During 2019, the Government of Jersey undertook a wide-reaching engagement programme across industry ahead of the public consultation.  Appleby was one of several members of the engagement programme, which informed the preparation of the Draft Law.

The intention of the Draft law is to place on a statutory footing the Financial Action Task Force (FATF)’s Recommendation 24 relating to the beneficial ownership of legal persons.  The Draft Law aims to maintain the current situation where the Jersey Financial Services Commission (Commission) collects and makes public certain information, but enables the States of Jersey to make regulations which determine additional information which may be made public.

What Will the Draft Law Cover?

The Draft Law:

  • includes a requirement for the basic regulating powers of all entities to be filed with the Companies Registry and made publicly available;
  • introduces enabling provisions to introduce a public register of officers;
  • includes a timely updating of information held by the Companies Registrar;
  • requires that information is provided by a natural person resident in Jersey or by a Jersey regulated trust company service provider;
  • prevents the misuse of bearer shares; and
  • controls nominee shareholders and directors.

 

Key Elements of the Draft Law

1. Definitions and Interpretation

1.1 “Entity” is defined as the following bodies incorporated or established in Jersey, will meet the requirements of Recommendation 24 and will capture current and future entities: companies, foundations, Incorporated Limited Partnerships (ILP), Limited Liability Companies (LLC), Limited Liability Partnerships (LLP), Separate Limited Partnerships (SLP), Limited Partnerships (LP), and any other prescribed bodies or persons;

1.2 “Significant Person” is introduced to apply a term across all entity types in order to introduce a public register of officers as required by Recommendation 24.  A significant person includes a council member of a foundation; a partner or general partner or limited partner participating in the management of a partnership; a director, manager, secretary of a body corporate; and any other prescribed person.  It is anticipated that the following information as to the significant person will be filed with the Registry: full name, nationally, month and year of birth, business/correspondence address, role in relation to the entity, occupation.

1.3 “Beneficial Owner” is defined so it does not differ from the definition under the Money Laundering (Jersey) Order 2008; in particular an individual who ultimately owns or controls a customer or an individual on whose behalf a transaction is being conducted, including an individual who exercises ultimate effective control over a legal person or arrangement.  This includes ownership or control through a chain of ownership or control other than direct control and will not include individuals owning securities listed on a stock exchange.  The Commission will have the power to issue guidance.

 2. Disclosure of Information to the Companies Registry

2.1 The Draft Law requires the following information to be provided to the Commission on the application to establish an entity and within 21 days of becoming aware of a change, error or inaccuracy: beneficial ownership information (unless the entity is listed on a regulated market), significant person information and details of nominee shareholders unless licensed by the Commission.

2.2 For most entities, this will not change what they already provide by way of disclosure to the Commission.  Currently foundations may volunteer this information, but in the future will be required to provide this information to the Commission.

3. Annual Confirmation Statement

The Draft Law introduces an annual “confirmation statement” required to be filed by all entities within the “relevant person” (being between 1st January and the end of February in each year).  This confirmation statement will replace the annual return and will verify “relevant information” in relation to an entity as of 1st January of the year in which the statement is being provided.  Relevant Information includes the following: the name and number of the entity, the type of entity, the address of the business premises of the entity, the name, address and nationality of each significant person of the entity, the name, address and nationality of each shareholder, member or subscriber of the entity, any other information specified by regulations.

4. Nominated Person

In accordance with best practice on beneficial ownership issued by FATF, it is intended that all interactions with the Companies Registry of the Commission will be through a “nominated person” who is resident in Jersey and will be accountable to the competent authorities for providing all required information and assistance as needed by the Commission or other competent authorities. It is currently proposed that a nominated person may only be the following persons: a trust company service provider regulated by the Commission, a fund service provider regulated by the Commission, a significant person ordinarily resident in Jersey or a lawyer or an accountant regulated by the Commission for the purposes of the Proceeds of Crime (Jersey) Law 1999.

5. New Register

5.1 The Draft Law supports the development of a more modern Registry and includes provisions to allow a fully digital, future ready Registry. The Commission is already developing a new Register to accommodate beneficial owner information, significant person information, information contained in the annual confirmation statement and any other information specified by regulations. The new Register will house a new portal system.

5.2 The States of Jersey may introduce regulations to specify any information required to be kept on the register and what information may be available publicly. Currently available public information will continue to be publicly available, but information of an entity’s beneficial owners will not be made public.  However, for the first time, a foundation’s regulations will become a public document.  Regulations may also specify public interest considerations in favour of or against making information public.

6. Offences

6.1 FATF Recommendation 24 requires information in relation to an entity to be adequate, accurate and up-to-date.  Therefore, the Draft Law introduces several civil and criminal offences for: providing false or misleading information, failing to update information to the Commission within 21 days of a change or error, failing to appoint a nominated person, failing to comply with a notice to provide further information or documents and disclosing information except in accordance with the Draft Law.

6.2 Where an offence is committed by an entity and it is proven to have been committed with the consent of a significant person, that significant person will also be guilty of the same offence.

6.3 A range of penalties are introduced including fines, imprisonment, daily default fines for subsequent offences, late-filing fees and striking-off provisions (albeit new provisions are made to allow entities to be reinstated and their dissolution declared void).

Comments

The consultation closes on 21 February 2020 and it is intended that the Draft Law will come into force for 1st October 2020 in order to meet FAFT timeframes.  It is expected that formal acceptance of the new Registry systems will come into force during July 2020 and that on-boarding to the new Registry will be available between July and October 2020.  From 1st January 2021, the first annual confirmation statement period will commence.  It is important to be aware of the changes to be implemented by the Draft Law and make use of the Commission’s outreach and engagement programme which encourages active dialogue with them.

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