Guernsey’s stance on public registers backed by court judgment

A LEADING private wealth lawyer has cast doubt that Guernsey will ever develop a public register of beneficial ownership.

The Crown Dependencies of Guernsey, Jersey and the Isle of Man issued a joint statement yesterday confirming their response to a judgment of the Court of Justice of the European Union, saying it impacted the joint approach agreed by the islands to commit to a public register announced back in 2019.

A commitment to provide access to the current registers to ‘obliged entities’ for the purpose of conducting customer due diligence by the end of this year was now on hold, they said, to allow legal considerations.

In terms of fully opening registers of who has a controlling interest in local companies to public scrutiny, the islands said that they would be seeking legal advice, and looking at developments in international best practice, before reviewing the public commitment.

Public registers of beneficial ownership have been key to the EU’s action on tax and money-laundering, by tackling the misuse of so-called ‘shell companies’.

The court ruling, on two cases brought by individuals in Luxembourg, agreed with the claimants that public access to the beneficial ownership registers breached their privacy rights under EU law, and put them at greater risk of harassment and kidnap.

Experts have said the judgment is likely to be a severe blow to the idea of unconditional public access.

The court agreed that those with a ‘legitimate interest’ in access, such as law enforcement agencies, which Guernsey already accommodates, was appropriate.

Austria, the Netherlands, Belgium and Ireland have already suspended their public beneficial ownership registers, though tax justice campaigners have criticised the ruling.

Lawyer James Quarmby, a private wealth specialist at London firm Stephenson Harwood, who has a number of professional connections with Guernsey, said that while the UK was no longer bound by the EU court, it could not ignore the judgment, and this could undermine the UK’s own register.

He told the private wealth magazine Spears that the judgment would also have consequences for the UK’s role in bringing the Crown Dependencies and Overseas Territories in line with European standards.

‘The Overseas Territories and Crown Dependencies have promised to introduce public registers by 2023,’ Mr Quarmby said.

‘But I think they can now rescind those promises, given the high likelihood that to do otherwise would breach the Human Rights Act.’

Deputy Gavin St Pier, who, as chief minister, led the island’s opposition to public registers of beneficial ownership. (Picture by Luke Le Prevost, 31601526)

Deputy Gavin St Pier, who as chief minister, played a key role in defending the island’s reputation on this issue and agreeing the stance across the Crown Dependencies, described the judgment as ‘a vindication of our position all along that a balance needs to be struck between an individual’s right to privacy and the public interest in ensuring that companies are not being used for nefarious purposes’.

‘Our view was a register that could be accessed by those who needed to know was the right way to strike that balance.

‘It seems very unlikely, in view of the court’s ruling, that public registers will now become the international “norm”.

‘That was one of the conditions we attached in 2019 to our commitment to develop public registers of beneficial ownership, so it’s quite right that we are reviewing that commitment.’

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