Transparency law could open up Cayman company ownership information

Companies operating in the Cayman Islands could soon be required to make details of their ‘beneficial ownership’ public under draft legislation published this week.

The development coincides with a visit from the global Financial Action Task Force inspection team, which is on island as part of a review process that could see Cayman removed from its anti-money laundering ‘grey list’ of non compliant countries.

The Beneficial Ownership Transparency Bill, published Wednesday, is not a mandated requirement for Cayman to be removed from the list, but is considered another key piece of legislation in an ongoing effort to improve the island’s ability to investigate and prosecute financial crime.

The task force – which sets international benchmarks for combatting money laundering and terrorism financing – has already indicated that Cayman is likely to be removed from the grey list this year following a massive national effort to add resources and bolster legislation.

A final decision is expected at the next plenary session later this year.

Financial Services Minister André Ebanks said the latest bill, published Wednesday, will be brought to Parliament this year.

He said it would enhance Cayman’s position as a “trusted global financial centre of excellence dedicated to combating financial crimes” and help with future rounds of FATF evaluations.

The bill largely consolidates existing laws requiring Cayman registered businesses to make their ownership information available to investigating authorities.

But it also includes a clause that would enable Cabinet to make regulations to provide full public access to specified beneficial ownership information – a more controversial provision because of its potential impacts on privacy.

This is in line with a commitment made by the Cayman Islands government in 2019 concerning the introduction of a public beneficial ownership register, which the UK had insisted its overseas territories introduce.

However, public access can only be implemented if Cabinet regulations are affirmed by a resolution of Parliament.

According to government, no such regulations would be commenced until the implications of a landmark ruling form the European Court of Justice have been clarified in discussions with the UK and British Overseas Territories.

The ruling struck down public beneficial ownership registries in the European Union on the basis of interference with privacy and data protection rights.

The clause will therefore provide a safeguard to allow for a full legal analysis and for the Cayman Islands government to consult with the UK government, before any public access to Cayman’s beneficial ownership register can be granted.

Ebanks said, “The introduction of the Beneficial Ownership Transparency Bill, 2023, demonstrates the Cayman Islands’ commitment to upholding global standards, as they evolve, in the fight against money laundering and terrorist financing.

“By enhancing transparency and ensuring access to accurate information, the Cayman Islands solidifies its position as a trusted global financial centre of excellence dedicated to combating financial crimes.”

He said the bill would also “proactively assist the Cayman Islands” in preparation for the next FATF evaluation process in 2025. The task force intends to continue assessing global compliance as money laundering and terrorism financing standards evolve.

Beneficial ownership refers to individuals who ultimately own or control an entity. The bill consolidates the beneficial ownership rules in the Companies Act, Limited Liability Companies Act, and Limited Liability Partnership Act into a single law. This consolidation streamlines the beneficial ownership framework, bringing ease of use to industry participants and public authorities, government said,

Cayman Finance CEO Steve McIntosh praised government for a “measured approach”.

He said, “As one of the first jurisdictions to have already implemented a register of beneficial owners accessible to tax and law enforcement authorities in the United Kingdom, the Cayman Islands is at the leading edge of the global fight against money laundering, terrorist financing and tax evasion.”