Changes to the Beneficial Ownership Rules

The Beneficial Ownership Act 2017 has recently undergone changes which have been approved by Tynwald and will come into force at the beginning of September; with tightening of regulations and timescales in which to act or provide information.

The key changes to the Beneficial Ownership Rules are that the reporting timescales have been reduced from one month to just 21 days. What this means is that a legal entity must now give notice of appointment, change, or change of details, of a nominated officer, plus from incorporation the legal owner must provide key details of each beneficial owner within three weeks. Furthermore, the same notice period applies from when the legal owner learns of any changes to the beneficial owners details. In addition, should a ‘competent authority’, such as the Financial Intelligence Unit, Attorney General, or Collector of Customs and Excise, request information on the beneficial owners, the time to gather all the required information and respond has also been tightened down to 21 days.

These changes to the Act have been made in response to the Island’s Mutual Evaluation Report, conducted by MONEYVAL back in 2016, and will further improve the accuracy of the beneficial ownership database especially with regards to those who are defined as the natural person (or people), who ultimately own or control a company, limited partnership with legal personality or foundation.

Paul Beckett, Senior Counsel and Advocate at MannBenham reiterated the sentiment from the Manx Government “The tightening of timescales and regulations sends a definitive message that the Isle of Man continues to be the responsible and responsive jurisdiction it has always been, committed to following what is expected of the international financial standards imposed on all of us.”

Paul, author of ‘Ownership, Financial Accountability and the Law’ went on to say, “The Isle of Man Government having originally established the beneficial ownership database in respect just of companies under the Companies (Beneficial Ownership) Act 2012, and having greatly enhanced this under the present Act, has placed the Island on a firm footing, strengthening its ability to counter beneficial ownership concealment and ownership avoidance strategies.”

The Isle of Man Government is now urging all registered businesses, legal entities and nominated officers to be aware of their obligations and make any changes which may be necessary before the amended legislation comes into force in just over two months’ time.

Beneficial ownership is the final, missing piece for regulators around the world, and their mission to accurately and conclusively identify them has often resulted in drawn out conversations and investigations. An owner, by definition, must possess something for which they are financially accountable, but what is meant by ‘ownership’?

Any beneficial owner who owns or controls more than twenty-five percent of the beneficial ownership of a legal entity to which this Act applies is classified as a ‘registrable beneficial owner’ around which there are statutory obligations. Failure to meet these obligations, compliance with which is overseen by the Isle of Man Financial Services Authority, is an offence under the Act and may result in a fine and the striking off of the entity concerned.

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To avoid such outcomes, we would advise you seek legal counsel and our specialist regulatory lawyers can help you comply with the Beneficial Ownership rules. If you need to talk to someone around Beneficial Ownership and the Isle of Man, then take the first step. You can email our team at [email protected] or call them on +44 (0)1624 639350 today.

Sources:

• Ownership, Financial Accountability and the Law: Transparency Strategies and Counter-Initiatives – Author Paul Beckett for Routledge, London/New York
• MONEYVAL
• Isle of Man Government Article – dated 25 June 2021
• Isle of Man Government Website