British Crown Dependencies Finally Have a Timeline for Transparency of Secret Company Registers

There has been a great deal of debate regarding the secret company registers found in various tax havens, including British Crown Dependencies.

The Debate

For years, those who oppose this type of secrecy have strongly encouraged the Crown Dependencies to share company-related information. Opposition argues that the British government and taxpayers should be aware of the companies that are using secretive measures to hide profits and, therefore, pay less in taxes.

On the other hand, the local governments of the British Crown Dependencies and those who support tax havens argue that those individuals and companies have a right to secrecy.

The main records in question in the most recent debate are the beneficial ownership registers. These registers show a company’s ultimate owners, without any hidden information. Until recently, this information was only accessible to the local authorities within the Crown Dependencies, though foreign governments could request access to the information.

For further controversy, similar records in the United Kingdom are publicly available. Specifically, the name of anyone who owns 25% or more of a registered company is available to the public.

Relatively recently, in March 2019, Members of Parliament (MPs) who spanned parties tried as a group to make the Crown Dependencies provide public access to these registers. The proposals included more than 40 MP signatures, but the legislation ended up applying to Overseas Territories only.

The Agreement

 The plans, announced last year, outlined the British Crown Dependencies’ timeline to make these beneficial ownership records more widely available, including to the British government and taxpayers. The records will become publicly available, as well as available to businesses and the European Union. This is the result of significant urging from MPs.

The Timeline

 The full availability of the relevant records to the EU, businesses, and the public will occur by 2023.

The first stepping stone in the timeline is that the dependencies will combine their registers with the equivalents in the EU by 2021. Then, by 2022, businesses will have access to the registers as a way to complete their “due diligence.” Finally, by 2023, the governments of the Isle of Man, Jersey, and Guernsey will propose legislation in parliament so that the registers become publicly available.

What Those Involved Say

 According to the Chief Minister of Guernsey, Gavin St. Pier, the agreement is a way that the islands will align with the regional standards related to financial transparency. St. Pier did not predict that this change would discourage companies from operating on the island.

Tony Mancini, the Guernsey International Business Association president, argued that confidentiality is crucial to the financial model in Guernsey. He went as far as to say that discarding it unilaterally could damage the economy. He also made the argument that the registers in Guernsey are better than those in the United Kingdom due to the verification of information by trust companies.

A director at the Grant Thornton Jersey branch, John Shenton, indicated that this change would put individuals’ private information unnecessarily at risk. He expressed concerns about tabloid sensationalism and reinforced that the change should not be necessary, given that the authorities can already request the information if they have a legitimate reason.

Additionally, there is some doubt as to how useful the registers will be. Dame Margaret Hodge, one of the MPs that led the March 2019 push to make the registers public, expressed concerns and skepticism as to whether it will be enough. She indicated that this will be a concern until the islands clarify more details. She was particularly skeptical about the various get-out clauses included in the current version of the proposal.

Sources:

https://www.bbc.com/news/world-europe-guernsey-48677083