Cayman weighs whether to make financial entity register public
The extended public consultation on proposals from the U.K. seeking to make public a list of individuals or companies that benefit from financial entities’ registration in Cayman draws to a close this week.
So-called “beneficial ownership” reporting requirements have existed in the Cayman Islands for more than a decade. Corporate service providers and registration agents have to collect and maintain those records. But the information is currently only accessible via a court process that can be lengthy and expensive.
U.K. Prime Minister David Cameron said last year that it was his intention to make such a list public in Britain, and the Mother Country has “suggested” that its territories, including Cayman, follow suit. Overseas Territories Minister Mark Simmonds said during a visit to the Cayman Islands last year that such a move would ultimately be a local decision.
Friday marks the deadline for anyone who wishes to share their thoughts on the United Kingdom beneficial ownership plans or on how Cayman currently maintains information such as who owns the companies or entities and if that information is readily available.
“We’ve had responses from persons locally and internationally, representing businesses, the financial services industry, individuals and non-government organizations,” said Financial Services Minister Wayne Panton. “This subject is important to all persons in Cayman.”
The subject of beneficial ownership took up a large portion of Premier Alden McLaughlin’s recent appearance on the BBC television program “HARDtalk,” when it appeared the premier already had his own ideas on how Cayman would respond to the U.K.’s call for a public registry.
Mr. McLaughlin said the Cayman Islands has “no difficulty” complying with international financial reporting standards, even if those standards require the Cayman Islands to make public its register of beneficial ownership of companies and investment funds.
“As the premier of the Cayman Islands, I have no difficulty, and my government has absolutely no difficulty, in complying with what are international standards,” Mr. McLaughlin told “HARDtalk” host Stephen Sackur. “If the international standards are that there ought to be a public registry for these matters, the Cayman Islands is more than willing to comply.”
Mr. Sackur responded by questioning Mr. McLaughlin further regarding the effect of such a stance.
“You’re saying that you won’t be an early mover,” Mr. Sackur said. “Are you really worried that you’re about to lose the essence of what has made the Caymans successful as a financial center?”
Premier McLaughlin said he was worried about nothing of the sort, despite statements from former Cayman Islands Monetary Authority Chairman Tim Ridley that indicated a public registry of beneficial ownership would make Cayman less competitive with other jurisdictions.
“As we have become more transparent … our business has improved,” Mr. McLaughlin said. “Legitimate business wants to be in jurisdictions that are well regulated and transparent.”
Mr. Sackur pressed Mr. McLaughlin during the program about whether Cayman would follow Mr. Cameron’s direction.
“So you’re now committing, are you, on this program, to absolute revelation of all these so-called beneficial owners of assets in Cayman?” Mr. Sackur asked. “So, however complicated the discretionary trusts or the investment vehicles that we see in your territory, from now on you are going to ensure the beneficial owners, the people who really own those assets, are identified?”
Mr. McLaughlin replied: “Mr. Sackur … we have had legislation in place requiring that records of beneficial ownership with respect to all the corporate entities in the Cayman Islands is kept for 10 years.”
“Yes, but is it published?” Mr. Sackur asked.
“I don’t know of any country in the world where that’s possible,” Mr. McLaughlin said.
“It’s precisely what David Cameron is demanding now,” the “HARDtalk” host replied. “He says, ‘Look, we’re moving in that direction in the U.K., we are going to identify the beneficial owners of discretionary trusts, the Cayman Islands must do the same.’ Will you?”
“Our house is in significantly better order than the U.K.’s with respect to beneficial ownership,” Mr. McLaughlin said. “We’ve had the legislation in place requiring that [beneficial ownership] records be kept for 10 years, the City of London cannot say that. “We are in dialogue with the U.K. about the move to a public registry,” the premier added.