Overview

Oversight by the Financial Service Authority – Beneficial Ownership Act 2017 (“the Act”)

These notes are intended to provide a general overview of the Authority’s oversight and are not intended as a substitute for the Act.

Section 30 and Schedule 1 of the Act define the Authority’s oversight powers, including inspections and investigations, requests for information, power to require information, search warrants, reporting of findings, offences and civil penalties. 

The Authority is responsible for assessing compliance with the Act by a relevant person. A “relevant person” is:

  1. a legal entity to which this Act applies;
  2. a nominated officer;
  3. a legal owner;
  4. a beneficial owner;
  5. an intermediate owner (see section 10 of the Act); and
  6. a registrable beneficial owner.

For quick reference (non-exhaustive), a relevant person’s principle statutory obligations are explained below under the following headings:

  • Schedule 1 – legal entity duties
  • Schedule 2 – nominated officer duties
  • Schedule 3 – legal owner duties
  • Schedule 4 – beneficial and intermediate owner duties
Approach to oversight

There will be an initial period of “assistance and education” by the Authority, whereby unless there are reasonable grounds to suspect information on the database has purposely been excluded or added incorrectly, the Authority may look to utilise its discretion and assist in ensuring that the correct information is held on the Isle of Man Database of Beneficial Ownership and all other parts of the Act are complied with.

The Authority understand that there are many different types of ownership structures and will strive to support and assist relevant parties where possible and within the Authority’s remit, however the Authority should not be the first point of contact where clarification is sought. The Act should be read and understood and independent advice should be sought on each occasion.

If in any doubt about your obligation you should consult the Act, and, if you consider it necessary, seek independent legal advice.

Inspections

In order to assess compliance with the provisions of the Act, the Authority intends to carry out visits to a representative sample of relevant persons each year and conduct an inspection.

In order to conduct an inspection the Authority will make contact with the relevant party. On most occasions this will be the Nominated Officer or the CSP. They will be advised of the identity of the entity for which a visit will be conducted and a date for the visit will be agreed. This will normally be arranged for around 4 weeks from the initial contact.

The Authority recognises that for some businesses the typical visit procedure may not always be appropriate. This may in particular, be the case in respect of very small businesses who operate from a residential premises. This will be taken into account when arranging visits.

In undertaking the prearranged visit the Authority will inspect the appropriate books and documentation of the relevant person to ascertain whether the obligations and requirements imposed by the Act have been and are being complied with and to assess whether the correct information has been entered on the Database of Beneficial Ownership.

If failures are identified, a report detailing the failures together with details of the remediation action to be taken and a deadline for regularisation will be issued to the relevant person. A re-visit may be conducted after the deadline date to ensure the failures have been addressed.

If the Authority is satisfied that the relevant person has regularised the position the relevant person will be supplied with a record of the visit.

If the failures have not been regularised by the deadline the Authority will consider appropriate action to address this. This may be further remediation or could result in civil penalties, referral to the Attorney General’s Chambers or in some cases striking off.

The Authority has further powers which may be used where appropriate in assessing compliance with the Act, including disclosure notices, search warrants and powers to require information.

SCHEDULE 1

LEGAL ENTITY DUTIES

Legal entities must:

  • Appoint and retain the appointment of a nominated officer/s. (S.6)
  • Notify the Department of Economic Development of the Nominated Officer’s details. (S.6)
  • Notify the Department of Economic Development of any changes to the Nominated Officer within one month of a change. (S.7)
  • Keep a record of the Nominated Officer’s name and address. (S.8)
  • Keep a record of the Nominated Officer’s consent to act as a Nominated Officer. (S.8)
  • Serve a notice on the Legal Owner (after receiving notice from the Nominated Officer) requiring them to provide beneficial ownership details. (S.14)
  • Notify the Authority of action taken in relation to the above mentioned notice. (S.14)
  • Each annual return must confirm Act complied with and information on database is correct. (S.42)
  • Comply with requests/requirements made by the Authority under Section 30 and Schedule 1 of the Act. (S.30 + Schedule 1)
SCHEDULE 2

NOMINATED OFFICER DUTIES

Nominated Officers must:

  • Ensure that the required details and the information which verifies those details and which were provided to the nominated officer are maintained and preserved. (S.13)
  • Give notice to the legal entity if they believe the legal owner has given them false information or is not complying. (S.14)
  • Disclose information to, if served with a disclosure notice, a competent authority within the specified timeframe (7 days for registrable BO and 1 month for none registrable BO). (S.15)
  • Take all reasonable steps necessary to ascertain whether a legal entity to which this Act applies has a registrable beneficial owner. (S.20)
  • Enter relevant information onto the database. (S.20 + S.22)
  • Update the database with changes. (S.20 + S.22)
  • Countersign each annual return to confirm Act complied with and information on database is correct. (S.42)
  • Comply with requests/requirements made by the Authority under Section 30 and Schedule 1 of the Act. (S.30 + Schedule 1)
SCHEDULE 3

DUTY OF LEGAL OWNERS

Legal Owners must:

  • Ascertain “required details” details. (S.9 + S.11)
  • Notify the nominated officer of the required details. (S.9)
  • Provide information from an independent source verifying the required details. (S.9)
  • Advise the nominated officer of changes to the required details (within one month of change). (S.12)
  • Provide information from an independent source verifying the changes to the required details. (S.12)
  • Comply with requests/requirements made by the Authority under Section 30 and Schedule 1 of the Act. (S.30 + Schedule 1)
SCHEDULE 4

DUTY OF BENEFICIAL AND INTERMEDIATE OWNERS

Beneficial and Intermediate Owners must:

  • Assist a legal owner to ascertain “required details” details. (S.10)
  • Comply with requests/requirements made by the Authority under Section 30 and Schedule 1 of the Act. (S.30 + Schedule 1)
Legislation, guidance and external links
Presentation

On 26th June 2017 the Financial Services Authority provided 2 seminars to members of the Association of Corporate Service Providers in relation to the guidance issued by the Authority and the practical oversight of the Beneficial Ownership Act 2017. Click here to view the slides from the seminar.

Enquiries in relation to oversight of the Beneficial Ownership Act 2017

Bryn Griffith
Manager – Beneficial  Ownership – Enforcement Division
Isle of Man Financial Services Authority
Email: bryn.griffith@iomfsa.im
Tel: +44 (0) 1624 689387