Isle of Man legislation update

Credit Unions (Amendment) Bill 2017: amends the Credit Unions Act 1993 (the 1993 Act) to impose a requirement for credit unions to be licensed by the Isle of Man Financial Services Authority (IOMFSA) and subject to regulation under the Financial Services Act 2008. The amendments will make the IOMFSA’s regulatory framework to be implemented for credit unions as it is for various other financial services sectors, which will be implemented via secondary legislation.

Data Protection Bill 2018: this is the legislation intended to implement the EU General Data Protection Regulation. It allows for:

the Council of Ministers to, by way of Order, apply any EU instrument relating to the protection of personal data to the law of the Island;

the Council of Ministers to make regulations for the purpose of implementing any EU instrument applied to the Island under an Order; and

references to EU instruments in Orders or regulations.

The Bill had its third reading in the Legislative Council on 27 March 2018.

Freedom of Information (Amendment) Bill 2017: this amendment Bill is intended to support the purpose of the Freedom of Information Act by:

Making provision to enable the Information Commissioner to be listed as a public authority, within Schedule 1 to the Act, in accordance with the intention of the Council of Ministers and Tynwald;

Recognising that policy is not just made by Government Departments, but also by Statutory Boards; and

Making certain stylistic amendments to remove the potential for any ambiguity in the application of exemptions and other provisions.

Bill was signed 16 January 2018. Awaits Royal Assent and Appointed Day Order.

Anti-Money Laundering and Other Financial Crime (Miscellaneous Amendments) Bill 2018: this Bill addresses several recommendations made within the MONEYVAL Mutual Evaluation Report of the Isle of Man, as well as addressing other matters identified by various authorities in relation to anti-money laundering and the effective prosecution of financial crime.

The amendments include:

an explicit power to prosecute predicate cases domestically where parts of the offence(s) were committed abroad;

amendments to the penalties for offences of failing to disclose information in paragraph 1(6) of Schedule 6 to the Anti-Terrorism and Crime Act 2003, section 20(5) of the Financial Intelligence Unit Act 2016 and sections 163A and 176 of the Proceeds of Crime Act 2008, to bring the penalties in line with section 41(1) of the Financial Services Act 2008;

amending the Gambling (Amendment) Act 2006 by include a new subsection to confirm that decisions made or taken by the Commissioners under the Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Act 2018 as a decision that is subject to appeal, as well as other minor amendments;

amendments to the Partnership Act 1909, Companies Acts 1931 and 2006, the Limited Liability Companies Act 1996 and the Foundations Act 2011, to insert a new clause which clarifies that the registrar is not liable for the accuracy of information submitted for inclusion on any register or index for registration under those Acts, as well as giving powers to the Registrar to make such enquiries as appropriate to determine the accuracy of any such information; and

amends the Financial Services Act 2008 to amend the persons that the Isle of Man Financial Services Authority may conduct an investigation into in relation to liability arising from a breach of AML/CFT legislation.

The Bill had its third reading in the House of Keys on 27 March 2018.

Gambling (Anti-Money Laundering and Countering the Financing of Terrorism) Act 2018: the remaining provisions of this Act came in operation on 13 February 2018. It aims to address deficiencies in the current legislation identified by the AML/CFT National Risk Assessment (published March 2016) and the MONEYVAL Mutual Evaluation Report (published January 2017). These identified that the Gambling Supervision Commission (GSC) did not have clear powers in primary law to conduct AML/CFT oversight and that the GSC had limited sanctioning powers.

The Act addresses these deficiencies by:

providing the GSC with powers to conduct supervisory oversight of gambling operators with AML/CFT legislation;

providing the GSC with a wider range of administrative sanctions designed to dissuade licensees from failing to comply with AML/CFT legislation;

requiring operators to submit AML/CFT returns to the GSC;

allowing persons from the GSC to conduct on-site inspections of premises in which gambling is conducted;

empowering the GSC to impose sanctions for non-compliance with AML/CFT legislation and impose restrictions on the holders of permits/licences; and

enabling the GSC to add to or amend operator’s licence conditions for AML/CFT reasons.

Secondary legislation

Financial Services (Exemptions) (Contracts of Insurance) Regulations 2018 revokes the Financial Services (Exemptions) (Contracts of Insurance) Regulations 2014 (the 2014 Regulations). The 2014 Regulations exempt authorised insurers from the requirements of section 4 of the Financial Services Act 2008 when conducting regulated activity specified in the Regulated Activities (Contracts of Insurance) Order 2014 (the 2014 Order). As the 2014 Order is now being revoked, the 2014 Regulations are no longer necessary and are therefore being revoked.

Regulated Activities (Contracts of Insurance) Order 2018 revokes the Regulated Activities (Contracts of Insurance) Order 2014 (the 2014 Order), which brought contracts of insurance within the scope of section 47 the Financial Services Act 2008. Section 47 clarified that no contract to which it applies shall be void or unenforceable by reason of section 40 of the Gaming, Betting and Lotteries Act 1988.

This 2014 Order can be revoked as the Insurance (Amendment) Act 2017 introduces a new section into the Insurance Act 2008 that addresses this matter. The Order was laid before Tynwald on 17 April 2018, and will come into operation on 1 May 2018.

The Casino (Amendment) Act 2018 (Appointed Day) Order 2018 brings sections 4 to 6 of the Casino (Amendment) Act 2018 (the Act) into operation. The Act amends the Casino Act 1986 (1986 Act). These sections amend the 1986 Act to:

permit the revocation of a casino licence in case of non-compliance with AML and CFT legislation (this includes Anti-Terrorism and Crime Act 2003, Part 3 of the Proceeds of Crime Act 2008 and Terrorism and Other Crime (Financial Restrictions) Act 2014);

confer new powers upon the GSC to require that a holder of a licence to satisfy it that the holder has complied with new money laundering obligations; and

permit the premises in which casinos are located and the facilities provided under casino licenses to be varied (with approval of the Council of Ministers).

