Jersey is facing renewed pressure from Westminster to increase transparency around company ownership after the UK government’s anti-corruption champion warned that patience with Crown Dependencies is running out.
Baroness Margaret Hodge made the comments ahead of a visit to Guernsey yesterday as part of a fresh push to encourage Crown Dependencies and Overseas Territories to go further in tackling illicit finance.
Jersey, alongside Guernsey and the Isle of Man, is currently consulting on proposals to widen access to beneficial ownership information through a “legitimate interest access” framework.
Such a system would allow journalists, non-governmental organisations and others with a specific role in fighting financial crime to access ownership data.
Speaking to the Financial Times, Baroness Hodge suggested the UK Government could consider stronger measures if progress continues to stall.
“I think we’re coming to the end of the road trying to do this through agreement,” she said, adding that the British government “could consider revisiting the advantages” of being linked to the UK that the dependencies and territories enjoy as leverage in discussions about the matter, or it could legislate to force their hands.
A “constitutional crisis”?
Jersey has previously warned that attempts by the UK Parliament to force change could trigger a “constitutional crisis”.
Baroness Hodge argued that transparency regimes in the Crown Dependencies needed to keep pace with developments in Europe, where new measures are being introduced to combat money laundering and terrorist financing.
Following Baroness Hodge’s visit to Guernsey yesterday, the island’s Chief Minister, Deputy Lindsay de Sausmarez, said the island was “rightly proud” of its beneficial ownership register and argued that independent assessments showed the island consistently met or exceeded international standards.
“Guernsey’s robust approach and our swift and effective sharing of information with international law enforcement and tax authorities have been praised by external authorities, including MONEYVAL and the UK’s own Home Office,” she added.
“Much evidence and many independent assessments show that we consistently meet and even exceed international standards, so it is a shame that outdated prejudices about Guernsey continue to be reiterated for the apparent purpose of generating media headlines.”
What is ‘beneficial ownership’?
Companies formed to hold investments typically have many shareholders.
These can be people or other companies, which in turn are owned by still more shareholders.
In some cases, shares can be owned by companies, whose shares are owned by other companies – and so on.
This makes it hard to work out which actual people own a company.
A company’s ‘ultimate beneficial owners’ are the real people who ultimately own a company – no matter how far removed.
While there are many legitimate reasons companies invest in other companies, criminals – including terrorists and hostile foreign governments – can use complex ownership structures to hide their investments and ‘launder’ money.
Over the last two decades governments around the world have been trying to introduce tighter anti-money-laundering laws to crack down on financial crime.
Following a 2022 court ruling, the EU changed who could access company ownership registers to people with a ‘legitimate interest’, such as law enforcement and tax authorities, as well as journalists, researchers and anti-corruption groups.
Similar schemes have been rolled out in the Cayman Islands and Turks and Caicos Islands, and are expected to be introduced in Anguilla, Bermuda, and the BVI later this year.
“European countries are making progress on beneficial ownership transparency, and I want Guernsey to join others to adopt public registers that meet much higher standards, at a faster pace,” Baroness Hodge told Express.