MP Cannonier On Beneficial Ownership & More
“When it comes to the somewhat mysterious subject of “Beneficial ownership,” we cannot sit idly by when somebody gives us an “F” when, in fact, we are at the top of the class,,” OBA MP Craig Cannonier said.
Craig Cannonier said, “Recently an article was published, entitled, “Bermuda cited in beneficial ownership failure.’ As Bermudians, we all love our country, but we also know Bermuda is not perfect. That does not mean we should accept criticism aimed at us that is not warranted. This article is a case in point. When it comes to the somewhat mysterious subject of “Beneficial ownership,” we cannot sit idly by when somebody gives us an “F” when, in fact, we are at the top of the class.
“Firstly, let’s start with principles:
“Beneficial ownership means humans are the ultimate owners: behind the veils of companies, partnerships and trusts. Some would say hiding behind such entities, although there are many legitimate reasons for such structures.
“There are two main issues connected to the beneficial ownership debate:
“1] The data itself. Who is familiar with it, where it is kept, and who controls it.
“2] Who has access to the data and/or who OUGHT to have access to it.
“Since many wealthy people have gone to great lengths to conceal their beneficial ownership, it can be very difficult to answer the first point. This is where the Bermudian approach to offshore business excels. Virtually from the beginning, post World War II, Bermuda’s philosophy has been that we don’t want just anybody doing business here. We want the crème de la crème. To achieve this, the local authorities insisted on being told who were the beneficial owners of any entity that had a Bermuda label on it.
“The principal legal authority for extracting this information was the Exchange Control Act 1972. Prior to that there was the Currency Control Board. The Exchange Control Act requires that the issuance, or the transfer of shares of a Bermuda company requires the permission of the Controller of Foreign Exchange. Such permission was given on the condition that the beneficial owners of the shares be revealed to Exchange Control where it would be held in confidence. The operator of Exchange Control has always been the Bermuda Monetary Authority.
“Therefore, the answer to the first point is that, in Bermuda, the beneficial ownership data is actually known and collected at the Bermuda Monetary Authority, originally in the form of paper files, but now electronically. This is the so-called Beneficial Ownership Register.
“You may think that most, if not every, jurisdiction would have such an arrangement, but you would be wrong. None of the other Overseas Territories have such a database. The UK itself used to have Exchange Control but abolished it in 1979, along with all the staff, facilities and data. So, imagine the hypocrisy when the UK Government met with Bermuda government officials during my premiership, and demanded that Bermuda should set up a register of beneficial ownership, when it did not have one itself. Officials were not amused when the Bermuda government informed them that not only did we have such a register, it was over 70 years old and that we would be happy to assist the UK in constructing its own.
“The other Overseas Territories did not follow Bermuda’s path either and therefore don’t have the data that we have.
“So, the bottom line is that Bermuda stands alone in the depth and quality of its data on beneficial ownership. There’s no point sharing the contents of a beneficial ownership register if the register is new and therefore incomplete or has no ability to clean up errors.
“The second point is the bone of contention. How widely is the data in the register shared? Originally, the data at the BMA wasn’t shared with anyone, quite literally – not even local government officials.
“But as times changed, Bermuda had to change as well. During my Premiership we agreed to share data on beneficial ownership with certain “Competent Authorities.” These included foreign law enforcement agencies to assist in fraud, money laundering and terrorist financing investigations. We also agreed to share information with foreign investigations regarding tax evasion. The contentious issue was always whether journalists qualified as Competent Authorities.
“This group, the Transparency International UK, represents yet another group that originates from journalism. Like many of its colleagues before it, it fails to differentiate between the various Overseas Territories and tar everyone with the same brush. In the recent past, journalists have used highly questionable tactics to “shine a light” on “dodgy” jurisdictions. While the Panama Papers were very revealing, the Bermuda-focused Paradise Papers, where they illegally hacked Appleby’s client files, were highly questionable. And for what? A sensational Panorama program that revealed that one of Bermuda’s clients was connected to the Royal Family. Really?
“Conducting assessments and declaring grades, like “F” implies a master-student relationship. In the sphere of beneficial ownership, we – Bermuda should be assessing these would be masters. There is little evidence that they understand the role and value proposition that Bermuda provides for the global economy. Instead, they reiterate the worn-out platitude that we are hiding looted money from the treasuries of countries that would otherwise do good things with. Well, in case they haven’t noticed, these same countries have trillions of dollars to spend, and a lot of it is wasted on inefficiency, corruption, weapons and polluting industries. It appears that Bermuda’s business model has had no impact on such activities.”
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