Premier Alden McLaughlin struck the right tone in his recent statement on the United Kingdom’s governance of its overseas territories, demonstrating both fortitude and diplomacy as he addressed conflicts on a number of issues that are exceptionally sensitive politically in the Cayman Islands.
The UK Foreign Affairs Committee of the House of Commons has published the UK government’s official response to the committee’s February report calling on government to intervene if British Overseas Territories do not legalise same-sex marriage, abolish rules on ‘belongership’ (i.e. ‘Caymanian status’) or accelerate the adoption of public beneficial ownership registers.
The Cayman Islands premier described the UK government’s response as “a clear-headed restatement of the fundamental principle of self-government that underpins the relationship between Cayman and the UK”.
On the issue of beneficial ownership, the premier said, “While we in the Cayman Islands and others in the OTs will continue to resist the UK’s attempts to impose public registers upon us in the absence of a global standard, it is positive that the UK Government has pushed back on any suggestion that the current timetable should be accelerated.
“I would like to thank the Governor for the assistance he has provided in representing the views of Cayman back to the UK Government and to ensure that those making the decisions were aware of the grave concern we felt about the Committee’s recommendations.”
To underscore the premier’s point on the timeline for public registers, we suggest that before the UK attempts to mandate a beneficial ownership regime in Cayman and the other overseas territories, it should get its own ‘house’ in order – namely Companies House, which is the UK’s registrar of companies.
The UK has long claimed that its public register is the “gold standard” for company information. In a way, that’s true. As opposed to the current system in Cayman, where company information is verified by financial services providers but is not publicly available, the UK Companies House information is publicly available but not verified.
According to a report released earlier this month by international NGO Global Witness, about 8.1% of Companies House entities declared they had no beneficial owner. Hundreds of companies were part of a circular ownership structure and thousands were controlled by a beneficial owner who controlled more than 100 companies. Thousands more named a foreign company as its beneficial owner, and more than 2,000 company owners are disqualified directors.
Perhaps most concerning is that nearly 10,000 people have complained that their legitimate details on Companies House had been stolen by fraudsters.
“The fact that critical information on company ownership is accepted at face value, without even the requirement for basic ID checks, hugely undermines the fight against corruption and money laundering. While the UK is a world leader in the way it makes information available to the public on its companies, the register will only prove its worth if people can trust the information and criminals are actually deterred from using UK companies in the first place,” said Nienke Palstra, anti-corruption campaigner at Global Witness.
In light of such concerns, UK officials unveiled a package of reforms to Companies House aimed at increasing the accuracy of the information while protecting entrepreneurs from criminal activity.
It is imperative that the UK addresses critical shortcomings in the public register system it wants Cayman to emulate. In the meantime, we stand with the premier and other leaders as they continue to engage the UK on this and other matters of “grave concern” through principled, respectful and constructive conversations.