Speaking at Jersey Finance’s Private Wealth Conference in London, Professor Jason Sharman challenged the assumption that registries, such as the one being implemented by the UK, would bring transparency to the monitoring of company ownership.

Addressing more than 400 senior private client tax, trust and wealth management professionals, he said that central registries were “not the only way of finding companies’ beneficial ownership” and that, due to their passive nature and lack of verification processes, “may not even be the best means of doing so”.

“People in registries rightly see their role in a fairly passive or archival way,” Professor Sharman said. “Registries receive information but they have little desire or capacity to verify it, so making them the guardian of this valuable beneficial ownership information runs up against the fact that they neither have nor want a verification function.”

Commenting that transparency was currently a “buzzword” amongst politicians and lobby groups, Professor Sharman said: “It is simply not possible to say that centralised registries work better than the leading alternative, and it is demonstrably wrong to say that they are the only way of achieving corporate transparency. A beneficial ownership regime based on licensed corporate service providers (CSPs) is a better solution…CSPs have an incentive to ensure records are accurate in that false records may lead to a revocation of their licence.

“When it comes to beneficial ownership regulation, at present by far the biggest problem is the United States, which has neither licensed CSPs nor registries of beneficial ownership information… It is peculiar that IFCs are subject to much more international pressure, even though objectively their performance is much better. This disparity seems to be an indicator of the degree to which the policy debate over beneficial ownership is dominated by politics and public relations concerns, rather than a genuine desire to fix the problem of untraceable shell companies.”

Professor Sharman, who is currently at the Centre for Governance and Public Policy at Griffith University in Brisbane, is taking up the Sir Patrick Sheehy Chair in International Relations at Cambridge in January 2017. He used Jersey Finance’s ‘Guiding Lights’ conference, held at 8 Northumberland Avenue on 27 April, to launch his new independent paper, The Beneficial Ownership Conundrum: Central Registries and Licenced Intermediaries, which was commissioned by Jersey Finance.

Geoff Cook, CEO of Jersey Finance, who introduced the conference, said: “There’s no doubt that, as Professor Sharman’s new report proposes, anonymous shell companies are major mechanisms for serious transnational financial crime, and it’s pleasing that Jersey is described in the report as ‘one of the leading pioneers’ of the tried and tested licensed CSP model of beneficial ownership. 

“What is quite frightening in the case of the ‘Panama Papers’, however, is that in the space of three weeks we have witnessed a media frenzy based on allegation and speculation lead to a celebration of data theft and a kneejerk reaction in proposing potentially incredibly expensive legislative change, without any sort of impact analysis. It seems governments are rushing to find new solutions when in fact – in the case of the regulated CSP model such as Jersey’s – we already have one.”

At the conference, a panel session on socially-responsible wealth management discussed how for high net worth individuals ‘tax’ is a secondary driver for wealth planning to effective succession planning. Panellists also commented that there was an increasing focus on the reputation of wealthy families and a need to adhere to a ‘barometer of morality’ against the backdrop of a constantly moving landscape.

Now one of the largest dedicated private client conferences in London, Guiding Lights was moderated by Stephanie Flanders, who also gave a talk on the current state of the markets and the potential implications of the UK’s referendum on the EU. Proposed amendments to Jersey’s trusts law were the topic of a keynote by Steve Meiklejohn, Partner at Ogier, and a second panel session.

In addition to Professor Jason Sharman and Steve Meiklejohn, other panellists at the event included Salpy Kouyoumjian, Partner, Boodle Hatfield; Camilla Stowell, Managing Director, Coutts Private Office; Siobhan Riley, Partner, Carey Olsen; Gilead Cooper QC, Wilberforce Chambers; and Zillah Howard, Partner, Bedell Cristin.

Professor Jason Sharman’s latest report, ‘The Beneficial Ownership Conundrum’, can be downloaded in full at www.jerseyfinance.je. His full speech can be seen on the Jersey Finance YouTube channel, www.YouTube.com/JerseyFinance