NIA CHARLESTOWN NEVIS – In August 2023 the Nevis Island Assembly passed the Nevis Business Corporation (Amendment) Ordinance 2023. Among other things, the legislation sets out at section 16 a comprehensive list of documents and registers which must be maintained by companies registered in Nevis. These include inter alia a register of directors containing the names and addresses of directors of the company and a register of shareholders containing the names and addresses of shareholders of the company.
The Nevis regulatory framework recognizes that detailed information as to beneficial ownership of companies is critical and must be maintained and available if the Nevis authorities are called upon to provide such information to counterpart authorities elsewhere in the world or if there is an investigation in Nevis itself. This permits Nevis to honour its international obligations in the global fight against money laundering, terrorist financing and other financial crimes. The existing regulatory framework allows Nevis authorities to cooperate fully on the basis of mutual legal assistance or otherwise whenever financial crime is being alleged or investigated and the Nevisian courts have been alive to applications for companies to disclose relevant information pursuant to national investigations or Nevis’ satisfaction of its unwavering commitment to cooperate in preventing and interdicting financial crime.
What the Nevis regulatory regime does not do is to provide public access to beneficial ownership of companies registered pursuant to the Nevis Business Corporation Ordinance.
The European Union and others (including the United Kingdom) have long pressured small jurisdictions to provide open public registers so that all and sundry might be able to ascertain who the beneficial owners of companies are at any given time. It is not quite clear why this is a matter for the general public or the busybody who wishes to know his neighbour’s legitimate business. It has been said that this is necessary to fight financial crime but as previously mentioned, any investigation or allegation of financial crime is already handled quite effectively under existing mutual legal assistance and cooperation as between Nevisian and foreign authorities. It has never been clear why the general public’s access to otherwise private information is seen as critical in the fight against financial crime when that information is readily available to authorities actually responsible for investigating and prosecuting financial crime.
While some Caribbean financial services centers have surrendered to the pressure to mandate open registers for beneficial ownership of companies registered in those jurisdictions, Nevis has stoutly resisted that imposition on the basis that every person is entitled to privacy in the conduct of his or her legitimate business affairs and that such privacy gives way only upon allegation or investigation of financial wrongdoing.
The decision by the European Court of Justice (ECJ) in November of 2022 (Cases C-37/20 ad C-601/20) striking down public access for beneficial ownership registries within the EU on the basis that such rules infringe rights to privacy and the protection of personal data under the EU Charter of Rights is a welcomed recognition that rights to privacy and the protection of personal data are still sacrosanct and worthy of protection. In the immediate aftermath of the decision, several EU countries such as Luxembourg, Austria, Germany, Netherlands and Ireland have already taken their public beneficial owner registries offline.
The ECJ made it clear that for the very legitimate fight against financial crime it was not necessary for every member of the public to have access to beneficial ownership of companies. Rather it was important that those granted such access had a “legitimate interest” in the information. This is entirely consistent with the position adopted in Nevis where those authorities such as law enforcement and those investigating financial wrong doing can utilize existing mechanisms to access beneficial ownership information absent any public registers of the type mandated in the 5th EU Anti Money Laundering Directive adopted in 2018 and now struck down by the ECJ.
The ECJ did carve out an exception for journalists and civil society entities that investigate or campaign against crime and corruption and ruled that these will have a legitimate interest in accessing beneficial ownership information. But extending such access to any and all members of the general public was a step too far and was disproportionate and not strictly necessary for fighting financial crime.
Since Brexit and the UK’s departure from the EU, it is unclear what relevance the ECJ decision will have on overseas British territories which have already committed themselves to open beneficial ownership registers. But for now, Nevis continues to demonstrate the right balance between individual rights to privacy and personal data protection and the shared global commitment to wage war on international financial wrongdoing.
The Nevis government remains wholly committed to a vibrant world class financial services sector which adheres to the highest standards of regulatory rectitude. We are committed to using every available tool to fight the global scourge of financial crime. We remain equally committed to ensuring that we strike the right balance between individual rights and public impositions.