Isle of Man Benef icial Ownership

Beneficial ownership has been a hot topic for many years – sparking debate in political and business circles, as well as generating a steady stream of media headlines around the world.

It is a vital tool in helping international law enforcement agencies to pursue allegations of financial crime. But for a country’s beneficial ownership database to be effective, the entries must be accurate and up to date.

And it’s not just larger, more complex structures that need to be aware of their responsibilities in this regard – it’s equally important for the one-man-bands, the entrepreneurs and the smaller owneroperated businesses.

So, if you are a painter and decorator or a bookkeeper, or if you own and run a café or a hair salon, you must ensure your firm is registered on the beneficial ownership database – and that the information provided is correct.

The Financial Services Authority (‘the Authority’) is working in conjunction with the Central Registry and the Financial Intelligence Unit to spearhead an awarenessraising campaign aimed at improving the quality of entries.

Compliance with the legislation supports wider efforts to show that the Island takes appropriate steps to protect consumers, reduce financial crime and limit the opportunity for criminal elements to hide behind Manx registered companies.

The Authority recently delivered a presentation at the 2023 Manx State of the Nation conference to highlight the expectations on Island firms that fall within the scope of the Beneficial Ownership Act 2017.

This was part of an engagement and outreach programme to urge all relevant parties to take action to fulfil their responsibilities, rather than face potential enforcement action.

Ian Spence, Head of the Authority’s AML/CFT Division, said: ‘It is essential that obligations are being met in respect of beneficial ownership. All relevant companies and other entities are required to have a nominated officer who is responsible for the accuracy and timeliness of information submitted to the beneficial ownership database. For many smaller firms, the person running the business may well also be the owner and the nominated officer, so the details required are quite straightforward. For some larger, more complex structures a Corporate Services Provider may be appointed to perform the function.’

He added: ‘We are giving all nominated officers the opportunity to review the beneficial ownership details of the entities they represent and make sure that entries are up to date. In some cases, this might just involve a check to ensure the name, details and contact information are accurate in the database. In others, it could be that although the entity has been registered in the companies register the additional step of recording details in the beneficial ownership database may have been missed out when the company was formed.

‘The necessary steps can be completed online, often in just a few minutes. We would much prefer companies to do this proactively, rather than leave themselves open to the possibility of enforcement action and a civil penalty.’ Here, we set out some of the key information that you need to know…

What is a ‘beneficial owner’?

A ‘beneficial owner’ means a natural person who ultimately owns or controls a legal entity, in whole or in part, through direct or indirect ownership or control of shares or voting rights or other ownership interest, or who exercises control via other means.

This is an intentionally broad definition which attempts to identify any individual who holds a defined interest in a company.

However, not all beneficial owners must be recorded on the beneficial ownership database.

What is a ‘registrable beneficial owner’?

It is only necessary to record details of ‘registrable beneficial owners’ on the database. A registrable beneficial owner is defined as ‘a beneficial owner who owns or controls more than 25%’ of a company or legal entity.

Nominated Officers

The Nominated Officer plays an important role. All relevant companies must appoint a Nominated Officer to submit their beneficial ownership information to the Central Registry’s beneficial ownership database. For a small business, such as a hair salon, the director may assume this role alongside their other duties. However, many businesses may choose to appoint a third party to act as the Nominated Officer on their behalf, such as a Corporate Services Provider (CSP).

Your next steps

It is very simple to submit or update your beneficial ownership information. The Nominated Officer will receive a log-in code for the Companies Registry section of the Isle of Man Government’s Online Services portal. It should take no more than a few moments to input the required information (e.g. Name, Nature of Interest, Percentage of Interest, and Appointment Date). If you require a new log-in code, please contact Central Registry.

Guidance

Guidance is available on both the Companies Registry’s and FSA’s websites. Please reach out to either the Central Registry or the Financial Services Authority with any questions regarding the process. The FSA can be contacted via the email address Beneficial.Ownership@iomfsa.im, whereas the Central Registry can be reached via companies.registry@gov.im