On 26 April 2024, the States of Jersey published its latest consultation
paper on "Access to information on Jersey's Central Register of Companies and legal persons". This continues the work started by the States of Jersey to allow access to the register by 'obliged entities', those persons obliged to conduct customer due diligence in accordance with the Money Laundering (Jersey) Order 2008. The aim is to allow access to those persons in 2024 and to "develop and deliver legitimate interest access in a leading timeframe".
This consultation focuses on obliged entities, and notes that a separate consultation on legitimate interest access will be published, likely later in 2024.
The JFSC has also notified industry about the consultation, noting the deadline for response is 7 June 2024.
Background
The States of Jersey, along with the governments of Guernsey and the Isle of Man, issued a joint commitment in 2019 to open up access to their central registers of information. Progress had already been made in 2022 with regards to access for obliged entities and consideration was being given to wider access. However, this work was temporarily
put on pause in 2023 after the Court of Justice of the European Union (“CJEU”) held that full public access is neither "strictly necessary nor proportionate to the objective pursued", and it may not even add anything to the fight against financial crime.
Notwithstanding this, with the benefit of advice obtained, a revised commitment was issued by the Crown Dependencies in December 2023, which supersedes the commitment issued in 2019, re-stating a priority of the jurisdictions was to continue providing effective access to up-to-date and verified beneficial ownership information for law enforcement and tax authorities. This statement was coupled with an acknowledgement of the tensions between transparency and privacy.
The 2023 commitment, in essence, agreed to deliver obliged entity access in 2024 and develop and deliver legitimate interest accessing in a leading timeframe. The publication of the consultation is demonstrative of Jersey's progress on the first limb of this commitment.
Are public registers on hold for now?
The CJEU agreed that legislatures do have the general power and right to put in place measures to combat money laundering and terrorism financing, such as ownership registers, and public access can contribute to those measures. The increased access under the Fifth Anti-Money Laundering Directive created a greater interference with privacy rights than that under the Fourth Anti-Money Laundering Directive, without any benefit to fighting money laundering and terrorism financing. For those who are familiar with English media law, it appears the CJEU agrees that the 'public interest' should not be confused with the 'interest of the public'.
The approach taken by other countries has varied. For example, France originally confirmed that they would continue with blanket public access, but this has since been limited to those with a 'legitimate interest'. The UK has maintained its position on full public access to beneficial ownership registers, but has only recently legislated for the creation of a central register (as opposed to registers held by legal persons at specified locations) and those provisions are not yet in force.
The sixth anti-money-laundering directive
The EU is in the process of adopting a further anti-money laundering directive, which has set out that access will be available to certain categories of persons who will be assumed to have a legitimate interest. A legitimate interest is one "in relation to the prevention and combating of money laundering, its predicated offices and terrorist financing". As well as the usual authorities who typically have access to registers, the Sixth Anti-Money Laundering Directive will also grant access to "persons acting for the purpose of journalism, reporting or any other form of expression in the media" and "civil society organisations, including non-governmental organisations and academia", so long as they are connected with the legitimate interest described above.
While the EU Parliament has adopted the legislation, it still needs to pass the EU Council and then to be adopted by the Member states. Simply put, it will be some time before this comes into force. Of course, how a legitimate interest will be demonstrated to ensure only those who are entitled to access actually obtain access, will be key here.
The FATF recommendations
The EU's AMLD laws are derived from the international standards set out by the Financial Action Task Force in 2012, but in the EU's own words "go further on a number of issues to promote the highest standards for anti-money laundering and to counter the financing of terrorism". The FATF Recommendations (as at February 2023) do not require this level of transparency; recommendations 24 (for legal persons, such as companies) and 25 (for legal arrangements, such as trusts) both state that countries should ensure that there is "adequate, accurate and up-to-date information" on the beneficial ownership and control of these structures, and they should also "consider facilitating access to beneficial ownership and control information by financial institutions and DNFBPs (Designated Non-Financial Business and Professions)" which are obliged to use this information for their own due diligence under separate Recommendations.
Of course, these "essential measures" are effectively a minimum standard, and jurisdictions are free to impose their own measures which go above and beyond this. However, the CJEU case is a reminder that these measures do not exist in a vacuum, but are part of a complex framework of legal rights and responsibilities with a clear and increasing tension between transparency and privacy. Striking the correct balance will be crucial from a Jersey perspective, in order to ensure the jurisdiction remains a competitive and attractive place to do business, but also to uphold international standards in the fight against financial crime.
The Recommendations also note that countries may also wish to extend this to public access, but flags that data protection and privacy are concerns that needs to be considered. Again, it suggests that those with a legitimate interest should be granted access.
Other offshore jurisdictions
Of course, Jersey is not the only jurisdiction affected by this.
A UK and British Overseas Territories ("BOTs") Joint Ministerial Council communiqué (published 12 May 2023) stated:
"…we will be establishing a technical working group on beneficial ownership transparency to share expertise on, and consider issues around, the implementation of publicly accessible registers of company beneficial ownership that contain the necessary safeguards to protect the right to privacy.“
However, the BVI has confirmed it will not be going ahead with public registers, instead focussing on the existing standards both under the Fifth Anti-Money Laundering Directive and human rights law. It appears that for now, Jersey and the other offshore jurisdictions are taking their time to consider
What does the future hold?
In the short term, feedback is invited on the draft legislation which will amend the Financial Services (Disclosure and Provision of Information) (Jersey) Law 2020 with a view to enabling access to Jersey's central register of beneficial ownership and control for obliged entities. Proposed access will be for persons obliged to conduct customer due diligence in accordance with the Money Laundering (Jersey) Order 2008. As noted above, the deadline for comments to be received is 7 June 2024.
However, Jersey is aware that the international standard may change: in a statement on the CJEU judgment, all three Crown Dependencies noted 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". This may not mean changes only to the FATF Recommendations but also EU rules; the EU list of non-cooperative jurisdictions for tax purposes may in the future include beneficial ownership standards as part of its relevant criteria in line with the new Sixth Anti-Money Laundering Directive. In time, Jersey may be required to open up its registers further to meet changing international standards.
However for now access in Jersey for obliged entities will strike the right balance between access to information for those who need it for due diligence and law enforcement, and protection of information for those to whom the data belongs.
