Ministry: Legislative changes concerning beneficial ownership and privacy coming

Following the release of the “Panama Papers,” the Cayman Islands Ministry of Financial Services has issued a statement saying “the disclosure has further amplified the need for global cooperation,” but it would need to be in accordance with accepted international standards.

Wayne Panton
Minister Wayne Panton

The ministry said the government is currently developing two programs to more effectively cooperate globally with law enforcement and tax authorities in the fight against serious crime.

A series of changes, which will begin to be enacted in June this year, aims to further strengthen Cayman’s legislative and regulatory framework. This enhancement program will include amendments to key pieces of legislation, such beneficial ownership provisions; the elimination of bearer shares, which have been immobilized in Cayman since the year 2001; and amendments to the Confidential Relationships and Preservation Law.

The changes were recommended by a working group of representatives from a cross section of Cayman’s financial services industry led by the Ministry of Financial Services which had examined existing legislation since the summer 2015, said the Minister of Financial Services Wayne Panton.

“These amendments are in keeping with our action plan, which was publicised in June 2013 immediately following the U.K.’s chairing of the G-8 Summit, to prevent the misuse of companies and legal arrangements,” he said in the statement.

The legislative changes also build on Cayman’s existing mechanisms for sharing information for tax purposes, including the sharing of beneficial ownership information. These mechanisms, such as tax information exchange agreements; the Multilateral Convention on Mutual Administrative Assistance in Tax Matters; the double tax arrangement with the U.K., allow for the sharing of information with more than 90 jurisdictions, the ministry noted.

In addition, Cayman automatically shares information with the U.S. and U.K., for FATCA purposes; and is committed to the OECD’s Common Reporting Standard along with 95 other jurisdictions, including the majority of G-20 countries.

The second program is based on a U.K. request for a custom information exchange mechanism between Cayman and the U.K.

“Beneficial ownership is a major initiative for the U.K. Prime Minister, and we support him in the efforts to combat serious crime,” Minister Panton said.

He pointed to the visit of a U.K. delegation to Cayman in February to discuss Cayman’s system of sharing beneficial ownership information with law enforcement.

This led to Cayman and the U.K. working together on a joint commitment, which outlines the agreement between the two governments regarding the enhanced sharing of beneficial ownership information.

“We are pleased that the proposed joint commitment recognizes that Cayman’s proposed enhancements to our current beneficial ownership regime represent a viable alternative to the U.K.’s approach of a central register. This affirms our long-standing adherence to implementing international standards in a way that is effective and appropriate for our jurisdiction,” Minister Panton said.

He said the financial industry support of government in this area demonstrates the willingness to comply with globally accepted and practiced regulatory standards.

“With our decades of engagement with international initiatives, and our current program for further enhancements, Cayman clearly is collaborating and cooperating with all countries that adhere to global standards for the sharing of information,” he said.