‘IFC’s lead the way on beneficial ownership’

‘You seem like a terrorist risk – so we’ll have to charge you more…’ Words you are not likely to hear from a corporate service provider in one of the world’s ‘offshore’ international finance centres – but you might hear them from one based on the ‘mainland’ USA.

That is according to Jason Sharman, lecturer at Griffith University in Brisbane and author of Global Shell Games, a large research project into international compliance on beneficial ownership. Jason was speaking at the Jersey Finance Private Client Conference, ‘Guiding Lights’, last week in London. Jason outline his research project, noting that companies in IFC’s like Jersey and the Cayman Islands performed much better in ‘secret shopper’ activities, refusing to form shell companies unless the correct forms of identification and due diligence were supplied.

In his report, corporate service providers in the States of Delaware and Nevada particularly, did not require any kind of KYC or due diligence to form a shell company. It was no coincidence to Jason, that the companies that performed well in this check, and upheld international standards, were those in jurisdictions where they were required to be licensed and regulated.

In his view, and the view of the expert panel that followed his talk, this is a much better approach to international transparency then a central register, as is currently being proposed by the UK government. He cited an example in Cyprus, where a company registry had not opened any mail in nearly 11 years.


He outlined that to implement an effective registry system would require registries, which previously had only to hold information, to become effective guardians and enforcers of what that information was. In his experience, this was a role that registries did not want to play.

Much better, it seems, to support licensed corporate service providers in well-regulated jurisdictions. As Siobhan Riley of Carey Olsen later pointed out, this well established system requires the service provider to know who the beneficial owner is and requires them to disclose that information to the authorities if the appropriate circumstances require it. This system gives clients the privacy they desire and authorities the access they need, when they need it without any of the risks associated with a central, public register of information.