Jersey's Beneficial Ownership and Control Register

Background

Following the introduction in the United Kingdom of a Register of People with Significant Control all Crown Dependencies (to include Jersey) and Overseas Territories have now signed up to an equivalent and reciprocal agreement with the United Kingdom to enhance exchange of BO&C information between law enforcement authorities. To this end Jersey, immediately prior to the London Anti-Corruption Summit in May 2016, made an international commitment to having an up to date and current centralised register (albeit one that is non-public) by 30 June 2017.

The entities affected are companies, limited partnerships (including incorporated and separate limited partnerships), limited liability partnerships and foundations (together "Entities") registered in Jersey and administered by Jersey trust and company service providers ("TCSPs").

Jersey's existing register

With the exception of foundations, this is not a new requirement - Entities registered in Jersey are already required to provide details of beneficial ownership on incorporation. Indeed a central register of beneficial ownership has been in place in Jersey since 1989 and relies upon TCSPs to retain full details of beneficial ownership and control and to make such information available to the Companies Registry or the JFSC upon request.

What actions are now required?

Following recent changes to legislation in Jersey there are now two mandatory requirements which enhance the existing position on the provision of BO&C information:

1. Before 30 June 2017 all TCSPs (to include Hawksford) administering Entities (save for foundations) must refresh and verify information ensuring that up to date information is transmitted to the central register at the JFSC by completing a C17S (or equivalent depending upon the Entity); and
2. Once up to date information is submitted in accordance with 1 above, all Entities will be obliged to notify the Companies Registry within 21 days of knowledge of a change to BO&C information in such manner as may be specified by the JFSC.

For the purposes of 1. notwithstanding that there may have been no change to BO&C information since incorporation, all Entities must file a C17S (or equivalent depending upon the Entity). Non-submission of the C17S (or equivalent depending upon the Entity) will constitute a criminal offence.

In respect of 2., whilst the obligation and requirement is on the relevant Entity to notify the Companies Registry of a change in BO&C the practical reality is that this requirement will fall upon the regulated TCSP (to include Hawksford) to provide this information. The requirement to notify the Companies Registry will be an ongoing requirement on every change to BO&C. For certain structures we will therefore be reliant upon this information being provided to us by the client.

In respect of foundations, it is envisaged that similar requirements will apply on a change of BO&C once the legislation relating to foundations has been amended.

Who can access the register?

Fundamentally the BO&C information stored on the register is not publicly available and will be stored on a secure and private register held by the Companies Registry.

Pursuant to Jersey's agreement with the United Kingdom BO&C information will only be exchanged with law enforcement authorities (which includes tax authorities) for the law enforcement purposes of the prevention of corruption, money laundering, terrorism financing, financing of the proliferation of weapons of mass destruction and other serious and organised crime. In other words the parameters for exchange are limited to these criminal matters.

Who is a beneficial owner and controller?

This is not always a straight forward issue. Jersey follows the Financial Action Task Force ("FATF") standards and interpretation in respect of BO&C as outlined in section 4 of the AML Handbook applicable to all TCSPs.

Whilst a case by case risk assessment is always required a general threshold of a holding of 25% or more may be applied to Entities assessed as representing a lower risk. However, where the TCSP views the relationship as high risk, the TCSP should consider registering the beneficial owner on the central register even though its interest is less than the 25% threshold.

The "three tier" approach documented in the AML Handbook will be applied in all cases. For ease of reference we set out below the three tier test for companies:

• Each individual with a material controlling ownership interest in the capital of the company (through direct or indirect holdings of interests or voting rights) or who exerts control of the company through other ownership means
• To the extent there is doubt as to whether the individuals exercising control through ownership are beneficial owners, or where no individual exerts control through ownership, any other individual exercising control over the company through other means
• Where no individual is otherwise identified under this section, individuals who exercise control of the company through positions held (who have and exercise strategic decision taking powers or have and exercise executive control through senior management positions)

What this will mean for you?

Although we will endeavour to work hard internally to minimise any disruption, we may need to contact you to confirm up to date BO&C information with respect to your structure. Alternatively, we may need from you additional information to enable us to determine BO&C. This will need to be provided in a timely manner in order to ensure compliance with the 30 June 2017 deadline.

Thereafter, we will need you to keep us fully informed of any changes to BO&C so that we can comply with the 21 day deadline set by the Companies Registry. This is a continuing obligation. This is also in accordance with our Terms of Business.

Costs

Following the introduction of these new requirements there are likely to be additional costs for affected Entities. Once a review of our records is complete and the final guidance has been issued by the Companies Registry we will provide a further update. We will of course take advantage of the automation that is available to us to manage these costs.

Thank you

This is a significant exercise and we are working on ensuring that we comply with the new requirements in the most effective and efficient manner for the 30 June 2017 deadline and the collation and submission of data thereafter. We thank you in advance for your cooperation.

If you have any questions about these changes, please contact your Client Director in the first instance.