A parent can be a child’s biggest fan, or fiercest critic … Often both. So it’s nice to receive positive affirmation, on occasion, from people “outside the family” who are likely to be less partial. The relationship between the Cayman Islands and our dear old Mother England is no different. Some of the most stinging critiques of Cayman’s financial services sector originate from lawmakers in London.
For example, while speaking to the topic of the ongoing FIFA bribery scandal, prominent Labour MP John Mann took a nasty swipe at British Overseas Territories, saying, according to The Observer: “The problem is that the Serious Fraud Office here can’t investigate these tax havens, and that anomaly needs rectifying. They are centers for money laundering in a very big way …. They are becoming a serious problem for the world.”
From a policy perspective, in late 2013, British Prime Minister David Cameron announced plans to create a publicly accessible central registry of information on beneficial ownership of companies in the U.K., and he called on Crown Dependencies to follow suit.
Earlier this year, then-Leader of the Opposition Ed Miliband promised, if his party were to come to power, that Mr. Cameron’s “request” would be converted to a “demand” – and U.K. territories would have six months to publish those central registers.
Mr. Miliband’s hard-line stance on “tax havens” evidently didn’t resonate with U.K. voters, at least not enough to prevent the May 7 general election bloodbath that resulted in an outright majority in Parliament for Mr. Cameron’s Conservative Party, and the resignation of Mr. Miliband as leader of the Labour Party.
So for the time being, the status quo on beneficial ownership information remains as is: Cayman will continue to make information on beneficial ownership available upon request – in adherence to current international standards on accountability and transparency, but will not be pushed into implementing new regulations ahead of our competitors, particularly the world’s largest nations. Meanwhile, Cayman’s government has announced plans to strengthen our current information-sharing system and to speed up the process of obtaining information on companies for foreign tax authorities and law enforcement agencies.
Cayman’s compliance and cooperation has not gone unnoticed on this side of the Atlantic. Recently, New York County District Attorney Cyrus Vance (whose jurisdiction is mainly the borough of Manhattan) told U.S. lawmakers that Cayman – due to our beneficial ownership regime – is better positioned than the U.S. to police terrorism financing.
Mr. Vance said, “On a near daily basis, we encounter a company or network of companies involved in suspicious activity, but we are unable to glean who is actually controlling and benefiting from those entities, and from their illicit activity. In other words, we can’t identify the criminal.
“This is not because the entities are incorporated in an offshore tax haven like the Cayman Islands. That country actually collects beneficial ownership information. Often, that entity is incorporated in the United States – and it’s incorporated in the U.S. precisely because we don’t collect beneficial owner information. In this important way, the prosecutor sitting in the Cayman Islands is better positioned to root out terrorism finance in her own markets than I am in ours.”
Mr. Vance and his predecessor have long backed federal legislation to ensure that law enforcement officials, with valid cause, would be able to obtain beneficial ownership information on U.S. companies – in essence, bringing the U.S. up to Caymanian standards … a standard that, for the record, many other major jurisdictions currently fail to meet – including, notably, the City of London.