Cayman and UK officials discuss beneficial ownership

Following an invitation from Premier Alden McLaughlin at the Joint Ministerial Council in London last December, senior representatives from the U.K.’s National Crime Agency and the Foreign and Commonwealth Office visited the Cayman Islands last week to discuss cooperation between both countries’ law enforcement agencies and Cayman’s progress in enhancing its beneficial ownership information regime.

Wayne Panton
Wayne Panton

Minister of Financial Services Wayne Panton said the meetings further familiarized U.K. officials with Cayman’s existing legislative and regulatory framework, and allowed the building of new relationships between Cayman and U.K. officials.

“It was excellent to hear the U.K.’s support for how Cayman’s government and industry work together in order to tackle global problems such as money laundering and corruption,” he said.

The U.K. delegation, which included the Director of the FCO’s Overseas Territories Directorate Peter Hayes; the National Crime Agency’s Head of Bribery, Corruption and Sanctions Andy Lewis; and Russell Phillips, the FCO’s senior policy adviser, Economic and Financial Services, met with the premier, Minister Panton and other government officials.

As part of the discussions, the Ministry updated the U.K. delegation on progress to enhance Cayman’s current beneficial ownership information regime. This process is being facilitated through a working group with representatives from government, Cayman Finance and other industry associations established by the Ministry in September 2015.

At the Joint Ministerial Council Meeting between U.K. and Overseas Territories government representatives in December 2015, Cayman and other U.K. territories agreed they would implement centralized beneficial ownership registers or “similarly effective systems,” but that access to these systems would not have to be public.

Minister Panton at the time announced that instead of a central register, government is exploring a centralized platform that would enable government officials to access and interrogate the beneficial ownership databases of all financial service providers in Cayman.

The system would be accessible from within the ministry’s Department of International Tax Cooperation and, contrary to a general registry, operate by reaching out to financial services companies and their systems rather than by having the firms submit information to a central location.

“We had an opportunity to explain, in more detail, the merits and potential mechanics of our proposed centralized platform, which would be locally accessed and non-public,” the minister said. “This would be an additional enhancement to our current, strong anti money-laundering regime and would be a similarly effective, viable alternative to the U.K.’s approach of a central register.”

Mr. Hayes of the FCO said, “We agreed at the [Joint Ministerial Council meeting] that addressing this issue would be given the highest priority. We very much welcome the timely and constructive discussions.”

Mr. Panton said in December that in previous meetings the National Crime Agency and the Serious Fraud Office had given no indication that there was a problem with Cayman’s system in the approximately 10 investigations during the past two years where requests were made to Cayman’s Financial Intelligence Unit and other authorities.

However, the U.K. government demanded to have “someone on the ground in Cayman” with direct access to beneficial ownership information.

This demand was rejected, but the Cayman government invited U.K. law enforcement agencies for talks to the Cayman Islands and said it was prepared to make concessions.

For instance, the minister said, government is contemplating the possibility of a dedicated person as an exclusive resource or the prioritization of U.K. law enforcement requests to minimize response times.

Mr. Panton at the time also announced changes to the eligible introducer regime in Cayman’s Anti-Money Laundering regulations. In cases where service providers in Cayman rely on the due diligence of professional intermediaries in third countries to confirm the identity of new clients, these changes will require that the beneficial ownership records will have to be brought to Cayman much faster than the currently prescribed period of three months.

Premier McLaughlin commented, “Government continues to maintain a position of zero tolerance on illicit activity and financial crime.

“Our commitment to the U.K., and to other foreign authorities, is to collaborate and cooperate to ensure that those responsible for illicit activity can be prosecuted in the relevant jurisdictions.”