EDITORIAL – Public registers: A brief respite in an ongoing war

The U.K. Parliament passed an amendment to the Sanctions and Anti-Money Laundering Bill in the House of Commons Tuesday, which will require British Overseas Territories to adopt public beneficial ownership registries.

This week brought a welcome respite from some British lawmakers’ unrelenting attack on Cayman and other offshore financial centers. But make no mistake, this is only a lull in the storm.

There is no comfort to be taken in the United Kingdom government’s delay of parliamentary debate on legislation which would reinstate a 2020 deadline for the imposition of public beneficial ownership registries in Cayman and other British Overseas Territories, and would extend the same requirement to the Crown dependencies of Jersey, Guernsey and the Isle of Man.

If anything, this week’s events have only deepened the resolve of Conservative MP Andrew Mitchell and Labour MP Margaret Hodge and their supporters, who appear to have been personally offended by the delay. As the Compass reported, Ms. Hodge – without any apparent trace of irony – called it “a blatant, deliberate and arrogant snub of this Parliament.”

Clearly, months of efforts to illuminate the practical and philosophical flaws in her proposal have had no effect. She and her allies continue to be convinced they are on the side of the angels. Nothing could be further from the truth.

As they have repeatedly been advised by knowledgeable colleagues, such as U.K. Attorney General Geoffrey Cox, who has significant experience in this area, there is no benefit to be gained by forcing such radical and unprecedented transparency upon Britain’s offshore financial centers. There is no global standard that requires wholesale public disclosure of corporate vehicles’ beneficial owners – nor is there compelling evidence of a compelling public need for such unprecedented access to such information.

Cayman’s financial services regulations are among the world’s most scrutinized; they consistently meet or exceed international standards. Our safeguards and information-sharing agreements are robust.

Forcing Cayman and our British counterparts in the financial services industry so far out of accepted global practice could well destroy our competitive advantage, which hinges on our territory’s ability to provide an effective and cost-efficient tax-neutral platform for international capital flows.

Mr. Mitchell, Ms. Hodge and their allies consistently attempt to paint our jurisdictions as global “bad guys.” In fact, our carefully calibrated regulatory environment and financial services ecosystem help keep the global economy humming. With apparent ignorance of our central role in global commerce and a callous disregard for the stability of our economies, they are attempting to throw a spanner in the works.

Not only that, they are doing so in a way that categorically violates Cayman’s rights to govern our own domestic affairs. It is an unprecedented and offensive imposition one might rightly characterize, to use Ms. Hodge’s own words, as “a blatant, deliberate and arrogant snub.”

Simply put, achieving a proper and profitable regulatory balance is our business, in every sense of the word.

Unfortunately, it is unclear what, if anything, can be done to persuade Mr. Mitchell, Ms. Hodge and their supporters of these essential facts, or persuade them to see the error of their ways.

But until they do, Cayman and our sister jurisdictions will be forced to continue playing defense in a rigged game, as convenient scapegoats or cartoonish villains for foreign politicians who either do not – or defiantly will not – consider the facts.

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  1. What we need is a re-make of The Firm.
    Except this time when Tom Cruise goes into the local bank and tries to open an account he is given the KYC forms they now demand.
    Then he could try to open an offshore corporation and deal with more KYC paperwork.

    He could even perhaps stumble from bank to bank with his briefcase full of $100 bills as bank after bank refuses to take them.

    I know I’m making fun but we need to overcome that image that even now, in any crime movie involving illegal wire transfers the bank at the other end is always in the Cayman Islands.