The intention of the Disclosure 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 Disclosure Law seeks to maintain the current situation whereby 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 Disclosure 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 Disclosure 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:
1.1.1 Companies;
1.1.2. Foundations;
1.1.3. Incorporated Limited Partnerships (ILP);
1.1.4. Limited Liability Companies (LLC);
1.1.5. Limited Liability Partnerships (LLP);
1.1.6. Separate Limited Partnerships (SLP);
1.1.7. Limited Partnerships (LP); and
1.1.8. 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:
1.2.1 full name;
1.2.2 nationally;
1.2.3 month and year of birth
1.2.4 business/correspondence address
1.2.5 role in relation to the entity
1.2.6 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 Disclosure 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:
2.1.1 beneficial ownership information (unless the entity is listed on a regulated market);
2.1.2 significant person information;
2.1.3 details of nominee shareholders (unless licensed by the Commission) including the identity of the nominee and their nominator.
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
3.1 The Disclosure 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:
3.1.1 the name and number of the entity;
3.1.2 the type of entity;
3.1.3 the address of the business premises of the entity;
3.1.4 the name, address and nationality of each significant person of the entity;
3.1.5 the name, address and nationality of each shareholder, member or subscriber of the entity;
3.1.6 any other information specified by regulations.
4. Nominated Person
4.1 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:
4.1.1 a trust company service provider regulated by the Commission;
4.1.2 a fund service provider regulated by the Commission;
4.1.3 a significant person ordinarily resident in Jersey; or
4.1.4 a lawyer or an accountant regulated by the Commission for the purposes of the Proceeds of Crime (Jersey) Law 1999.
5. transitional provisions – timings
5.1. Pursuant to transitional provisions set out in the schedule to the Disclosure Law:
5.1.1. within three months of the Disclosure Law coming into force, an existing Entity must provide details of its nominated person, its beneficial owners and any nominee shareholders; and
5.1.2. within one year of the Disclosure Law coming into force, the JFSC may extend the relevant period for the provision of annual confirmation statements.
5.2. On 10th November 2020 the Commission announced that the relevant period for filing the first annual confirmation statement has been extended from 28 February 2021 to 30 April 2021 to give entities more time to adapt to the new process.
6. New register
6.1. The Disclosure Law supports the development of a more modern Registry and includes provisions to allow a fully digital, future ready Registry. The Commission has developed 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.
6.2. 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.
7. Authority to Disclose Information Collected including to Competent Authorities
7.1. The Disclosure Law does not permit the disclosure of information collected by the Commission unless in particular circumstances which are specified in the Disclosure Law. These circumstances include, but are not limited to, disclosing information:
7.1.1. for the purposes of any legal proceedings;
7.1.2. to a law enforcement agency for the purpose of the investigation or prosecution of an offence;
7.1.3. to a local competent authority (e.g. the Joint Financial Crimes Unit of the States Police and the Attorney General); or
7.1.4. with other lawful excuse.
7.2. Additionally, the Disclosure Law allows a local competent authority, at the request of a foreign competent authority (i.e. a public authority, excluding a self-regulating authority, exercising functions or having responsibility for anti-money laundering and counter terrorism measures in a jurisdiction outside of Jersey) to:
7.2.1. facilitate access by the foreign competent authority to information held by the local competent authority;
7.2.2. exchange information with the foreign competent authority on shareholders, including nominee shareholders; and
7.2.3. obtain beneficial owner information on behalf of the foreign competent authority.
8. Electronic Communications
8.1. The Disclosure Law confirms that the Commission is taken to have consented to the giving of information or the provision of a signature by way of an electronic communication.
9. Offences
9.1. FATF Recommendation 24 requires information in relation to an entity to be adequate, accurate and up-to-date. Therefore, the Disclosure Law introduces several civil and criminal offences for:
9.1.1. providing false or misleading information;
9.1.2. failing to update information to the Commission within 21 days of a change or error;
9.1.3. failing to appoint a nominated person;
9.1.4. failing to comply with a notice to provide further information or documents; and
9.1.5. disclosing information except in accordance with the Disclosure Law.
9.2. 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.
9.3. A range of penalties include 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).
10. Timings
10.1. Originally, it was intended that the Disclosure Law come into force on 1st October 2020 in order to meet FAFT timeframes. Due to the events of this year, the date was pushed back to 1st December 2020 but recently, following feedback from industry, the Commission has decided to push back the launch date of its new registry from 1 December 2020 to 6 January 2021 to give industry more time to prepare. Consequently, the Government of Jersey has moved the date on which the Disclosure Law will come into effect to 6 January 2021 and, consequently, the filing deadline for the new annual confirmation statement has been extended from 28 February 2021 to 30 April 2021.
