The drive towards publicly accessible beneficial ownership registers has faltered and this could have serious implications for efforts to combat corruption, money laundering and other illicit financial flows. It could also have negative implications for business managing their supply chain risks. Open Ownership has closed its Register which brought together publicly accessible registers. Leaders from British Overseas Territories (OTs) continue to push back again public registers more than a year since they were legally obliged to make their registers publicly accessible.
In late 2020 we wrote about the balance between transparency and privacy of beneficial ownership (BO) information. The blog can be found here. At that time, there was a strong drive towards publicly accessible national beneficial ownership registers. EU Member States were implementing publicly accessible registers and full public access, at least of a restricted data set, appeared to be the direction of travel. The UK implemented a publicly accessible BO register in 2016, and has been applying pressure to its Overseas Territories (OTs) such as the British Virgin Islands (BVI) to implement public registers or open their existing registers to public access. The effort gained momentum with the Sanctions and Anti-Money Laundering Act (SAMLA) 2018, which mandated OTs to establish publicly accessible BO registers by 2023. Many OTs, including the Cayman Islands, Bermuda and BVI initially resisted, citing concerns over the legality and potential economic repercussions of such registers, and the debate between the UK and its OTs became increasingly heated.
Then came 2022 and the European Court of Justice’s (ECJ) ruling that unrestricted public access to beneficial ownership information infringed privacy rights. Despite the ECJ’s stance, UK officials continue to advocate for transparency. Much has been written about the debate around “legitimate interest” and the way in which this ruling impacted and continues to impact on accessibility of EU Member States’ registers, and we won’t delve into that here, except to note that since then the European Commission has put in place a broad definition of “legitimate interest”.
The ruling also caused several OTs to reconsider or pause their implementation plans, with OTs initially saying that they needed to consider the implication of the ruling (even though it did not apply to them), and then questioning the scope of access to registers. Some OTs argue that the purpose of BO registers is to serve law enforcement rather than public curiosity. The UK government, however, maintains that public access is crucial for transparency and accountability, aligning with broader anti-corruption objectives.
In November 2024, leaders from the OTs issued statements regarding BO registers, expressing concerns over the concept of “legitimate interest”. For instance, representatives from the Cayman Islands and the British Virgin Islands emphasised their commitment to financial integrity but stressed the need for clearer guidance on “legitimate interest” to protect individuals from potential misuse of their information. Gibraltar officials reiterated their commitment to aligning with international best practices, yet voiced apprehensions about a one-size-fits-all approach that could disregard regional nuances.
These statements indicate a broader concern within the OTs about balancing privacy rights and the need for public transparency, particularly under mounting pressure from the UK government to adopt public beneficial ownership registers.
So, what has happened more broadly over the last five years? Many hoped for convergence, with a clear model of international best practice emerging which would see countries implementing central BO registers, with a broad scope for access to that information built on clear use cases. However, that’s not what has happened. Access models remain very diverse, and might even be seen to be diverging.
What has also become more apparent over the last five years is the use case for beneficial ownership information. The uses for this information go beyond law enforcement anti-money laundering investigations, to encompass a wide range of uses by a variety of users. Other government departments and agencies can use the information to understand who is doing business in their country e.g. who is applying for mining licences or providing vital services and goods, financial institutions can use the information as part of their due diligence on clients, businesses can use the information to mitigate risks in their supply chain, communities can hold accountable those who are investing in their area and journalists use the information in research on corruption cases and conflicts of interest.
It remains unclear where BO transparency across the EU will land, let alone in the OTs, but we continue to see countries around the world implementing BO registers with the full range of access options. Some are fully public with others restricted to competent authorities. What is absolutely clear is that BO information has great value, and that countries need to pay particular attention to decisions about who should have access to that information.
Corruption, money laundering and other financial crimes involve many actors and combatting them also involves numerous players, not just law enforcement. The benefits of public access to beneficial ownership information include “many eyes” to spot errors, discrepancies and suspicious patterns and so enhance reliability. More than that, it gives anti-corruption and anti-money laundering stakeholders an important tool to shine a light into the dark corners of company ownership.
Some of the key considerations in assessing who should have access to beneficial ownership information are:
- What is the local context? How does access to BO information facilitate mitigation of risks identified in national risk assessments?
- What is the use case for access by each potential category of user? Have all of the use cases, and particular use by private sector businesses, been assessed?
- Where access incorporates a concept of legitimate interest, is there clarity as to exactly what this means and does it ensure that access rights meet the intention of law makers?
