Crown Dependencies: Beneficial Ownership Transparency

Tom Tugendhat Excerpts

Tuesday 19th December 2023 Written Statements

[The Minister for Security (Tom Tugendhat)]

Illicit finance is an active and growing threat to the national security of the UK family. As set out earlier this year in the UK’s second economic crime plan, illicit finance fuels serious and organised crime, threatens our institutions, and enables kleptocrats to establish a financial foothold. That is why in 2016, the UK set up our own publicly accessible register of beneficial ownership, the people with significant control (PSCs) register, which was the first of its kind in the world. Seven years later, many other countries and jurisdictions around the world have joined us.

We are still working with others to achieve this aim. The UK and Crown dependencies (CDs) have a history of working together as partners to strengthen our economic defences against illicit finance. Publicly accessible registers of beneficial ownership are an essential tool in this fight.

In 2019, the Bailiwick of Jersey, Bailiwick of Guernsey and Isle of Man (the Crown dependencies) committed to implement publicly accessible registers of beneficial ownership in line with the principles adopted by the European Union.

In December 2022, following the ruling of the Court of Justice of the European Union (CJEU), the CDs issued a statement announcing that they were pausing work on their public commitments while they sought legal advice.

According to Transparency International, 14 EU member states have maintained public access to their beneficial ownership registers. Gibraltar has also maintained a publicly accessible beneficial ownership register since 2020 and has not noted any negative economic impacts resulting from the implementation of its public register. The UK is satisfied with the lawfulness of our own publicly accessible registers and continues to believe that the CDs could legally implement public registers of their own.

The Home Office has been actively engaging the CDs to understand their position. As the Under-Secretary of State for Foreign, Commonwealth and Development Affairs, my hon. Friend the Member for Macclesfield (David Rutley) set out in the Backbench Business debate on 7 December, there have been discussions with the CDs on providing access to beneficial ownership information to those with a legitimate interest, such as media and civil society organisations who are involved in the fight against illicit finance and money laundering.

Legitimate interest access would bring the CDs into line with the EU, where the CJEU judgment notes that EU member states must continue to enable access to those with “legitimate interest”. For the CDs to implement legitimate interest access would be a very significant step forward in beneficial ownership transparency and improve the security of the UK and the wider British family. Nevertheless, the UK Government are still committed to publicly accessible registers becoming the global norm.

The Home Office has made our expectations clear that the CDs should implement registers with legitimate interest access in the coming year. On 13 December, the CDs published their commitments on beneficial ownership transparency.

The CDs state that they will deliver obliged entity access—such as financial services businesses and certain other businesses in their jurisdictions who are required to conduct due diligence—during 2024. I consider that delivering obliged entity access across the CDs has been slower than it should be, given the need to protect our financial institutions from use by hostile states, terrorists and criminals. This recognition of commitment is still welcome.

I welcome the CDs’ press release, stating their commitment to developing and delivering legitimate interest access to their beneficial ownership registers, confirming that access to the information on their registers

“will be extended to include those media and civil society organisations who can demonstrate a legitimate interest in accessing relevant information in order to combat financial crime”.

I look forward to seeing this commitment being adopted by the appropriate CD Parliaments.

The CDs have said that their definition of legitimate interest access will be developed having due regard to international good practice, including finalisation of the EU’s sixth anti-money laundering directive (6AMLD) which is anticipated in early 2024, as well as in line with relevant European judgments such as the 2022 CJEU ruling. The CDs also note that the EU negotiating text for 6AMLD recognises groups who may have a legitimate interest as being those

“conducting business transactions, civil society, journalists, law enforcement and higher education”.

The CDs state that they will present proposals to their Parliaments for agreement on the definition and implementation of legitimate interest by Q4 2024 at the latest. Given that the original commitments were made in 2019 and the increasing use of finance to co-ordinate action against the interests of the British people and the wider British family, this is not the pace that I expect, and I urge the CDs to work as quickly as possible next year to implement these commitments. Parliament will wish to consider these commitments and closely monitor the situation.

[HCWS151]