The Order (and so the Act) came into operation on 24 January 2018.

Insurance (Amendment) Act 2017 (Appointed Day) (No.1) Order 2018: brought into operation a number of provisions of the Insurance Amendment Act 2017 (and the related amendments to the Insurance Act 2008) with effect from 1 February 2018. This includes:

sections 21(1), (2), (3) and (4) – inserts a requirement into the 2008 Act to serve notice when a principal control officer is appointed/ceases to be appointed;

section 23 inserts a definition of principal control officer into the 2008 Act;

section 24 and 25 – amends the 2008 Act to require notice to be served when a company secretary is appointed/ceases to be appointed;

section 47(1), (2)(c), (3) – inserts permission into the 2008 Act for foreign insurers to carry on non-insurance business away from the island;

section 51 – inserts a new section into the 2008 Act to state that no contract of insurance is to be regarded as gaming or wagering contracts and therefore void or unenforceable;

section 54 – amends the 2008 Act definition of insurance business;

section 57 – minor amendments to the 2008 Acts prescribed powers of the Authority to make regulations;

section 58 – amend the 2008 Act procedure for regulations, inserting the requirement to gain the approval of Tynwald before the regulations come in to effect;

sections 59 and 60 – inserts the definition of person in both the 2008 Act and Financial Services Act 2008 respectively; and

section 61 – amends the continuation and discontinuation of insurance companies schedule 4 of the 2008 Act to insert a new paragraph to ensure that any references to ‘the Department’ are construed as ‘the Authority’; and

Other minor and consequential amendments.

Beneficial Ownership (Access to Database) (Amendment) Order 2018: in force 21 February 2018 and amends section 26(2)(c) of the Beneficial Ownership Act 2017 to allow access to the beneficial ownership database for the purposes of maintaining the database and the related website to employees of the Cabinet Office and any person authorised in writing for that purpose by the Minister for the Cabinet Office.

Value Added Tax Act 1996 (Amendment) Order 2018: The Isle of Man VAT regime is required to be in line with the UK regime. This Order makes amendments to the Value Added Tax Act 1996 to correspond with recent amendments made to UK legislation (Value Added Tax Act 1994). These amendments include, amongst other things:

new sections inserted into article 3 of the Act to introduce a new and more effective penalty against the participation in VAT fraud. The new penalty will be a fixed rate of 30% which will apply to businesses and company officers when they knew or should have known that the transactions were connected to VAT fraud, and give the Treasury option to name those who participate in the fraud; and

amendments to schedule 12 of the Act to give the Treasury power to make regulations to require businesses that a registered for VAT or liable to be registered, to use digital tools and to keep records and to provide information and VAT returns through the use of digital tools, and also allows for regulations to provide for exemptions to those obligations (note: regulations providing for digital record keeping cannot come into operation before 1 April 2019);

This Order came into operation on 1 March 2018.

Freedom of Information Act (Amendment of Schedule 1) Order 2018: this Order came into operation on 1 March 2018 and amends Schedule 1 of the Freedom of Information Act 2015 to add the Information Commissioner to the list of public authorities subject to the Act, which means that the Information Commissioner must respond to freedom of information requests using existing resources.

Insurance (Fees) Regulations 2018: application and annual fees payable increased from 1 April 2018 in respect of authorisations, permits and registrations under the Insurance Act 2008 by 3.3% (with amounts rounded up to the nearest £1).

Financial Services (Fees) Order 2018: application and annual fees payable increased from 1 April 2018 in respect of the licensing of regulated activities under the Financial Services Act 2008 by 3.3% (with amounts rounded up to the nearest £1).

Collective Investment Schemes (Fees) Order 2018: application and annual fees payable increased from 1 April 2018 in respect of authorisations, permits and registrations under the Collective Investment Schemes Act 2008 by 3.3% (with amounts rounded up to the nearest £1).

Gambling Appeals Tribunal Rules 2018: rules to introduce a new framework to govern the practice and procedure of the Gambling Appeals Tribunal, which is due to be established pursuant to the Gambling (Amendment) Act 2006 (Appointed Day) No.2) Order 2017. These rules came into effect on 20 March 2018.

Electronic Transactions (General) (Amendment) Regulations 2018: these regulations, in effect on 21 March 2018, extend the operation of certain exemptions under the Electronic Exemptions Act until 31 March 2020, as well as updates and amendments to the list of certain electronic transactions that can be accepted by public authorities.

Financial Intelligence Unit (Tipping Off) Regulations 2018: the Regulations introduce tipping off offences for those who have been approached for additional information under section 18(4) of the Financial Intelligence Unit Act 2006. The offence is punishable upon summary conviction to a fine not exceeding level 5 on the standard scale.

The Regulations also make provisions for professional legal advisers who have been approached for additional information, highlighting it is not tipping off for a legal adviser to give legal advice to their client (or a representative of the client) in connection with the provision of legal advice, or to any person in contemplation of or in connection with legal proceedings and for the purpose of those proceedings. The exception does not apply in relation to any information which is disclosed with a view to furthering any criminal purpose.

The Regulations replace the previous Financial Intelligence Unit (Tipping Off) Regulations 2017, which are to be revoked, as they did not make a provision for a defence. It is now a defence when it can be proven that the person did not know or suspect that the disclosure would be prejudicial in the way set out in the Regulations.

The Regulations came into operation on 1 March 2018.