EDITORIAL – ‘Reign-y’ days: UK restraint vs. direct rule

There is no more dangerous beast in the jungle than a tiger … or a British lion … that has tasted blood.

The U.K. Parliament recently usurped powers held by colonial governments to direct their own domestic affairs, signaling the British government’s intent to force the adoption of public beneficial ownership registers by the Cayman Islands and other overseas territories by the end of 2020.

That date is perhaps something of a false finish line. It can be safely assumed that businesses impacted by the impending order in council will be making their requisite moves well in advance of that deadline. (In fact, many of these businesses may already be examining their options in other jurisdictions.)

And it would be dangerously naïve to conclude that Parliament’s intervention into territorial self-governance will be limited to company registers. British lawmakers have fired a first shot, but there may be more than one bullet in that gun.

Even if the outward-facing conflict between the U.K. government and overseas territories cools down, calms down or slips into an apparent state of hibernation over the next 2.5 years, rest assured that behind closed doors and in conference rooms on both sides of the Atlantic, a prolonged flurry of activity will be occurring. Amid all of those discussions, conversations, information-sharing sessions, rounds of bargaining, lobbying efforts, presentations and deal signings, it is vital for Cayman that our best group of financial services practitioners is advocating on our country’s behalf.

It is unfortunate our Mother Country appears to be operating in parallel with foreign powers in the European Union, and by proxy groups such as the Organisation for Economic Co-operation and Development (OECD) and Financial Action Task Force, that do not bother to disguise their objectives to cripple the economies of small offshore entities such as Cayman. However, with its recent parliamentary maneuvers, the U.K. has committed a breach of the trust that formerly existed between the colonizer and the colonies. Once such bonds have been broken, they are incredibly difficult to repair. When trust has been breached, even in a domestic household, it by definition means the wounded party can no longer trust the offender. The very foundation of the relationship has been rent asunder.

While the ramifications of the U.K.’s action on company registers are substantial, there seems to be little restraining Parliament from voting to issue orders in council on any number of matters that could be of even more consequence to our society and economy. (This is, of course, in the absence of any parliamentary representation of Cayman or other territories in London.)

On subjects where there is a significant gap between Cayman’s approach and the U.K.’s, the specter of direct rule is present – including, potentially, on issues related to the environment, healthcare, immigration, labor, gay marriage, and, most ominously, our system of taxation.

As Premier Alden McLaughlin said, “If the U.K. parliament comes to believe they can legislate for the territories any time they disagree … it is a threat to our very existence.”

1 COMMENT

  1. I saw a funny cartoon a few years ago.

    A lady is at a department store complaints office. She is told, “OK madam. We are giving you your money back. Firing the person who served you and demoting his manager. Does that satisfy you?”

    The fact is that WHATEVER we do to satisfy the EU they will only be happy with the complete DESTRUCTION of our financial services industry. Ideally they would like us bought into line with their tax policies of Income Tax, Capital Gains Tax, Corporation Tax etc.