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Grounds Keeper Willy

Public beneficial ownership register to be introduced

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4 hours ago, thesultanofsheight said:

Looking at the thread above that’s confusing. So are you seriously claiming that what you disclose on the register is not what your records actually document? You claim firstly above that you don’t have to disclose the UBO in certain circumstances (where trusts are involved), and when challenged you say but the CSP always knows who is the UBO. So if that’s the case it’s the UBO (who you say you always know) who gets recorded on the register? You probably need to clarify. 

There is no requirement for a register of BOs for a trust, the BO register relates to companies, which is why this is a point of debate. Hope that clarifies.

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5 minutes ago, Gladys said:

There is no requirement for a register of BOs for a trust, the BO register relates to companies, which is why this is a point of debate. Hope that clarifies.

It clarifies the obfuscation. :lol:

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Posted (edited)
11 hours ago, Gladys said:

There is no requirement for a register of BOs for a trust, the BO register relates to companies, which is why this is a point of debate. Hope that clarifies.

I understand the issue but you have chosen further obfuscation rather than answer the question put. Philip Dearden answers more openly above. I wasn’t talking about BO for trusts obviously (as you well know despite adding your hope that clarifies sarcasm). I was talking about registering the BO for a company owned by a trust as just the trust company when, as you clearly state above, you know who the UBO of a trust is in pretty much every case. I’m amazed some trust companies are getting away with this (if they are doing it). If you are doing what you claim to be doing I’m surprised that they are accepting the filing at the Registry stating the UBO of ABC Company Limited is XYZ Trust Company as there is no identifiable owner of the trust structure sitting above it without querying it. I would imagine once the register goes public these will be the very records which will be subject to extra scrutiny very quickly. 

Edited by thesultanofsheight

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15 hours ago, Phillip Dearden said:

Yes, I think this is a good point. Not only the man on the Clapham Omnibus, but also may Tax Inspectors, Policy-makers and media commentators will expect that there is a shifty and shady Mr Big behind most offshore arrangements.  In my experience this is not usually the case so we may get a reporting regime that does not meet all expectations. 

I provided a link to general advice that Carey Olsen issued a few months ago on what needs to be done to determine where a trust is involved as I thought it might be helpful. I think many people find it hard to believe that a true owner of a company can’t be found and reported and looking at the post above I’m also sure many find it even harder to believe that the authorities would just accept the name of the CSP or its owners / directors in the belief that there is no other identifiable owner. However you would assume they’re going to be asked to show their structure charts to the registry at some stage to show how they arrived at this submission for the register? It’s fine saying we’ve looked at this and there is no UBO; but actually is there? 

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Posted (edited)

As an aside, I have often thought there is a case for a trust register where the trust deed is available.  When I worked in this sector it was common for a discretionary trust to name a charity like Manx Blind Welfare as an ultimate beneficiary in the event that the trustees had funds left over when winding the trust up. Of course as the trust deed is not public  potential beneficiaries simply may not, probably do not  know about their interest. 

Edited by NoTail
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6 hours ago, thesultanofsheight said:

I understand the issue but you have chosen further obfuscation rather than answer the question put. Philip Dearden answers more openly above. I wasn’t talking about BO for trusts obviously (as you well know despite adding your hope that clarifies sarcasm). I was talking about registering the BO for a company owned by a trust as just the trust company when, as you clearly state above, you know who the UBO of a trust is in pretty much every case. I’m amazed some trust companies are getting away with this (if they are doing it). If you are doing what you claim to be doing I’m surprised that they are accepting the filing at the Registry stating the UBO of ABC Company Limited is XYZ Trust Company as there is no identifiable owner of the trust structure sitting above it without querying it. I would imagine once the register goes public these will be the very records which will be subject to extra scrutiny very quickly. 

