Cayman Finance supports beneficial ownership ‘enhancement’

Cayman Finance said it supports the agreement concluded between the Cayman Islands government and the United Kingdom over improvements to the way beneficial ownership information is collected and exchanged with foreign tax authorities and law enforcement.

The deal announced by Premier Alden McLaughlin on Monday means that the U.K. recognizes plans by the government to implement a centralized technological platform as an effective alternative to a centralized register collecting information on the true owners of Cayman-based companies and other entities.

It also means that beneficial ownership information will not be accessible by the wider public, but only by U.K. tax authorities and law enforcement after making a request to Cayman’s Tax Information Authority.

“We are pleased the U.K. government has recognized that our licensed corporate services provider verified beneficial ownership system is a world-class system that provides for due diligence know-your-customer checks that are critical to proper law enforcement authorities conducting legitimate investigations and is superior to other proposed systems,” said Jude Scott, CEO of Cayman Finance.

The existing system already enables U.K. law enforcement agencies to request and obtain beneficial ownership information through bilateral tax information exchange and mutual legal assistance agreements but the planned changes will speed up the information exchange.

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This will be done in a way that is suitable for the Cayman Islands, which “is not a public register,” Mr. Scott said.

Under the “enhancements” to the system, beneficial ownership information will continue to be maintained and managed by corporate service providers and made accessible through a central technical platform.

Foreign law enforcement and tax agencies will be able to ask Cayman authorities to gather the information from the system, without the beneficial owners being aware that their information is being collected from the corporate service provider databases.

To meet demands by U.K. law enforcement agencies, the platform will identify all companies that a particular beneficial owner has a stake in without the need for multiple requests.

The technical details have not been finalized and the system does not yet exist. Government has until June 2017 to implement a functioning centralized beneficial ownership platform.

Law firm Maples and Calder said in a client notice, while details are not yet known, it anticipates that the Cayman Islands requirements will be similar to those recently adopted in the U.K. Under the U.K. regime, companies have to maintain a register of persons with significant control, defined as at least 25 percent ownership of a company or control of 25 percent of a company’s voting rights. Mr. Scott said the agreement was a significant step in recognizing that Cayman is not a secrecy jurisdiction but a premier global financial hub that efficiently connects law abiding users and providers of capital and financing around the world.

“The terms of this agreement are essentially business as usual for Cayman. The agreement offers a path forward that builds on the work Cayman has been doing for decades, while continuing to support the important economic role we play in the global economy,” Mr. Scott said.

While the agreement with the U.K. is a milestone, it will not be the end of the road in the fight against global financial crime, he noted.

Most British overseas territories, with the exception of Guernsey and Anguilla, have so far agreed to disclose beneficial ownership information.

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