The issue of publicly accessible beneficial ownership registers remains a priority in talks between Britain and Bermuda (file photo)
The government has called for feedback on beneficial ownership legislation, including the transfer of the central register from the Bermuda Monetary Authority to the Registrar of Companies.
The consultation document said proposals were intended to strengthen Bermuda’s beneficial ownership regime by consolidating it under the framework of a single law, in line with a revised recommendation from the Financial Action Task Force.
It is proposed to extend access to the register to obliged entities (financial institutions and designated non-financial entrepreneurs) and to those who can demonstrate a legitimate interest.
The deadline for submissions is January 8.
The consultation document, sent out yesterday, said: “The Government is now considering streamlining the beneficial ownership regulatory regime to maximize efficiency, simplify management and enforce compliance.
“To give effect to this proposal, Bermuda’s central register of beneficial ownership information would therefore be transferred from the BMA to the RoC, with the RoC designated as the authority to collect, verify and verify beneficial ownership information in the central register and to keep track of legal entities operating from and within Bermuda.”
The RoC has developed a secure database on which the register is maintained.
The consultation follows the public commitment from the Bermuda Government July 2020 submit proposals to establish public access to information on beneficial ownership of companies in the central register. The pledge was to do this within one year of the European Union’s publication of an implementation overview of the Fifth Anti-Money Laundering Directive.
In November 2022, the Court of Justice of the European Union ruled that an EU requirement to introduce publicly accessible registers violated the EU Charter of Fundamental Rights.
Although this does not apply to the British Overseas Territories, several of them have raised concerns about the legal implications of introducing a publicly accessible register if the human rights provisions applicable to them were interpreted in a similar way.
Britain maintained the legality of its own register and the ability of territories to meet the requirements of the draft Order in Council.
As a result, an intermediate step was agreed.
David Rutley, the British Parliamentary Secretary of State for the Americas, the Caribbean and Overseas Territories, said in a written statement in the House of Representatives last December: “Given our differing views on this ruling with various overseas territories, we have been working with them to find a way to make positive progress by taking an intermediate step, which would include the implementation of publicly accessible beneficial ownership registers, with a legitimate interest access filter, next year.
“This would enable access to beneficial ownership information for members of the public with a legitimate interest, including media and civil society organizations involved in the fight against illicit financing and money laundering.”
This was with a view to the implementation of a complete register “in due course”.
Following the Court of Justice ruling, the EU published its Sixth Anti-Money Laundering Directive (EU 6AMLD) on June 19, which requires public access to beneficial ownership information in the central registers of EU Member States to be subject to of proof of a legitimate interest.
A notice from the Registrar of Companies Department of the Ministry of Finance stated: “The Government of Bermuda is also aware that the right to the protection of personal data is further guaranteed by the right to respect for private life under the European Convention on Human Rights, which has been extended by the UK government to most OTs, including Bermuda.”
The consultation sets out a phased approach to extend access to people with legitimate interests by the third quarter of 2026.
The government said it would expand access to obliged entities by the second quarter of 2025 and to persons with a legitimate interest by the third quarter of 2026.
The consultation is also aimed at ensuring that Bermuda meets its further obligations under the revised FATF international standards on beneficial ownership and transparency, and addresses all key recommended actions identified by the Caribbean Financial Task Force as part of Bermuda’s mutual evaluation in the fourth round.
The government would repeal several legal provisions in the process of introducing a single law to govern the island’s regime, including the Companies Act 1981 and related laws, and the Exchange Control Regulations 1973.
The new law is expected to come into force in the first quarter of next year and the regulations initially regulating access to obliged entities in the second quarter of 2025.
The RoC would have the power to restrict or prohibit access to beneficial ownership information if deemed appropriate.
What is a beneficial owner?
In the context of legal entities, the Financial Action Task Force defines a beneficial owner as “the natural person(s) who beneficially owns a customer and/or the natural person on whose behalf a transaction is conducted.
“It also includes the natural persons who exercise ultimate effective control over a legal entity.
“Only a natural person can be a beneficial owner, and more than one natural person can be the beneficial owner of a particular legal entity.”
According to the FATF, legal entities may include corporations, legal entities, foundations, partnerships or associations, and other relevant similar entities.
• Information provided in the consultation document
What is a beneficial owner?
In the context of legal entities, the Financial Action Task Force defines a beneficial owner as “the natural person(s) who beneficially owns a customer and/or the natural person on whose behalf a transaction is conducted.
“It also includes the natural persons who exercise ultimate effective control over a legal entity.
“Only a natural person can be a beneficial owner, and more than one natural person can be the beneficial owner of a particular legal entity.”
According to the FATF, legal entities may include corporations, legal entities, foundations, partnerships or associations, and other relevant similar entities.
• Information provided in the consultation document
A criminal penalty would be imposed on disclosure of beneficial ownership information to unauthorized entities, and requirements would be imposed under the Proceeds of Crime (Anti-Money Laundering and Anti-Terrorist Financing) Regulations 2008 to require reporting persons require entities to disclose any material discrepancy between the information they maintain and that in the central register.
The proposed penalty for improper disclosure violation is a fine of up to $50,000 or two years’ imprisonment, or both, upon summary conviction.
If you don’t meet the beneficial ownership requirements, you could be fined up to $250,000.
A fine of $25,000 or two years in prison is proposed for making false or misleading statements.
Bermuda also plans to include government agencies at the national level in the scope of competent authorities that have access to the central register of beneficial ownership information, as well as “others as appropriate” in the context of government procurement.
The government said: “Access to the central register will therefore be extended to the Office of Project Management and Procurement, and ministries and departments involved in the procurement process, with the aim of facilitating the exercise of their due diligence functions.”
The government said that in the absence of an international standard and evidence-based practices to guide development and implementation, its goal is to balance competing public and private interests.
In conclusion, the consultation document said: “As the jurisdiction now moves towards a corporate beneficial ownership register accessible to obliged entities and persons who can demonstrate a legitimate interest in accordance with the EU 6AMLD and international best practice, the government will continue to monitor global developments as it strives to balance greater transparency and individual rights to privacy and data protection.”
• Feedback may be submitted to the Regulatory, Enforcement and Policy Division, Registrar of Companies Department, by email at [email protected] no later than January 8, 2025. See Related Media to read the full consultation document
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