Written by Gonzalo Jalles
British Prime Minister Cameron eloquently announced the end of beneficial ownership secrecy, and has been pushing for a public central registry of beneficial ownership which seems to be getting traction in the legislative process in the UK.
However, the proposed law has received considerable criticism from jurisdictions like the Cayman Islands. Cayman is being asked to consider implementing this system while our existing regime is not only stronger than what the UK has now, but in most aspects even better than what has been proposed.
Lately, as quoted in an article in the Financial Times, the criticism seems to be spreading. Grant Thornton said the new rules could be circumvented, “Criminals who use front companies are unlikely to comply with the new law, at least not properly, and detection may prove difficult”. The UK Institute of Directors said “the small minority of company owners who wish to conceal their influence over a company are likely to continue to be able to do so”.
According to Mr. Cameron “the more eyes that look at this information, the more accurate it will be”. However, the system of self-disclosure and making the information public is unlikely to be consistent with current official standards.
The FATF requirements state: “Countries should ensure that there is adequate, accurate and timely information on the beneficial ownership and control of legal persons that can be obtained or accessed in a timely fashion by competent authorities.” Note that there is no requirement for making the information public, the requirement is for it to be accessible to competent authorities. There is a requirement for the information to be accurate, so the question is: does a system of public self-disclosure without independent review ensure the accuracy of the information?
Cayman’s response should be: we have a much better system for that, it may not be cost efficient for the UK, but it certainly does a better job at ensuring the accuracy of the information than Mr. Cameron’s proposal.