On May 23, important innovations were brought to the UK AML/CFT system with the entering into force of the Sanctions and Anti-Money Laundering Act(the “Bill”).
The main novelty of this post-Brexit settlement if the strengthening of provisions to avoid unlawful money cross border transfers aimed at facilitating the detection, investigation and prevention of money laundering throughout offshore companies.
Among changes, one finds the obligation of British Overseas Territories (“BOT”) governments to establish a publicly accessible register of the beneficial ownership of companies registered in each of the governments’ jurisdiction by the end of 2020.
Known to be "tax havens", the BOT list includes the British Virgin Islands, Isle of Man, Bermuda, Cayman Islands, Hong Kong, and others are expected to present retrained transparency controls in what relates to assets therein.
The Bill defines a “beneficial owner” as equivalent to "people with significant control” in accordance with the UK Companies Act of 2006. Thus, beneficial owners would be those who: i) holds, directly or indirectly, more than 25% of the shares in a company; ii) holds, directly or indirectly, more than 25% of the voting rights in a company; iii) holds the right, directly or indirectly, to appoint or remove a majority of the board of directors of a company; iv) has the right to exercise, or actually exercises, significant influence or control over a company; v) as trustees of a trust or asmembers of a firm that, under the law by which it is governed, is not a legal person meet any of the other conditions, or would do so if they were individuals, and has the right to exercise, or actually exercises, significant influence or control over the activities of that trust or firm. These criteria are not cumulative.
Broadly, BOT are now due to introduce public registers revealing the identity of individuals behind offshore companies. The measure increases transparency on asset management strategies based on the incorporation of offshores therefore contributing to the responsibilization of their beneficial owners in case of money laundering, tax evasion and financing of terrorism.
Information regarding Brazilians and their offshore assets located in BOT, which are currently unknown, will become public until the end of 2020.
Therefore, it is recommended to Brazilian citizens in such situation to declare to Brazilian Central Bank their equity and other investments held in BOT, mainly to avoid criminal and tax liability, such as tax evasion crime, punished with 2 to 6 years of imprisonment and fine (Article 22, Federal Law No. 7,492/1986).
In addition, individuals and companies obliged by the Brazilian Anti-Money Laundering Law (Federal Law No. 9,613/1998) to have an AML compliance program shall also accompany the evolution of the publicity of information regarding beneficial owners in BOT.
In possession of BOT offshores beneficial owners’ information it will be of high importance for Brazilian companies with an AML compliance program to update their client registries in order to fully comply with Know Your Client duties.