Introduction
Position on registers of beneficial ownership in Jersey
Recent decision following CJEU judgment
Comment


Introduction

Pursuant to the fifth EU Anti-money Laundering Directive, each EU member state must make the information stored on its central register publicly accessible. On 22 November 2022, the Court of Justice of the European Union (CJEU) provided its judgment with respect to the interpretation of the EU Anti-money Laundering Directives in view of an individual's right to privacy enshrined in the Charter of Fundamental Human Rights. The CJEU's judgment was issued further to proceedings filed in Luxembourg, which has since 2019 maintained a register of beneficial ownership with unrestricted public access.

The CJEU ruled that such unrestricted public access to information on the beneficial ownership register was not proportionate and constituted a violation of human rights, in particular, the rights to respect for private life and the protection of personal data. This type of unlimited public access will therefore need to be reviewed and an alternative approach taken going forward.

Jersey is not part of the European Union and therefore the judgment has no direct application to it. Nonetheless, the principles behind the decision are likely to be relevant and, on the application of human rights and data protection legislation, persuasive. Jersey has enshrined the European Convention on Human Rights and the General Data Protection Regulation into respective domestic legislation.

Position on registers of beneficial ownership in Jersey

For companies, foundations and partnerships with legal personality, this is not a new requirement in Jersey. Entities registered in Jersey were already required to provide details of beneficial ownership on establishment. Indeed, a central register of beneficial ownership has been in place in Jersey for some years now. It relies upon fiduciary service providers and resident agents to:

  • retain full details of beneficial ownership and control; and
  • make such information available to the companies registry or certain bodies (including the regulator) upon request.

In terms of implementation of the fourth and fifth EU Anti-Money Laundering Directives, the position in Jersey has been a phased approach to the implementation of more detailed beneficial ownership registers and, fundamentally, public access.

Jersey has completed the initial stage and currently maintains beneficial ownership registers that are accessible by law enforcement and certain other authorities and regulators. The second stage was set to complete by the end of 2022, and it was intended that legislation would be brought into force to provide access to beneficial ownership information to financial services businesses, as well as certain other approved businesses for customer due diligence purposes.

The last phase of the implementation, the introduction of public access to the information on the beneficial ownership registers in line with the EU Anti-Money Laundering Directives, was anticipated to be completed by 2023.

Recent decision following CJEU Judgment

Following this recent judgment by the CJEU, Jersey and Guernsey, in conjunction with the Isle of Man, have given a joint statement explaining the decision to postpone the introduction of legislation to provide access to obliged entities for the purpose of conducting customer due diligence. The aim of this delay is to reassess the impacts of such legislation, as well as to take specialist legal advice. Subject to this, it is intended that the legislation will come into force as soon as possible.

Similarly, with respect to opening access to the beneficial ownership registers to the public, the statement confirmed that:

In respect of extending access beyond obliged entities, we intend to obtain expert legal advice on all relevant issues and, in due course, intend to review the public commitment in line with that advice and any recent development of international best practice.

It is unknown what the approach will be going forward, and it may be that public access to beneficial ownership registers will be granted in the future. However, it is anticipated this will only be upon demonstration of a legitimate interest in order to provide a greater balance between transparency and privacy.

Comment

This is nothing new for Jersey, which has long collated and maintained accurate beneficial ownership data. The fact that the data on the register is verified by regulated fiduciary service providers as to its accuracy and, thereafter, monitored and updated on any changes in beneficial ownership is of fundamental importance. A register stands or falls on the accuracy of the data actually held. Further, each registry itself is staffed by experts mandated to keep the data accurate.

Registers that hold inaccurate data on beneficial ownership on a self-reporting basis with no checks and balances in place are not going to be as effective in combatting financial crime.

Further, the empirical evidence and data supporting the notion that providing "public access" to these registers has a positive impact in combatting financial crime is substantially lacking.

Against this backdrop, Jersey is clearly considering its options carefully, as is to be expected from a well-regulated and reputable jurisdiction.

For further information on this topic please contact Natalia Fortuna at Ogier by telephone (+44 1534 514 000) or email ([email protected]). The Ogier website can be accessed at www.ogier.com.