It is important to recognise that there are different types of trust arrangement. This is what the IOMFSA have to say on the subject of the (trustees of a) discretionary trust holding shares in an IOM company, which, I understand, is the type of trust to whIch Gladys has been referring, and this confirms the approach she has set out in this discussion:

”Where the trust is a discretionary trust, its beneficiaries do not have an absolute right to any of the trust property, but only a right to be considered, as any benefit they receive is at the discretion of the trustees. In such circumstances, the beneficiaries of the discretionary trust cannot be beneficial owners and therefore cannot be registrable beneficial owners of the company. In that case, the registrable beneficial owners will, in the case of trustees who are natural persons, be those trustees. Where the trustee is a legal person, the registrable beneficial owners may be the trust company’s shareholders, if their apportioned shareholding in the company is over 25%.”

Different treatments may may apply for other types of trust - see https://www.gov.im/media/1357278/beneficial-ownership-act-2017-guidance-june-2017-gc-no-2017-0003.pdf

 

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Posted (edited)
26 minutes ago, bankerboy said:

It is important to recognise that there are different types of trust arrangement. This is what the IOMFSA have to say on the subject of the (trustees of a) discretionary trust holding shares in an IOM company, which, I understand, is the type of trust to whIch Gladys has been referring, and this confirms the approach she has set out in this discussion:

You’ve posted that before I think but does anyone really think the FSA won’t start wanting to see proof of how the UBO has been derived if it starts seeing a huge load of registrations in the name of trustee companies? Or that these won’t be the very structures people outside the IOM (journalists etc) are going to home in on when the register goes public as they will just claim it’s another firewall. This is the whole idea behind the push for a public register. Guidelines are only guidelines and at some stage the FSA are presumably going to want to check that CSPs aren’t just hiding behind claims of discretionary trusts to not report. 

Edited by thesultanofsheight

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Let's be honest here. A lot of these companies are probably shitting bricks because they don't have any idea who the underlying owner of some of the "companies"  they administer. Some of these companies don't know their arses from their elbows, never mind a grasp of their own portfolio of trusts and companies. As long as the money keeps coming in, as long as nobody asks too many difficult questions, they are fine. They hope if they can obfuscate things, it'll all go away and be forgotten. I hope they're right because if there really was a genuine registry with rigorous declaration of information in place, the island's economy would go down the toilet very fast

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14 minutes ago, Rushen Spy said:

Let's be honest here. A lot of these companies are probably shitting bricks because they don't have any idea who the underlying owner of some of the "companies"  they administer. Some of these companies don't know their arses from their elbows, never mind a grasp of their own portfolio of trusts and companies. As long as the money keeps coming in, as long as nobody asks too many difficult questions, they are fine. They hope if they can obfuscate things, it'll all go away and be forgotten. I hope they're right because if there really was a genuine registry with rigorous declaration of information in place, the island's economy would go down the toilet very fast

...as would the economies of Guernsey, Jersey, Cayman and the BVI and, err, the UK and USA (think UK LLP structures and Delaware companies).  Capitalism is amoral, despite what some would have you believe.

Think about all the revisionism that is going on with reference to money in some institutions that derived originally from the slave trade.

History will probably look back at some of our (Manx and wider) current crop of worthies - individuals and businesses - and make the call that they were built on bent money.

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Posted (edited)
1 hour ago, thesultanofsheight said:

You’ve posted that before I think but does anyone really think the FSA won’t start wanting to see proof of how the UBO has been derived if it starts seeing a huge load of registrations in the name of trustee companies? Or that these won’t be the very structures people outside the IOM (journalists etc) are going to home in on when the register goes public as they will just claim it’s another firewall. This is the whole idea behind the push for a public register. Guidelines are only guidelines and at some stage the FSA are presumably going to want to check that CSPs aren’t just hiding behind claims of discretionary trusts to not report. 

The trust will exist, they are not "claimed".  Bankerboy has explained the position correctly.  In the case of a discretionary trust, there is no BO - there cannot be.  That is the whole dilemma. And it is exactly that.

