Registry enforces beneficial ownership regime with fines

The Ministry of Financial Services has warned that the Registrar of Companies will impose penalties and issue warning letters to companies that fail to submit accurate information on their ultimate beneficial owners.

As of 1 Feb. 2021, the registrar had levied 19 administrative fines – at a rate of $5,000 per fine – against companies for noncompliance with beneficial ownership requirements, the ministry said in a press release.

Head of Compliance Paul Inniss said warning letters were sent to the companies prior to the fines being levied. If the fines are not paid or the companies involved continue not  complying, the registrar will remove them from the companies register.

“There are consequences to not maintaining current [beneficial ownership] details with [the Registrar of Companies], and these consequences are in line with Financial Action Task Force standards to fight money laundering, terrorist financing, and the financing of weapons of mass destruction,” Inniss said.

The Cayman Islands is awaiting the result of a review of its anti-money laundering regime by the Financial Action Task Force later this month.

By enforcing its local legal requirement for companies to maintain current beneficial ownership details, Cayman can provide better information to international tax and law enforcement agencies for their investigations, Inniss said. “The Cayman Islands also receives information from international agencies for our own investigations, so we understand how valuable this information can be in fighting financial crime locally and globally.”

He noted that service providers can also be fined in relation to beneficial ownership noncompliance, if they do not fulfil their legal responsibilities to file restriction notices.

Restriction notices curb the ability of companies to conduct certain business activities if they have not provided beneficial ownership information.

As of 1 Feb., the registrar had therefore issued warning letters to 18 service providers that had not filed restriction notices. The letters direct the companies to file the required information with their service provider, by a stated deadline, in compliance with the Companies Act (2021 Revision).

Failure to comply with the warnings can result in companies being liable for the administrative fines, the ministry said.

As the competent authority for beneficial ownership in the Cayman Islands, the registrar has the legal power to enforce compliance.

The registrar sits within General Registry, and the General Registry is under the remit of the Ministry of Financial Services.

The ministry’s Chief Officer Dax Basdeo said that enforcing international standards is part of maintaining an effective regime.

“Cayman is committed to doing its part to fight global criminal activity, and having an effective [beneficial ownership] regime is a core component of this commitment,” Basdeo said.

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