Home ID Verification Isle of Man Gov engages cybersecurity firm to ‘seamlessly verify’ beneficial owners

Isle of Man Gov engages cybersecurity firm to ‘seamlessly verify’ beneficial owners

Isle of Man: the British Crown Dependency is home to just 84,000 people; (inset) representatives from SQR and PDMS with (second from left) Ann Corlett MHK (political member for Digital Isle of Man in the Department for Enterprise) | Credit (main photo): David Pryke (Pexels)

The Isle of Man (IoM) Government’s Central Registry has engaged a cybersecurity company from the island as it looks to ‘seamlessly verify’ the identity of beneficial owners.

The IoM is a self-governing British Crown Dependency, home to just 84,000 people, located in the Irish Sea, almost equidistant from England, Northern Ireland and Scotland.

The Central Registry is the overarching body for the IoM’s Companies Registry, which maintains the records of all companies and other business types incorporated in the IoM.

Beneficial owners – defined as someone who owns or controls more than 25 per cent of a legal entity – are a politically sensitive topic on the island, as well as the other two Crown Dependencies (Jersey and Guernsey), where the islands’ governments do not open up their beneficial owner registers for public perusal.

The appointment of SQR comes after the Central Registry, which sits under the IoM Department for Enterprise, invited expressions of interest from digital ID solution providers to ‘enhance the quality of its current database of beneficial ownership’, according to the company’s announcement.

The move, SQR said, was ‘in line with its [the Central Registry’s] commitment to maintain the Island’s reputation as an internationally responsible and increasingly sustainable jurisdiction’, adding that ‘fulfilling this requirement gives Central Registry the surety that the identities of beneficial owners are credible and digitally verified.’

RELATED ARTICLE Manx united for fintech: an interview with the Isle of Man’s Ros Lynch and Kurt Roosen – an interview (26 June 2024) with senior representatives from the IoM Financial Services Authority and Digital Isle of Man

Data validation

SQR said in its announcement that it has been awarded a five-year contract ‘to provide an independent identity verification solution’ and is working alongside a software development company called PDMS (whose full name is Professional Data Management Services).

It says its application is certified on the UK government’s digital identity and attributes trust framework (DIATF) – a set of rules and standards (currently in ‘beta’ version) designed to establish trust in digital identity products .

Individuals (beneficial owners) selected by the Central Registry to verify their identity will receive email and invited to register via SQR’s application (which is available on iOS and Android). The company will provide support for individuals throughout the process as required.

Once the verification process is completed, these individuals ‘will benefit from the creation of a free-to-use reusable digital identity, which – with express user consent – can be securely shared with other SQR partner organisations to ease onboarding in the regulated services sector’, SQR’s contract award announcement states.

The SQR solution was selected as a ‘trusted, reliable and independent third-party platform, to provide a simple and seamless method of identity verification’. Its solution, it said, ‘offers assurance for the Central Registry that beneficial owners are who they say they are by validating the data that is held on the registry.’

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Crown Dependencies’ joint approach

Unlike the UK, which introduced its own public register in 2016, the Crown Dependency islands’ governments have opted against opening up their beneficial owner registers to allow the general public to take a look.

A ‘joint commitment by Guernsey, the Isle of Man and Jersey: Registers of beneficial ownership of companies’ was published on 13 December 2023, setting out the islands’ shared position. Here they stated that they ‘recognise the importance of access to accurate and up-to-date beneficial ownership information in countries across the globe’ and ‘closely monitor developments internationally to ensure that our own systems remain robust, effective and in line with international standards and obligations.’

But they spelled out that ‘in developing our policy to enhance access to information held on our registers of beneficial ownership, we have carefully considered recent decisions of the Court of Justice of the European Union (CJEU) and the European Court of Human Rights (ECtHR) about the right to privacy and data protection issues arising from access to such information’.

‘Having carefully considered the CJEU’s decision in [a specific legal case: Sovim’] and relevant ECtHR caselaw, the governments of the Crown Dependencies are satisfied that it would not be compatible with the international obligations extended to them, including those enshrined in their domestic laws, to grant access to their beneficial ownership registers to the general public.’

‘However, the Crown Dependencies do intend to work towards extending access to their registers having regard to relevant developments in the EU and international best practice,’ the governments stated.  

Among various specific ‘actions’, the islands’ authorities commit to ‘develop[ing] and deliver[ing] legitimate interest access’. ‘Subject to necessary approvals in the Crown Dependencies’ legislatures, we will provide access to the information on our registers of beneficial ownership to those who can demonstrate that they have a legitimate interest,’ the governments stated.

