TRANSPARENCY AND BENEFICIAL OWNERSHIP IN THE ISLE OF MAN
30 June 2018 is the absolute cut-off date by which all companies and certain other entities in the Isle of Man must have submitted details of their principal owners and controllers to the Companies Registry for inclusion on the new database of beneficial ownership. In this article, we look at the practical application of the rules created under this significant and far-reaching new regime.
At the summit meeting in 2013, the members of the G8 group (including the United Kingdom) committed to introducing national action plans implementing the FATF's recommendations on transparency and beneficial ownership, the intention being to combat the misuse of companies for money laundering and terrorist financing purposes.1 Companies, it was declared, "should know who really owns them and tax collectors and law
enforcers should be able to obtain this information easily".2
In 2016, the Governments of the UK and the Isle of Man (IOM) made commitments to improve law enforcement cooperation between the two jurisdictions over the sharing of beneficial ownership information.3
The IOM undertook to establish a central database of the beneficial owners of companies to be held by the IOM Companies Registry and overseen by the IOM Financial Services Authority (FSA). As a result, the Beneficial Ownership Act 2017 (BOA) came into force in the IOM on 21 June 2017 and the new central database for storing information collected under its provisions (Database) was launched on 1 July 2017.
TO WHOM DOES THE BOA APPLY?
The BOA applies to all legal entities incorporated, registered or established in the IOM (Relevant Entities). This includes companies in all their forms (with limited exceptions), limited partnerships with legal personality under section 48B of the Partnership Act 1909 and foundations established under the Foundations Act 2011. It is intended that the Database will provide a searchable record of the natural persons who enjoy beneficial ownership of these Relevant Entities, or exercise effective control over them, or both.
Each legal owner of a Relevant Entity is under a duty to ascertain the identity of the Relevant Entity's beneficial owner or owners. This information together with corroborating documentation is then given to the Relevant Entity's "nominated officer". Nominated officers are the lynchpin in the mechanism: they are responsible for
collating and maintaining the Relevant Entity's beneficial ownership records, submitting the information to the Database, and responding to requests for disclosure. Each Relevant Entity must have a nominated officer who
is either an individual resident in the IOM or a local licensed corporate services provider.
1 Recommendations 24 and 25 (see http://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-transparency-beneficial-ownership.pdf).
2 G8 Lough Erne Declaration, paragraph 3.
3 An exchange of notes between the Government of the UK and the Government of the Isle of Man evidencing the mutual commitments may be found at https://www.gov.im/media/1356973/april2016-beneficial-ownership-exchange-of-notes.pdf.
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