Cayman Finance welcomes rejection of central register

Centralized register of beneficial owners would go too far, CEO says

Cayman Finance has supported government’s rejection of a centralized register of information on the beneficial owners of shell companies, saying the changes would go too far to be reasonable.  

Cayman’s existing regime already requires corporate service providers to collect this type of ownership information and make it available to law enforcement, tax and regulatory authorities, government said last week. 

The implementation of a centralized, public register has been advocated by the U.K. government and the European Union to increase transparency around the true owners of shell companies and trusts. 

Jude Scott, who was recently appointed CEO of Cayman Finance, said the organization, which represents Cayman’s financial services industry, agrees with government’s position that no change is necessary to Cayman’s already effective beneficial ownership system.  

“Cayman’s system has been in place for years and already fulfills the FATF recommendations on how a country can comply with the global availability of information standard,” he said. 

“The changes that were being insisted upon were unreasonable and went far beyond globally accepted practices which would only serve to create unfair and unnecessary disadvantage and damage for Cayman’s financial services industry.” 

The U.K. used its presidency of the G8 at Lough Erne Summit in June 2013 to focus on combating cross-border tax evasion and other financial crimes. At the summit, the G8 agreed to a set of principles to increase the level of ownership of companies. In November 2014, the Group of 20 leading nations adopted a set of principles that aim to make it easier to determine the beneficial owners of shell companies. 

Government said in a statement that Cayman’s existing regime for corporate service providers adheres to the G20’s High-Level Principles on Beneficial Ownership Transparency. In early 2014, a public consultation rejected the implementation of a centralized registry in Cayman, with 81 percent of the respondents, including local and international companies, individuals and nongovernmental organizations, stating they oppose the idea. 

The majority of respondents argued that the existing regime, reliant on corporate service providers, was more beneficial than a self-reporting system, which would impose additional costs and create both security and privacy risks.  

The U.K. has included plans for a centralized beneficial ownership registry in a Small Business, Enterprise and Employment Bill that is currently going through the parliamentary process. In December, the European Union Parliament and the EU Council of Ministers agreed to amendments to the fourth anti-money laundering directive that, if implemented, will create interconnected, centralized and public registers across Europe. 

Mr. Scott said government and the financial services industry recognize Cayman’s important role in the global financial market.  

Cayman has consistently evolved and maintained its practices to meet robust, balanced and globally implemented standards for regulation and cross-border cooperation that apply equally to G20 countries and all international financial centers, he added. 

Jude-Scott

Mr. Scott
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