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‘Busy area of government’

The ‘Isle of Man Central Registry Business Plan 2024-2028’ describes the Central Registry as a ‘busy operational focused area of government.’

The document mentions that recent legislative changes have provided the Central Registry with ‘greater powers to challenge corporate information presented to it’; that the Companies Registry appointed a data assurance officer in 2021, following the introduction of the Beneficial Ownership (Amendment) Act 2021; and that the organisation is ‘establishing closer links with regulators and law enforcement agencies to drive compliance and improve data quality’.

‘There remains firm and consistent pressure to move toward independently verified registers,’ the document continues. ‘Where companies remain in default with statutory filings the Registry will actively seek to remove such companies from the Register, or seek other legal remedies.’

The Central Registry also comprises the Civil Registry, Deeds Registry, Land Registry, Probate Registry, Public Record Office, as well as being responsible for registration of legal practitioners and trade unions. SQR’s contract scope is for the beneficial owners’ registry only. 

In 2024, the organisation estimates that the Central Registry will register more than 3,000 individual life events, incorporate more than 2,000 companies, process circa 100,000 other company transactions, register more than 4,000 individual properties transactions and ‘accession more than 7,600 items into the National Archive’.

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‘Responsible jurisdiction’

Founded three years ago, SQR was one of three winners of an IoM government-backed ‘challenge’-style fintech competition last year. The ‘FinTech Innovation Challenge’ was a collaboration between Digital Isle of Man (IoM), a public-private partnership that is an executive agency within the Department for Enterprise; Finance Isle of Man, an executive agency within the same department; and the Isle of Man Financial Services Authority.

SQR worked closely with PDMS throughout the 2023 challenge, having been ‘paired with’ the company by Digital IoM. PDMS’s founder, Chris Gledhill, also acted in a ‘challenge mentor’ capacity.

“It is encouraging to see SQR’s innovative digital identity solution now being implemented with the Central Registry,” said Ann Corlett MHK (Member of the House of Keys – the popularly elected branch of Tynwald, the Isle of Man’s parliament), political member for Digital Isle of Man at the Department for Enterprise.

“Digital Isle of Man is proud to support initiatives like these, which not only enhance our technological landscape but also reinforce our commitment to maintaining the Island’s reputation as a leading, responsible jurisdiction in the global digital economy,” Corlett added.

“Helping to deter criminal activity through verified company ownership is part of the global movement towards the highest standards of corporate governance, and we are very proud the Isle of Man Government and its Central Registry have awarded SQR this contract,” said SQR chief executive Shelley Langan-Newton. 

RELATED ARTICLE Isle of Man regulator to use AI tool for compliance-related interactions – a news story (26 February 2024) on an IoM FSA collaboration with a company called Regsearch (see below)

Isle of Man’s digital ID interest

In a recently published interview with Global Government Fintech, Digital Isle of Man head of innovation Kurt Roosen raised digital ID as among fintech-related topics that are prominent for the IoM authorities, particularly in the context of beneficial owner verification.

‘When we looked at the register of beneficial owners, we said, “so how do we validate all of these people who say they come from other places and they own parts of our companies?”; and the best way to do that, we felt, was to latch onto other places’ IDs and therefore become agnostic towards IDs,’ Roosen said.

‘The Isle of Man government is building an ‘orchestration layer’ that will ‘talk to’ multiple ID providers so we can look at accepting IDs that are certified on frameworks elsewhere,’ he continued. ‘So, we’re looking worldwide at where we can accept things from. And actually, when you talk to the ID providers, this is a bit of a game-changer for them as well – when you’re starting to orchestrate these things on their behalf, as well as for the owners of the ID.’

The Isle of Man government’s engagement of SQR and PDMS comes just a few months after the IoM Financial Services Authority announced a collaboration with a Luxembourg-based company, Regsearch, to use AI for compliance-related interactions with companies. The link-up stemmed from an ‘InsurTech Acceleration Programme’ (a similar initiative to the IoM’s fintech and innovation challenges).

Also, in October 2023 the FSA announced that, alongside the IoM Gambling Supervision Commission (GSC), it was rolling out a new data collection and risk assessment tool – ‘STRIX ALM’ – to support AML/CFT supervision. The two authorities are collaborating with Vienna (Austria)-based software development firm Financial Transparency Solutions on implementation.