Behind the Shares: Divorce, Deception, and Disclosure in Jersey’s Courts, a case for MLROs and Divorce Lawyers

I was reminded of this case today while working with some lawyers on their policy and procedures.

The Al Tamimi v Al Charmaa [2017] JRC033 case is significant for both Money Laundering Reporting Officers (MLROs) and divorce lawyers due to its implications for beneficial ownership transparency, regulatory compliance, and family law asset disputes.

Here's why:

Key Facts of the Case

• Parties: Essam Abdulamir Al Tamimi (Plaintiff) and Rouzin Marwan Al Charmaa (Defendant), a divorced couple.
• Dispute: Ownership of two Jersey companies (Jorum Limited and First Grade Properties Limited) that held valuable London properties.
• Claim: Mr Al Tamimi argued that although the companies were registered in his ex-wife’s name, he was the valid beneficial owner and she held the shares as a nominee or trustee.
• Defence: Ms Al Charmaa maintained she was the legal and beneficial owner.

Why It Matters for MLROs

1. Beneficial Ownership Disclosure:
• The judgment emphasised that accurate disclosure to the Jersey Financial Services Commission (JFSC) is a legal obligation.
• Misleading the JFSC about beneficial ownership could amount to a criminal offence
2. Public Policy and Transparency:
• The Court stated it would not uphold any arrangement that obscures beneficial ownership, reinforcing Jersey’s commitment to anti-money laundering (AML) standards
3. Regulatory Integrity:
• MLROs must ensure that corporate structures and ownership declarations are transparent and verifiable, especially in high-risk scenarios like divorces involving offshore assets.

Why It Matters for Divorce Lawyers

1. Asset Ownership in Divorce:
• The case illustrates how offshore corporate structures can complicate asset division in divorce proceedings.
• The Court rejected Mr Al Tamimi’s claim of nominee ownership due to lack of evidence and the presumption against enforceable family arrangements
2. Trust and Enrichment Claims:
• Claims of resulting or constructive trusts and unjust enrichment were dismissed, setting a precedent for how such arguments are treated in Jersey courts.
3. Equitable Discretion:
• Even if the Plaintiff had proven beneficial ownership, the Court stated it would not grant relief if doing so undermined regulatory transparency.

Judgment Access

 Al Tamimi-v-Al Charmaa 23-Feb-2017 

• Companies – ongoing issues relating to ultimate ownership of two Jersey companies
• https://www.jerseylaw.je/judgments/unreported/Pages/[2017]JRC033.aspx

Other sources

• Beneficial Ownership in Jersey: The Importance of Transparency https://www.voisinlaw.com/resources/beneficial-ownership-jersey-importance-transparency-2/
• Arrangements to deceive as to beneficial ownership will not be upheld ... https://www.ogier.com/news-and-insights/insights/arrangements-to-deceive-as-to-beneficial-ownership-will-not-be-upheld-al-tamimi-v-al-charmaa-2017/

The court door “slammed shut” for fake owners.

• The Royal Court has delivered a landmark judgement which is intended to send a message out to those who mislead the financial authorities.
• https://www.bailiwickexpress.com/news/court-door-slammed-shut-untrue-beneficial-owners/#.XHei9fZ2uUk

The Royal Court has delivered a landmark judgment intended to send a message to those who mislead the financial authorities.

The judgment says that the Court will not help those who engage in any financial deception – even if they are technically entitled to the proceeds.

According to local lawyer Olaf Blakeley, who won the case, the UK has struggled with the issue of how to deal with parties in litigation when one has to rely on an immoral purpose to explain their claim for “hundreds of years”, with the matter even reaching the Supreme Court recently.

In Jersey, the case centred on shares held by a Dubai couple, who were undergoing divorce proceedings.

While they had been placed in the wife’s name, the husband contested that they were really his and had just been ‘resting’ in her name.

This is not an uncommon occurrence, as many people opt to place shares or investments under another person’s or company's name for privacy purposes. Nonetheless, the JFSC require anyone doing so to declare if they are the valid beneficial owner.

The man had not done so, however, and was therefore left in a tricky situation.

• If the shares really were his, he had effectively ‘misled’ the Jersey Financial Services Commission.
• If they were not, his wife would retain the money.

With criticism of Jersey’s offshore financial services often based on “…assertions of banking secrecy and underlying criminality which is not capable of being discovered by the relevant law enforcement authorities”, Bailiff William Bailhache, presiding, said that it was important for the Island to maintain transparency. 

In handing down his verdict, he commented:

• “ There is a public interest – a very strong public interest – in the Island being able to demonstrate that it can identify the beneficial owners of companies, or the beneficiaries under trusts. 
• In our judgment, this Court should not recognise any arrangement which detracts from the ability of regulators or law enforcement authorities to do so, and,
• even if we had been satisfied that
• The shares were held as a nominee or on trust for the Plaintiff, or
• That the Defendant had been unjustly enriched at the expense of the Plaintiff,
• We would not have been prepared to grant relief in the exercise of our equitable discretion on that basis.”

As Advocate Blakeley observed:

• “In this case, the Bailiff has made clear: if someone misleads the JFSC or Island authorities about the true beneficial ownership of companies or trusts, the Court will not assist that person if they come to court with a claim. In effect, the door of the Court will be slammed shut.”

 Source

https://www.bailiwickexpress.com/jsy/news/court-door-slammed-shut-untrue-beneficial-owners/#.XHei9fZ2uUk