The Cayman Islands will join a new United Kingdom-led initiative on developing a global standard for sharing information on ownership of companies and trusts, the Ministry of Financial Services announced Wednesday.
As a delegation from Cayman, including the premier and the financial services minister, prepared to attend Thursday’s Anti-Corruption Summit in London, the ministry released a statement early Wednesday pledging to join in developing a “global standard” for sharing information on who owns companies and trusts that will likely involve automatic information exchanges with other jurisdictions.
Ahead of Thursday’s summit, Financial Services Minister Wayne Panton, in an interview to the Financial Times, argued against the U.K.’s proposal for a central register of company ownership information. He said the register is flawed because it relies on companies to self-report the information.
Mr. Panton told the newspaper, “The suggestion that going to a central public registry with unverified information is a better approach is frankly very disappointing.”
The ministry statement says that Premier Alden McLaughlin committed to repealing the Confidential Relationships (Preservation) Law, “which often has been misrepresented as Cayman’s ‘secrecy law’” by September. The legislation will be replaced by a new Confidential Information Disclosure Law that will “better clarify the mechanisms through which confidential information may be shared with appropriate authorities,” the statement notes.
The legislative changes will also include new data protection measures “on par with what is in place in the European Union.”
Thursday’s Anti-Corruption Summit, hosted by U.K. Prime Minister David Cameron, brings together leaders from more than 40 countries to discuss international cooperation and using new technologies to combat corruption. Part of that discussion is how people use trusts and companies to hide ill-gotten gains.
Mr. McLaughlin said Cayman already has a number of laws and procedures to collaborate with other countries and “promote global tax compliance.”
He said in the Wednesday morning statement, “For many years Cayman has had in place a strong anti-corruption framework, as evidenced by the extension in 2010 of the OECD Anti-Bribery Convention; and the expected extension of the U.N. Convention against Corruption, for which Cayman was favourably assessed in 2014.”
Mr. Panton said the new initiatives build on Cayman’s existing systems to fight money laundering and tax evasion. Cayman has tax exchange agreements with more than 120 countries through bilateral agreements and treaties, and complies with U.S. and U.K. FATCA and the OECD’s Common Reporting Standard.
“We recognise the need for closer collaboration, in line with international standards. We support current initiatives in this regard, and will do our part to promote transparency in order to encourage global tax compliance,” Mr. Panton said in the written statement.
The Cayman Islands last month signed an agreement with the U.K. to make beneficial ownership information available based on requests from overseas law enforcement and tax authorities. The U.K. also signed similar agreements in April with its other overseas territories, including Jersey, Isle of Man, Guernsey and the British Virgin Islands.
Cayman’s agreement, announced in an April press conference by the premier, would create a “centralized platform” that gives Cayman authorities the ability to access beneficial ownership data held with financial services firms, rather than creating a central register as proposed by the U.K.
Panton argues against central register
In his Financial Times interview, Mr. Panton made the argument against a central register, calling the idea of a public register, which relies on companies self-reporting, “weak policymaking.”
“The small element of abusers of the international financial system … are the very people who are not going to be honest with voluntary disclosures,” he told the newspaper.
Ruling out putting the beneficial ownership information in a public database, Mr. Panton said making the information public would chase away some companies to “a jurisdiction that respects privacy more.”
“We believe there is a very clear distinction between secrecy and privacy,” he told the newspaper.