Government has announced the start of a second public consultation period for the planned exchange of beneficial ownership information with foreign law enforcement and tax authorities through a centralized platform.
Based on an agreement with the U.K. government that was concluded in April, government proposes to establish a platform that centralizes access to information about the true owners of Cayman-registered companies. Knowing the owners and ultimate beneficiaries of corporate vehicles can be an important element in the fight against corruption and financial crime.
The proposed information exchange system requires several legal amendments.
An initial consultation period, which ended on Dec. 9, sought to identify any major areas of concern with the draft Companies (Amendment) Bill, 2017.
The second consultation phase follows the publication of a revised Companies (Amendment) Bill, 2017, and the Limited Liability Companies (Amendment) Bill, 2017.
If approved by the Legislative Assembly, the bills will provide the framework to develop the centralized platform by June 30, 2017.
Minister of Financial Services Wayne Panton encouraged all business owners to provide input into the three-week public consultation.
“The planned amendments facilitate an information exchange arrangement with the U.K. for beneficial ownership information. They are in line with the agreements made between the U.K. and all of its Overseas Territories and Crown Dependencies,” Mr. Panton said in a press statement.
He added that the platform will enhance Cayman’s already strong regime of exchanging this information with law, regulatory and tax authorities in the global fight against crime.
However, the minister emphasized, the changes are not an attempt “to introduce a public or central register of beneficial ownership information.”
“Currently, fewer than a dozen countries around the world have introduced or plan to introduce public registers,” Mr. Panton said. “Cayman is not one of those countries, and we will not do so until this is the accepted and implemented international standard.
“We do, however, recognize that there has been a strong push globally for greater transparency and information exchange, and that Cayman must act in order to protect our reputation as a leading international financial center.”
The U.K. pushed for greater beneficial ownership transparency since it chaired the summit of G-8 leaders in 2013. At the time, Cayman agreed to assess whether establishing central registers of the people who ultimately have beneficial ownership and control of companies would enhance domestic legal compliance and allow easier access to this information.
Cayman conducted a public consultation on beneficial ownership of registered companies in late 2013. It found that the strength of Cayman’s current regime, which collects, maintains and updates beneficial ownership information through licensed and regulated corporate service providers, was an appropriate and preferred system that complies with international standards.
To further enhance the existing system and speed up access to information, the Ministry of Financial Services, together with Cayman Finance, developed the concept of a centralized platform of beneficial ownership information.
In response to data security concerns, the platform ensures that the data remains decentralized.
Under the plans, Cayman service providers continue to be responsible for collecting and maintaining the data but would have to grant access to the information through the new platform.
The information will be accessible by the Department for Tax Cooperation of the Ministry for Financial Services, which accesses and exchanges the data with foreign authorities on request within 24 hours.
At a Joint Ministerial Council Meeting between U.K. and Overseas Territories government representatives in December 2015, Cayman and other offshore centers linked to the U.K. agreed they would implement centralized beneficial ownership registers or “similarly effective systems” like the centralized platform suggested by the Cayman Islands government.