Key extracts follow:
7 The UK government will lead by example by creating a publicly accessible central registry of company beneficial ownership information. The registry will contain information about who ultimately owns and controls UK companies.
Supporting civil society organisations
CAFOD, Christian Aid, Global Witness, ONE, Open Knowledge Foundation, OpenCorporates, Oxfam, Save the Children, Tearfund, Transparency International UK
Vision and impact
A lack of knowledge about who ultimately controls, owns and profits from companies and legal arrangements facilitates their misuse for illicit purposes including tax evasion, money laundering, corruption and bribery.
The UK is committed to lead by example to implement international standards on transparency of ownership and control to tackle the misuse of companies and legal arrangements. In particular, the UK has committed to place a requirement on companies to obtain and hold adequate, accurate and current information on their beneficial ownership – defined as the natural person(s) who ultimately owns or controls a legal person or arrangement.
Company beneficial ownership information will be held in a central registry maintained by Companies House. The UK sought views on whether information in the registry should be made publicly accessible. A large number of respondents to the consultation supported this in the interests of promoting positive corporate behaviour and transparency, though concerns were also expressed, notably around competitiveness impacts and privacy. Having carefully considered the arguments for and against, the UK has committed to making information on individuals with significant interests in UK companies accessible publicly via Companies House, potentially using as a model the type of information already in the public domain on company shareholders.
As we further develop the policy we will give careful consideration to:
how we can best protect individuals who might be at risk of harm through disclosure of this information the sanctions that will apply if individuals or companies deliberately provide false information, or fail to provide information how the registry will operate in practice
This will help ensure the robust implementation of the new requirements.
In parallel, the UK is taking forward related G8 commitments to enhance corporate transparency and has sought views on the following issues:
the prohibition of new and existing bearer shares, which allow company shares to be traded anonymously
enhanced transparency around the use of nominee directors, which can be used to conceal who really controls a company
the prohibition of corporate directors, which can be used to create an opaque corporate structure
Furthermore, we continue to pursue the same level of ambition through the EU, G8 and the G20. All G8 countries have published action plans on beneficial ownership. The G20 also declared at St Petersburg this year that they too will lead by example on implementation of beneficial ownership requirements, and G20 leaders have tasked finance ministers to update the G20 next year on steps taken to meet the relevant international standards. In the EU, the UK is continuing to push for an ambitious approach in the context of proposals for a Fourth EU Money Laundering Directive.
Through the UK’s G8 action plan on beneficial ownership, the UK is taking forward a number of other commitments. We are currently undertaking the UK’s first ever national risk assessment of money laundering and terrorist financing threat to be completed in 2014. We also committed to improve the supervision and enforcement of those that facilitate company formation in the UK. HM Revenue and Customs (HMRC) are currently leading a review of supervision and enforcement of trust and service providers which will include consideration of additional measures to ensure company formation agents conduct effective due diligence including the identification and verification of beneficial owners. We will also take forward work in the context of the national risk assessment to assess the money laundering and terrorist financing risk posed by trusts, and through the Fourth EU Money Laundering Directive we will seek to ensure that trustees of express trusts are obliged to obtain and hold adequate, accurate and current information on beneficial ownership regarding the trust. Furthermore, we are working hard in the OECD to establish a new global standard on automatic exchange of information which the G20 has called for by February 2014. This will provide greater transparency over trusts than ever before, providing the authorities with more information to tackle the misuse of trusts.
A lack of transparency of company ownership and control favours those looking to hide their identity and launder illicit proceeds through international financial systems. In the UK, investigations are frequently frustrated by the inability of law enforcement to identify the true owner of a company being used to hide or conceal criminal activity, particularly where this information is held offshore by companies incorporated outside the UK. The government is taking steps to implement smart regulation which will improve the playing field for responsible businesses and put a stop to abuse by those who are less scrupulous. In leading by example, the UK hopes to encourage collective global action to tackle corporate opacity.
Companies are already required to know and provide information on their beneficial ownership when, for example, they seek to establish a bank account. Similarly, financial institutions and other professional organisations are required to verify beneficial ownership information through their customer due diligence requirements, with higher risk clients requiring a higher degree of verification. However, financial institutions often cite the customer due diligence requirements as one of the most costly and difficult requirements to fulfil as they are heavily reliant on the information provided by the company. An explicit requirement on companies to obtain and hold information on their beneficial owners could make it easier for financial institutions and others to carry out this due diligence.
By requiring UK companies to provide this information to a central registry, there could be additional benefits for tax authorities and law enforcement agencies in terms of more efficient investigations into company ownership and control. Making this information available publicly could have advantages in terms of public scrutiny, building public trust and ensuring investors, the market and other companies can identify who really owns the companies with whom they are doing business.
The government discussion paper relating to these commitments has informed this action plan. Implementation will now be taken forward through amendments to company law, led by the Department for Business, Innovation and Skills, and through: transposition of the Fourth EU Money Laundering Directive, which is currently being negotiated; amendments to the UK Money Laundering Regulations; and other relevant bilateral and multilateral agreements led by HM Treasury.
It is not clear at this stage what exactly will be on this register and the detail is important. However, so far as Jersey is concerned the Jersey Treasury Minister has helpfully written on the subject this morning as follows:
I have been asked for a comment on the UK and USA announcements yesterday concerning central registries for beneficial ownership of corporate entities.
Jersey welcomes the UK’s commitment to move to a central registry.
As we committed to do at the G8, Jersey will now move forward on consulting on our G8 Action plan – see below.
We will keep a watching brief on developments on the initial statement that registries could be public in the future.
Jersey already has a central register of beneficial interest and, in the here Action Plan published in June ahead of the G8 summit, we stated that a pre-consultation paper would be prepared to seek views on the enhancement of our register. Now that the UK has announced its plans, our pre-consultation paper will be prepared.
Jersey’s committed to complying with international standards that have global application, and we’ll be watching closely the response of the other G8 and G20 countries to the initiatives which have been announced yesterday by Britain and the United States of America.
Jersey has access to all the information on beneficial ownership that is required to meet the present international standards and to respond effectively to requests for information from tax authorities or law enforcement agencies as required by statute.
Jersey requires beneficial ownership to be disclosed to the Jersey Financial Services Commission at the time of incorporation of a company, and the Commission holds this information in a central register which available for law enforcement and regulatory agencies.
If world standards changes, Jersey is in a position be able to respond and move in step with international community standard.
Jersey meets international obligation placed on companies to know their ownership.
The Jersey ‘model’ has been used by the World Bank, in the StAR project report ‘the Puppet Masters’, to describe conditions under which the company registry can be considered a viable option for providing beneficial ownership information.
I will be tracking developments closely and further updates will follow.