise the schemes exploited by those who trade in dirty money or avoid paying their tax”, would get access to the information before the public and the media does.

Naomi Hirst, an anti-corruption campaigner at Global Witness, said: “This positive move shows that we are finally seeing years of campaigning by civil society and parliamentarians take effect. Transparency is the new norm.

“The era of secrecy is a thing of the past and other tax havens must now make their own moves to bring the real people behind anonymously owned companies out of the shadows. Any state failing to do so will be left behind.”

However, she also emphasised concerns over the time frame and that details given by the Crown dependencies were still ambiguous.

John Christensen, director at the Tax Justice Network, called the announcement the opposite of leadership, stating that the dependencies had “set out a three-year plan to table a discussion in parliament with no commitments and no details on whether they will comply with emerging international standards on beneficial ownership transparency”.

For public beneficial ownership to be effective in tackling financial crime and tax abuse, it must cover all types of legal entities and legal arrangements, including trusts and foundations, Christensen said. “And verified data must be readily available to the public from day one. Anything short of this cannot be considered meaningful action, let alone leadership in the global fight against criminal and corrupt practices.”