Parliamentarians in the UK on Tuesday 1 May approved an amendment to the Sanctions and Anti-Money Laundering Bill that will require the introduction of publicly accessible registers of beneficial ownership of companies in British Overseas Territories before the end of 2020.
What does this mean?
This means that British Overseas Territories will each (assuming that the Bill is enacted into law) be required to introduce a register in a similar form to the Persons with Significant Control Register that is already in operation for companies and LLPs incorporated in the UK (please see our PSC article here). Significantly, these registers will be accessible by the public.
These British Overseas Territories have already adopted the Common Reporting Standard/Automatic Exchange of Information regime relating to tax compliance and have developed systems to record beneficial ownership information for use by law enforcement agencies. To date, the Overseas Territories have resisted calls for public disclosure of beneficial ownership information on the basis that the existing arrangements facilitate effective exchange of tax information and contain safeguards to prevent the use of companies for money laundering and other criminal purposes.
Which jurisdictions will be affected?
The measure impacts on British Overseas Territories, notably Bermuda, the British Virgin Islands, the Cayman Islands and the Turks & Caicos Islands.
It is not applicable to the UK Crown Dependencies (Jersey, Guernsey, the Isle of Man) which have a different constitutional status. This development could, however, clearly lead to pressure being applied to these Crown Dependencies to introduce similar regimes.
What will happen next?
The devil is, as always, in the detail. The amended Bill still has to complete its passage through the Houses of Parliament and to receive Royal Assent. The Bill provides a mechanism for the imposition of register regimes only if each of the Territories does not implement a register on its own initiative. There will, no doubt, be negotiations between the UK and the Territories affected as to how the Registers are introduced and the costs of doing so.
How the registers would operate is also unclear. The Overseas Territories may seek to limit public access to individuals/entities with a 'legitimate interest', an arrangement envisaged by the EU's Fifth Money Laundering Directive.
We will provide updates on this topic as they come in, but if you wish to discuss with one of our team, please get in touch with your usual Withers contact, or contact enquiries.UK@withersworldwide.com