Out-Law News | 03 May 2018 | 2:47 pm | 2 min. read
The territories, which include the British Virgin Islands and Cayman Islands, agreed in 2015 to begin keeping registers of company 'beneficial ownership', and to make these available to law enforcement on request. The new transparency measure, which will be introduced by way of an amendment to the UK's Sanctions and Anti-Money Laundering Bill, will bring the position in the BOTs in line with that of the UK, which introduced a public register of 'persons with significant control' (PSCs) in 2016.
The legislative amendment was tabled by Labour MP Margaret Hodge and Conservative MP Andrew Mitchell. Hodge, the former chair of the House of Commons Public Accounts Committee (PAC), said that the measure was necessary to prevent the BOTs being used as "a haven for crooks, kleptocrats and corrupt individuals who engage in financial skulduggery".
However, tax expert Jason Collins of Pinsent Masons, the law firm behind Out-Law.com, said that differences in company registration procedures in the UK and the BOTs made extending the same transparency measures to each like "comparing apples with pears".
"In this day and age, it is difficult to argue against transparency - but democracy is supposed to be alive and kicking, and the BOTs won't be feeling that way about this measure," he said.
"Transparency is a good thing, but the information revealed by the so-called 'Paradise Papers' didn't show any criminality, so the response should be kept in proportion. Ultimately, any move towards transparency will be less effective if some jurisdictions act but others do not, so unilateral action of this type isn't really the answer. Those who want privacy, for good or for bad purposes, will use a jurisdiction where that is still on offer," he said.
"The BOTs had already agreed to keep a central register of beneficial ownership which is accessible to law enforcement within an hour. What this does is throw open the information to wider scrutiny by making the information public. As the UK has recently introduced a public register for UK companies, one might say that this just follows suit – but the big difference is that anyone can open a company in the UK, whereas you need to go through a licensed operator to open one in the BOTs, who will be performing checks on the data before it is added. Global Witness has recently shown that the information on the UK register is hugely incomplete, and it wouldn't be surprising if much of it is inaccurate," he said.
The Sanctions and Anti-Money Laundering Bill amendment will allow the government to impose a requirement to introduce "publicly accessible registers of beneficial ownership of companies" on BOTs that do not take action voluntarily. BOTs would have until 31 December 2020 to act before the UK government would be able to take action.
The measures will not apply to the Crown Dependencies of Jersey, Guernsey and the Isle of Man.
The UK government's Foreign and Commonwealth Office said in a statement that it intended to promote public registers of company ownership as "the global standard".
"The UK government's preference would have been to work consensually with the elected overseas territory governments on moving incrementally towards public registers. However, we have to recognise the strength of feeling in parliament on this issue," it said.