Following an industry consultation, the Ministry of Financial Services has selected a type of beneficial ownership platform that it says is “highly secure” but “less convenient” for the financial service providers.
The platform is part of an agreement with the British government to provide U.K. law enforcement and tax authorities with faster access to information about the true owners of Cayman companies and other entities during criminal investigations.
The ministry opted for a so-called “offline air-gapped platform,” which will not be connected to any of the financial institutions in Cayman. Instead, each financial services provider will maintain its own beneficial ownership register and once a month upload an extract of this data to an encrypted flash drive, or similar electronic medium, which has to be physically transported to the Government Administration Building. There, the agent of the reporting entity will log into a secure beneficial ownership data transfer terminal and use dedicated software to upload the encrypted file. Within the platform, data from each reporting company will be held in separate encrypted containers.
This model, advocated and supported by Cayman Finance, is not susceptible to phishing or other types of remote hacking attacks, and safer in terms of data loss, leaks or human error than a locally hosted or cloud-based platform, the ministry said in a presentation document.
Each service provider will employ a unique encryption key for their data. The search platform will receive only a copy of each reporting entity’s beneficial ownership data. This information includes the names, addresses, dates of birth, passports or other identification documents, as well as the dates when each individual became or ceased to be a beneficial owner.
“The data protection and access is to be treated as if the data were maintained in the offices of the service providers, and can only be accessed or queried for properly validated requests,” the ministry said in the document.
The search platform will not be accessible from any other government or nongovernment system. U.K. authorities will have to send an information request to the RCIPS Financial Crime Unit. To prevent wholesale requests for data, so-called “fishing expeditions,” the Financial Crime Unit then must verify that the request is part of an ongoing investigation and that the alleged offense is also a criminal offense under Cayman Islands law.
If the request meets all the necessary requirements, an “authorized vetted investigator” from the Financial Crime Unit will conduct the search of the registry and report the data to the U.K. authority.
The delivery of the software system is scheduled for June 30. In the meantime, government will provide service providers with guidance notes and file format specifications.