In what has been seen by some as a surprise development in the corporate transparency story, the UK Government on Tuesday agreed that it would require Britain's overseas territories to establish public beneficial ownership registers for companies.
Overseas territories to follow UK's lead on public registers
Unlike the UK, which has had a publicly accessible "register of people with significant control" of UK companies since 2016, the overseas territories have in general resisted a public register. They have instead committed to registers accessible only by the UK's tax authorities.
Until this week, rather than force the overseas territories to introduce their own public registers, the UK Government has preferred to rely on other means of persuasion. Indeed, earlier on Tuesday, before the amendment to the Bill was agreed, Sir Alan Duncan had confirmed that the Government was "committed to influencing others in this regard, including the UK's overseas territories and crown dependencies." The Government's subsequent agreement to support a backbench amendment to the Sanctions and Anti-Money Laundering Bill, if passed in its current form, means that the overseas territories, at least, will be required by law to introduce public registers.
The Government's Sanctions and Anti-Money Laundering Bill does not apply to the crown dependencies of Jersey, Guernsey and the Isle of Man. Interestingly, the Chief Ministers of Jersey and Guernsey have both since the Bill's amendment commented that they are pleased that their constitutional relationship with the UK has not been breached. While the Chief Minister of Guernsey has said that Guernsey would introduce a public register "if that becomes the agreed global standard", it seems likely that the amendment of the Bill with respect to overseas territories will increase the existing pressure on the crown dependencies to introduce public registers sooner rather than later.
The wider transparency picture
The change in approach to public ownership registers in the overseas territories comes in the context of a number of other transparency-related measures. As reported in our March 2018 Transparency Update, the UK has published its plans to implement a register of overseas companies owning UK property, which is intended to be operational by 2021. There have now been calls, including from the Labour Party, to accelerate the implementation of that register.
The amendment to the Sanctions and Anti-Money Laundering Bill provides that if any overseas territory has not implemented a public register by the end of 2020, the UK will have to prepare a draft order requiring that territory to do so. Alan Duncan's statement on Tuesday before the amendment was conceded remains relevant to the Crown dependencies and more globally. In it, he expressed the Government's intention to use "its best endeavours, diplomatically and with international partners, including through multilateral fora (such as the G20, FATF and the OECD), to promote public registers of company beneficial ownership as the global standard by 2023." The promotion of that global standard now appears likely to be expedited by this week's developments in relation to the UK's overseas territories.