The long path towards the introduction of public access to the register of the beneficial ownership of Jersey companies.
What just happened?
The Crown Dependencies of Jersey, Guernsey, and the Isle of Man have announced that they have agreed upon a series of steps expected to culminate by 2023 in the introduction of public access to the registers of the beneficial ownership of companies incorporated in their jurisdictions.
This is being presented as an appropriate step to take, given the Crown Dependencies’ wish to ensure they remain aligned with international standards and global norms, especially in light of the EU’s 5th Anti-Money Laundering Directive, which becomes effective on 1st January 2020, and which will allow public access to beneficial ownership information of companies based in the EU.
Isn’t this an abrupt change of position?
Jersey has kept a register of the beneficial ownership of companies incorporated here for decades and this information is shared with governments and official authorities globally on demand.
The relevant regulations have become stricter in recent years, with updates to ownership information now required as soon as changes occur, rather than in arrears at the beginning of the following calendar year.
The big issue is eventual grant of public access to this information. The Crown Dependences were opposed to this step arguing that their existing systems struck a better balance between preventing misconduct and maintaining owners’ legitimate expectations of privacy. The caveat was that they would move towards public access when and if it became the new global standard.
It would seem that with the forthcoming introduction of the AMLD 5 the Crown Dependencies have accepted, perhaps with scant enthusiasm, that the writing is on the wall and it’s now time to shift their position.
One can well see that if the beneficial ownership of companies in western Europe is no longer to be kept confidential eventually the very choice of a Jersey company, if such were not also the case here, could give them a troublesome reputation they and their shareholders would not deserve simply because they were out of step with the world around them.
Meanwhile in London
This tale of adjustment to evolving global standards has been obscured by the noisy constitutional fuss arising from Westminster’s controversial presumption that it had the right to push the CDs into making this change if they did not first choose to jump of their own accord.
The CDs let it be known that they were unimpressed by the steps already taken in this area by the UK where the data available for inspection is not checked, but only self-certified. Consequently, the information on offer is not guaranteed to be accurate. While it is a criminal offence to provide false information, there has so far only been one successful prosecution for filing inaccurate beneficial ownership information, providing no deterrence to those who may have decided to make a false declaration.
When Westminster decided to use its powers to push the UK’s Overseas Territories towards introducing publicly accessible registers the OTs complained loud and hard about colonial attitudes and about the fact that the same requirements had not been made of the CDs.
With a breath-taking indifference to the centuries old constitutional convention that Westminster does not legislate for the CDs without their express consent ( because unlike the OTs they are not former colonies with a new, more politically correct sounding, title ) certain backbenchers began to prepare to try and do just that. The Speaker did not stop them but the Government did – even though it was almost entirely preoccupied by a rather wider constitutional collapse arising from that catastrophic collision between representative democracy and direct democracy better known as Brexit.
Jersey’s latest move has thus robbed its critics on the back benches at Westminster of their current grievance. It will do the sort of thing they want, not because of their urgings, but because of its long standing policy of keeping on the right side of the EU.
France’s register of company beneficial ownership is automatically accessible by judicial authorities and certain public authorities, but individuals must establish legitimate interest before a court in order to gain access to the register.
The situation is similar in Germany, where the register (known as the transparency register) is immediately available to certain public authorities, but other persons or entities need to demonstrate a legitimate interest in order to be granted access.
There are obvious strains between AMLD 5 and modern notions of data protection, and the human right to a private and family life
The CDs will observe between now and 2023 how in practice these are resolved by the various member states of the EU and then decide which form of statutory compromise adopted there does justice to the policy priorities of the islands. One can well imagine for example that similar challenges are being grappled with in Valetta and Luxembourg ville.
Alignment with the UK is not a priority, its system does not compare with those of the CDs who regard it as less rigorous than their own.
In the meanwhile steps towards this innovation will be taken, first by interconnecting the CDs’ beneficial ownership information with that kept in the EU for access by law enforcement authorities and then by granting access to this information to financial services businesses and members of the professions for the purpose of their own KYC researches.
In a nod towards the now widespread fashion for team cycling in the island the Jersey authorities have used a cycling analogy to describe the island’s new position: in the peloton but not out front leading the group.