Addressing world leaders at the Anti-Corruption Summit in London on Thursday, Premier Alden McLaughlin defended Cayman’s anti-money laundering and tax avoidance regimes and called for a seat at the table in developing a new global standard on sharing information about who owns companies and trusts.
In his talk to the conference, with representatives of more than 40 countries and jurisdictions present, the premier said the Cayman Islands would extend its new agreement with the United Kingdom to share beneficial ownership information with the countries participating in the summit.
Mr. McLaughlin described the existing treaties and bilateral agreements to share tax information with more than 120 countries, including U.S. FATCA, U.K. FATCA and the OECD’s Common Reporting Standard.
He said Cayman has “proven our commitment to the global fight against corruption.”
“Our credentials cannot be seriously challenged. I believe we have earned our seat at the table to be part of the development of any new global standards,” Mr. McLaughlin told the crowded room at Lancaster House. His remarks were streamed live over the Internet.
However, the premier said, any new agreement on a registry of who owns companies and trusts “must be a truly global standard.”
“There is little point in us continuing the rhetoric if we are to allow major countries to stay outside the global standard,” he said.
“It is time to put behind us shades of hypocrisy.”
The premier did not name the U.S. as one of those “major countries,” but the implication was clear to those in attendance, which included U.S. Secretary of State John Kerry.
Allan Bell, chief minister of the Isle of Man, specifically called out the United States for being complicit in corporate secrecy.
“It’s all very well and good to criticize small jurisdictions,” Mr. Bell said, but “the U.S. needs to do more.” The U.S., he said, “is the elephant in the room.”
Mr. Bell referred to President Barack Obama’s statement during the 2008 campaign when he pointed to a single building in the Cayman Islands with 12,000 companies registered to it. “One building in Delaware has 285,000 companies,” he said.
“We need actions, not fine words,” he said.
Cayman’s Financial Services Minister Wayne Panton, in a phone interview from London, echoed Mr. Bell’s comments at the summit. “That one building in Delaware alone has more companies than Cayman, Jersey, Isle of Man and Gibraltar put together,” he said.
Mr. Panton said that is “a clear indication of the scale of the problem and where the real problem is.”
There have been abuses of the financial systems in the U.K. and the overseas territories, he said, but those “pale in comparison to the problem that exists in the United States.”
Clarifying Cayman’s commitments
Mr. Panton explained in the interview that Cayman has not committed to an automatic exchange of ownership information.
“We have agreed to making a political commitment to this process,” he said of the talks ahead on how to develop a global standard for sharing beneficial ownership data and how to implement any future system.
Cayman’s delegation to London did not sign on to the communique from the summit and a new global initiative that commits in principle to automatic information exchange.
The summit communique calls on the Financial Action Task Force, the Organization for Economic Co-operation and Development and the Global Forum on Transparency and Exchange of Information for Tax Purposes to develop initial proposals on ways “to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information and its international exchange.”
For now, Minister Panton said, Cayman is committed to what it agreed to with the United Kingdom last month, which is a platform to more quickly and effectively share ownership information when requested by overseas law enforcement or tax authorities.
That platform will keep the data with financial services firms and give Cayman authorities free access to the information. Cayman agreed with the U.K. to have the system in place by next summer.
The agreement with the U.K., Mr. Panton said, will be extended to any of the 40-plus countries participating in Thursday’s summit if they request access.
Extending the agreement to other countries, the minister said, is “recognition that it is better for us to demonstrate that level of engagement.”
Mr. Panton explained that the current agreement, called an “exchange of notes,” would most likely be Cayman’s regime for sharing ownership data “for some time to come.”
He said a new global standard on sharing beneficial ownership information is “a long way down the road.”
There are many questions still to be asked and answered about what a new standard would look like, Mr. Panton said, and “this is all part of the development process.”
“We have to engage in the process,” he said, adding that Cayman should be involved in developing that global standard.
“If the world is moving towards a new standard,” the minister said, Cayman will follow that standard, and in the meantime “it serves our interest to be seated at the table.”
The biggest issue, Mr. Panton said in the interview, reflecting the views of many in attendance at the summit, “It has to be a global standard and it has to apply to everybody.
“Many G-20 countries do not have a system nearly as robust as Cayman,” Mr. Panton said, and those big international players will have to agree to the new standard if they want smaller jurisdictions like Cayman or the Isle of Man to adhere to any new agreements.
BVI not invited
Officials from the British Virgin Islands said they were not invited to Thursday’s summit. In a statement, BVI Premier D. Orlando Smith expressed similar concerns about new standards applying across the board.
Mr. Smith said in the statement, “We believe that achieving this goal requires further details and discussions about how it would apply in practice and be effectively implemented consistently and globally, together with time to assess its impact on the BVI economy in the short and longer term.
“We would expect to participate in discussions by international standard setters as the proposed standard is developed and we commit to implement the standard once it is agreed and adopted by all U.K. Overseas Territories, Crown Dependencies, G-20 and OECD Member States.”
This story has been amended from the original to reflect that the Cayman Islands did not sign the summit communique.