Public Beneficial Ownership Registers

Perhaps the biggest news story of this quarter was the decision of the UK Government in May to accept a last minute amendment to the Sanctions and Anti-Money Laundering Bill to impose public beneficial ownership registers on the British Overseas Territories.

The Bill that received Royal Assent on 23 May 2018 to become the Sanctions and Anti-Money Laundering Act 2018 requires the British Secretary of State to provide "all reasonable assistance" to the governments of the British Overseas Territories to enable them to establish a publicly accessible register of the beneficial owners of companies, in a similar form to the register of persons with significant control recently introduced by amendments to the Companies Act 2006

If a British Overseas Territory fails to introduce such a register, as the Act currently stands, the Secretary of State must by 31 December 2020 prepare a draft Order in Council that requires it to establish a register.

A similar amendment had been put forward in respect of the Crown Dependencies (the Channel Islands and Isle of Man), however that was subsequently dropped as a result of clarifications made by the Lord Chancellor (following discussions with the Chief Ministers of each of the Crown Dependencies) on the differing constitutional position between the Crown Dependencies and the British Overseas Territories. Notwithstanding this, section 63(3) of the Act allows by way of an Order of Council the option to introduce public beneficial ownership registers for the Crown Dependencies, should it choose to. So, for the Crown Dependencies, while the issue has been put to bed for now, it hasn't totally gone away.

Since the enactment of the Act, two British Overseas Territories have announced that they are preparing to challenge this extra-territorial provision contained within the Act. The British Virgin Islands have appointed international law firm Withers, Dan Sarooshi QC of Essex Court Chambers and Collas Crill Senior Partner and eminent constitutional lawyer, Gerard St. C. Farara QC to raise the legal challenge.

The Cayman Islands have announced that they will wait to see whether the UK Government enacts an Order of Council before launching any legal challenge.

The Channel Islands already have a register of beneficial ownership that is transparent, but that respects privacy, and this position has the support of the UK Government. Guernsey has said that it will move to a public register of beneficial ownership if that becomes an international standard, but that must be a standard agreed by all jurisdictions as there must be a level playing field. We watch with interests as the long arm of the Act attempts to take hold and the force of the legal challenge is mounted.

Risk & Regulatory lawyer Nin Ritchie contributed to this article