Beneficial ownership approaches in Europe and beyond

Wednesday 13 December 2023

The BVI is the latest offshore jurisdiction to signal it will not allow full public access to registers that show who ultimate owners of companies are.

In a way that mirrors today's response from the Crown Dependencies, like Guernsey, facing demands from the UK Government to introduce public registers of beneficial ownership, the BVI instead has pointed to a scheme that will allow journalists and organisations with a “legitimate interest” access to the data.

The Territories and Dependencies were meant to have registers in place by the end of the year, but a European court ruling that said full public access unfairly infringed the right to privacy stalled that work.

Hon. Lorna Smith, BVI Minister for Financial Services, Labour and Trade said recently: “The safeguarding of these fundamental human rights necessitates the application of a ‘legitimate interest test’ to determine access for those parties whose request for beneficial ownership information is genuinely aimed at preventing or combating money laundering and terrorist financing."

The Minister confirmed that the island’s Government will continue to undertake the work of designing and building systems that deliver on its commitment to implement a register consistent with the standards to be identified in a review of the EU’s Fifth Anti-Money Laundering Directive which introduced the public’s right to access the registers in member states. 

That review should be finished by early next year.

In Bermuda, David Burt, the Premier, told its parliament recently that the issue of publicly accessible registers of beneficial ownership remain a priority in the discussion it has had with the UK Government.

“Bermuda’s position remains firm. We have committed to publicly accessible registers within 12 months of the publication of the implementation review of the European Union’s fifth Anti-Money-Laundering Directive.

“Bermuda will then bring into effect the legislative framework to establish public access to beneficial-ownership data held in a central register, mindful of the recent European Court ruling that stated the privacy rights that may be infringed by a public register must be balanced by a legitimate interest test, for persons seeking access to that register.”

Bermuda, like Guernsey, has a register that is accessible to law enforcement agencies.

To comply with the EU Court of Justice ruling, it is expected that the updated EU rules will dictate that access to beneficial ownership information will need to be based on legitimate interest, but questions remain on how that will be interpreted.

The court ruling said that media and civil society organisations that are involved in the fight against money laundering have a legitimate interest.

Transparency International argues that this means that journalists and those organisations should be able to access the information without having to demonstrate their legitimate interest in specific cases.

The public if they were involved in transactions with a specific company should also be considered to have a legitimate interest in accessing the information, it has said.

The move to a transparent register was aimed at combating tax evasion and avoidance. It also helps expose conflicts of interest.

Gibraltar is the only territory or dependency that has a publicly accessible register. 

Cayman Islands and Turks and Caicos Islands also have private registers. 

In the EU, 14 of 27 member states have retained full public access to their registers. Some closed them down immediately after the court ruling.

As of July, the likes of Estonia, Slovakia, France, Denmark, Bulgaria, Czechia, Slovenia, Latvia, and Poland kept their registers open. Austria, Belgium, Cyprus, Germany, Finland, Greece, Ireland, Luxembourg, Malta and the Netherlands suspended public access.

In 2018 the UK Parliament passed legislation requiring the Government to prepare a draft order in council by 2020 to require the Overseas Territories to introduce public registers. 

The Government did so, but said it would not make the draft order to enforce these registers until the end of this year.

Guernsey, Jersey and the Isle of Man as Crown Dependencies have a different constitutional relationship with the UK and have staunchly argued that the UK can not legislate for them on this issue.