All the inhabited Overseas Territories (OTs) of the United Kingdom (UK) have committed to adopting publicly accessible registers of company beneficial ownership, in a move that is being described as a "major change" demonstrating their "commitment to tackle flows of illicit finance" by the UK Government. The registers are expected to be in place by the end of 2023 and the UK Government will provide technical support to assist the OTs in meeting what might in some cases be a demanding deadline.
Under Section 51 of the Sanctions and Anti-Money Laundering Act 2018 (SAMLA), the UK was required to prepare a draft Order in Council by 31 December 2020 requiring OTs to introduce a publicly accessible beneficial ownership register, if they had not already done so.*
This draft Order in Council was published on 14 December 2020, but as a result of the OTs’ commitment, it has been decided that it is not necessary to actually make the Order. It appears that it will therefore remain in draft, in case the commitment by the OTs is not met (this will be kept under review).
The draft Order is short and imposes an obligation on OTs to introduce a register and sets the minimum requirements for it. In essence, these reflect the requirements of the Persons of Significant Control regime now contained in the Companies Act 2006. For example, the minimum threshold for beneficial ownership (which cannot be set higher) is 25% and is bolstered by various "look through" provisions to prevent masking of ownership.
While this is not likely to trouble the penguins of South Georgia and the South Sandwich Islands, for certain territories such as the Cayman Islands and the British Virgin Islands this potentially marks a major change. When combined with contemplated reform of the UK’s Companies House records and a new drive to report beneficial ownership of companies in the USA, the end of 2020 could be seen in the future as a significant period in the drive to reduce financial crime by increasing transparency around the world.
* If made, the Order would apply to: Anguilla; Bermuda; British Antarctic Territory; British Indian Ocean Territory; Cayman Islands; Falkland Islands; Montserrat; Pitcairn, Henderson, Ducie and Oeno Islands; St Helena, Ascension and Tristan da Cunha; South Georgia and the South Sandwich Islands; The Sovereign Base Areas of Akrotiri and Dhekelia; Turks and Caicos Islands; and the British Virgin Islands. Gibraltar is not included because it already has a publicly accessible register of beneficial ownership of companies.
The UK is spearheading an international campaign to encourage more countries to commit to publicly accessible registers by 2023. Action on access to beneficial ownership information in the OTs needs to be complemented by improved beneficial ownership transparency internationally. This is an essential tool in the global fight against economic crime, illicit financial flows and corruption.