If I can help, I will set out the history of trust law.  It was originally an arrangement when the crusaders went off on the holy wars.  Women could not hold property so the knight would sign over (settle) his assets to a trusted person to hold for the benefit of named beneficiaries in case he would not return. He would probably set some conditions.  This created a new branch of law, equity, which is very different from the common law, contract, which applied at the time. Under the law at the time, if he gave his assets away, he had given them away, end of, and the person he had given them to could deal with them as he liked. So, the concept of a trust was born, where the trustee held the assets in law, but had fiduciary duties to follow the wishes of the settlor in dealing with those assets in the interests of the beneficiaries.   He could not personally benefit as that would be a breach of trust. 

There is also a line of argument, that trusts were created to allow donations to the church, basically, in return for a place in heaven.  I am not sure that I follow that, but it may have been the nascent origin of the broader concept.

Trust arrangements are useful in many situations, succession planning  where you want your descendants to benefit  but want someone who can decide if the recipient is deserving, and charitable set ups are often trusts and so on. 

The important point is that the person giving the assets to the trustee alienates themselves from the assets, they no longer own them. In a fixed trust,  for example,  I give all my assets to the trustee to hold for X for when he reaches 25.  That is a fixed trust as X has an absolute right to the assets. 

Then, there may be a discretionary trust where I give all my assets to the trustee to hold for the benefit of my descendants for when they need them - education, maintenance  or other event.  But I leave it to the trustee to decide, in their fiduciary capacity  who should benefit bearing in mind the interests of all other beneficiaries.  

It is not obfuscation, but an understanding of what a trust is. 

Edited by Gladys

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Posted (edited)
56 minutes ago, Rushen Spy said:

Let's be honest here. A lot of these companies are probably shitting bricks because they don't have any idea who the underlying owner of some of the "companies"  they administer. Some of these companies don't know their arses from their elbows, never mind a grasp of their own portfolio of trusts and companies.

Some of them are poor. But I think there is an expectation that they should know what they’re doing, But a good point made above is who is going to check that? It’s probably fine while the register is restricted access but once it goes public and people still can’t see who is behind a company except the trust company it’s just going to create a whole pile of issues for the FSC and government. 

Edited by MrPB
Typo

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14 minutes ago, Gladys said:

The trust will exist, they are not "claimed".  Bankerboy has explained the position correctly.  In the case of a discretionary trust, there is no BO - there cannot be.  That is the whole dilemma. And it is exactly that.

If I can help, I will set out the history of trust law. 

I’m not sure another slab of text cut from somewhere else adds much value. Not every trust set up here is a discretionary trust. I know that you know that. A huge number aren’t and a significant number of trusts have protectors appointed to them, or contain all sorts of other mechanisms in them which mean that you can make a good assessment of who actually controls it (like who pays you bill for one). You can’t deliver a trust lecture on discretionary trusts and say that’s why nobody knows who owns it as you know that often they are not discretionary trusts in the truest sense of the word in a large number of scenarios. I really cannot see the FSA looking at the register (as they will before it goes public) and not requiring CSPs to validate why there is no UBO recorded if a significant number of entries end up as just the trust co. Despite what they say in their own guidelines. 

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That was all my own work, Sultan.  I would say the majority of trusts are discretionary.  Protectors have limited powers. 

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Posted (edited)
16 minutes ago, Gladys said:

I would say the majority of trusts are discretionary 

In some businesses .. 

As I said there are a whole pile of factors that need to be taken into account. I’m not sure just hiding behind the ‘it’s discretionary’ argument is going to cut it if a whole pile of Registry entries show no UBO other than the trust company. They are likely going to want to see the validation work behind the assessment at some stage as the number of documented none owners is one thing the FSA is sure to be keeping an eye on before the whole thing has to go public as realistically it’s the first thing public viewers are going to spot and submit questions about. 

Edited by thesultanofsheight

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I think I did say from the outset that I did not agree with who is currently deemed to be the BO of discretionary trusts. But that is what we have. 

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