The Sanctions and Anti-Money Laundering Act 2018 (the “Act”) was brought into law by the Government of the UK on 23 May 2018. Of significance for the Cayman Islands (and other British Overseas Territories such as the British Virgin Islands and Bermuda) was the late amendment to the Act which was introduced by Labour MPs and not objected to by the Conservative MPs. This amendment included a requirement that all Overseas Territories (but not Crown Dependencies) implement an open public register of company ownership by 31 December 2020.
The Act has been met with widespread confusion and disdain by practitioners in the Cayman Islands’ financial services industry. In circumstances where the Cayman Islands already adheres to all international standards on anti-money laundering, has implemented systems for the automatic exchange of tax information (FATCA/CRS) and has already established a private beneficial ownership register regime, we fail to see how making the registers public would provide any benefit. The information is already available to all relevant authorities and agencies. Why does ‘Joe Public’ need to see it? There is a significant difference between privacy and secrecy. Secrecy was removed from the Cayman Islands many years ago but we have yet to hear a coherent reason as to why privacy needs to be removed also.
Cayman Finance has stressed that Cayman’s existing verified ownership regime remains superior to that of the UK.
Jude Scott, CEO of Cayman Finance stated:
“The Cayman Islands is a transparent jurisdiction that already meets or exceeds the full range of globally-accepted standards for transparency and cross-border cooperation with law enforcement and tax authorities. Cayman became an early adopter of automatic data exchange by signing onto agreements such as the European Union Savings Directive, the OECD’s Common Reporting Standard, US FATCA, and country-by-country reporting principles under the BEPS process.
“The Cayman Islands also has had a world class verified ownership regime in place for more than 15 years whereas only eleven out of twenty-eight E.U. countries have a register at all. For all of those reasons, the OECD’s Global Forum in 2017 assessed our jurisdiction to be “largely compliant” with the international standard for transparency and exchange of information, the same rating given Canada and Australia”.
The Act has also caused a wider debate on the sovereignty of the Cayman Islands and its position as against the UK Government. Premier Alden McLaughlin has been quoted as saying that “the position of the Cayman Islands Government is the attempt by parliament to legislate for this territory … is unlawful and we do not accept it”.
There is not necessarily a reluctance to implement public beneficial ownership registers in the Cayman Islands. In all likelihood, after the initial trawl of the publicly available registers by the press for famous names and the consequential news stories, the registers being public is really of limited significance. The information is already available to the relevant agencies and authorities. The real concern is in being perhaps the first and only offshore jurisdictions to do so. The Cayman Islands has been an early adopter of all of the new regimes designed to enhance compliance and transparency but there is a concern that being used as a ‘guinea pig’ in this way could harm Cayman’s position as a premier offshore financial centre by making it less competitive with others. There is a long way to go between now and the 2020 deadline but, as Premier Mclaughlin has said: “When this becomes a global standard, Cayman is there”.
Read the Beneficial Ownership Legal Update.
This publication is for general guidance and is not intended to be a substitute for specific legal advice. Advice should be sought about specific circumstances.
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