Beneficial Ownership Registers: What Public Access Means

Article 30(1) of the EU’s Fourth Anti-Money Laundering Directive (4AMLD) requires all EU Member States to put into national law provisions requiring corporate and legal entities to obtain and hold adequate, accurate and current information on their beneficial owner(s) in their own internal beneficial ownership register.

“It took the allied powers six months to plan and successfully carry out the D-Day landings. It took Thomas Edison two years to create the light bulb. The Crown Dependencies have today set out a three-year plan to table a discussion in parliament with no commitments and no details on whether they will comply with emerging international standards on beneficial ownership transparency.”

John Christensen, of the Tax Justice Network on the Beneficial Ownership Transparency.

But is this assessment fair? I think not.

The EU and how the Register Works

So what exactly is the EU’s position on a beneficial ownership register, and how transparent is that?

If we look at Ireland, for example, under the AML5D, the CRO will make low-level access of the Central Register data available to the public. The following information will be publicly accessible:

Name, Extent of beneficial ownership, Nationality, Country of residence Part of date of birth (month and year)

High-level access will be granted to competent authorities with a ‘legitimate interest’ including the Revenue Commissioners, law enforcement agencies (i.e. In Ireland the Financial Intelligence Unit of the Gardaí), banks including the Central Bank, credit institutions and Accountants or Lawyers undertaking customer due diligence requirements.

And how far is it in progress? It is envisaged that the public will not have access to the register until late 2019/early 2020 and that only limited information will be available.

You can’t currently register on the site until 22 June 2019 anyway.

In the portal there will be a facility, similar to the “Company Search” facility on the CRO website, where you can look up a company or society and purchase a “Company/Society Printout”.

The “Printout” will include a list of the past and present beneficial owners of the company/society and the following data in respect of each one:

A statement of the nature and extent of the beneficial interest held or control exercised. A “Company /Society Printout” is expected to cost €3.50 to buy and payment can be made by credit/debit card. The printout will be e-mailed to the address you provide within minutes.

So let’s be clear how this works. A search can be made of any company or society on the register. There is no provision to search on individuals. And when a company you wish to inspect is found, it will cost €3.50 to buy.

So although technically it is a public accessible register of beneficial owners, in fact it will not be that easy for the public to ownership by individual, only the beneficial ownership by company – and there will be a charge.

The EU considers this to be enough to be “publicly accessible”, but I’d be intrigued to know if Mr Christensen thinks likewise.

I'm not saying it is a good or bad thing, because the strength of the register I think is more in the ability of legitimate law enforcement agencies to search by name, and that is available both in Ireland and Jersey registers now.

Public does not mean anything goes

It’s not just Ireland, similar restrictions are available elsewhere. For instance:

Belgium: Members of the public have restricted access to the UBO Register and will have to identify themselves through eID, and may only search the Register using a company’s Crossroads Bank for Enterprises number or company name.

Indeed the regulations state that there are no restrictions provided in the AML Act. However, it will not be possible to perform searches on specific persons being UBO by the general public.

However, competent authorities and the Financial Intelligence Units will have the additional option of searching the register for UBO information by name of individual. And Jersey of course already supplies that to other countries law enforcement bodies worldwide.

The USA: Edison's Homeland

As a recent report notes, authorities in the United States have more information about library card holders than the owners of registered companies, according to a bipartisan group of U.S. senators behind a bill that would overhaul the country’s dated anti-money-laundering laws.

The senators, members of the Committee on Banking, Housing, and Urban Affairs, are seeking to enact The Illicit Cash Act, which would empower regulators to force shell companies to disclose their true ownership for the first time.

The senators referenced research that found the U.S. is among the easiest countries in the world in which to set up anonymous shell companies.

“To obtain a library card in any state in the U.S., the applicant must be the person who will ultimately be controlling/using the card, and a significant amount of identifying information must be provided by the person to the state in order to obtain the library card,” the report found.

“To form a company in any state in the U.S., it is not necessary to identify or provide any information about the person(s) who will ultimately be controlling the company.”

The Panama Papers have prompted more stringent regulations in the European Union including mandating member states to compile centralised registers on beneficial ownership and to make these widely – even publicly – accessible.

The draft U.S. legislation also calls for a comprehensive database of beneficial ownership to be compiled at a federal level, but only law enforcement officers would have access to the information.

And it is only at an early draft stage!

It took Thomas Edison two years to create the light bulb, but the USA is taking far longer to create a central beneficial ownership register, let alone one publicly accessible. 

Maybe before citing Edison, Mr Christensen should be honest about how slow matters are in the USA before using that analogy as a stick to beat the Crown Dependencies.

In conclusion

The timetable of the Crown Dependencies may not be the quickest – but the UK register is a shambles of unverified and often garbled information, which is certainly not adequate, accurate and current information.

Meanwhile, the USA has not even started. Where do you think the dirty money is heading?

And it’s worth adding that enforcement authorities across the globe already have speedy access to the Crown Dependencies registers in the hunt for money laundering, something which Mr Christensen has omitted from his critique.

Indeed, on tackling money laundering, it is as far advanced if not further advanced that the 28 EU member states. So “no commitments” is really hardly painting an accurate picture of the real state of affairs.

And finally....

Edison also opted for Direct Current rather than Alternative Current to supply electricity, but Nikola Tesla won the battle for the superior system.

Edison dismissed Tesla's "impractical" idea of an alternating-current (AC) system of electric power transmission, instead promoting his simpler, but less efficient, direct-current (DC) system.

It's rather like the difference between the UK and Jersey registers regarding "adequate, accurate and current information" on their registers.