The U.K. Foreign Office Minister James Duddridge will press the Overseas Territories on their commitment to efficiently provide information on beneficial owners of companies and other entities at the Joint Ministerial Council Meeting at the end of this month.
In response to a parliamentary question by Labour MP and former chair of the Public Accounts Committee Margaret Hodge about what the U.K. government’s objectives are for the council meeting “in respect of central registries of beneficial ownership in the Overseas Territories,” the minister said he had written, together with the Financial Secretary to the Treasury, to the premiers of the British Virgin Islands, the Cayman Islands and Bermuda in March.
The letters asked the Overseas Territories to provide detailed plans and a timetable for the implementation of central registers of company beneficial ownership, or similarly effective systems, by the November Joint Ministerial Council.
“We set out that any system should meet the following criteria: a) U.K. law enforcement and tax authorities must be able to access company beneficial ownership information without restriction, subject to relevant safeguards; b) these competent authorities should be able to quickly identify all companies that a particular beneficial owner has a stake in without needing to submit multiple and repeated requests; and c) companies or their beneficial owners must not be alerted to the fact that an investigation is under way,” the Overseas Territories minister explained.
In early 2014, a public consultation in the Cayman Islands rejected the implementation of a centralized registry in Cayman. About 81 percent of the respondents, including local and international companies, individuals and nongovernmental organizations, said they oppose the idea.
The majority of respondents argued that the existing regime, reliant on corporate service providers, was more beneficial than a self-reporting system, which would impose additional costs and create both security and privacy risks.
Bermuda and the British Virgin Islands also rejected the idea, echoing Cayman in stating that implementing a public register ahead of competitors such as the U.S. or Canada would put them at a competitive disadvantage.
The Cayman Islands government subsequently said that Cayman’s existing regime adheres to the G-20’s High-Level Principles on Beneficial Ownership Transparency and rejected a centralized register of information on the beneficial owners of shell companies, saying the changes would go too far to be reasonable.
Corporate service providers in Cayman are already required to collect this type of ownership information and make it available to law enforcement, tax and regulatory authorities under international tax information exchange agreements.
Cayman Finance supported government’s position that no change is necessary and noted that the existing regime also fulfils the FATF recommendations.
In August, Premier Alden McLaughlin said it appeared that the U.K. had “moved its position” on demands for a central ownership registry and would accept “another effective mechanism” for releasing that information, after Acting U.K. Overseas Territories Minister Grant Shapps, who had temporarily replaced Minister Duddridge, said there was “more than one way to skin a cat.”
“My objective is to press the premiers to repeat their commitments to uphold international standards of transparency to ensure the highest degree of effectiveness including on holding beneficial ownership information. I will be discussing their proposals and timetable for doing so,” Minister Duddridge said.
It is not clear if the U.K. is satisfied with the existing system in Cayman, especially after a number of legal challenges to the provision of beneficial ownership information under tax information exchange agreements were mounted.
The U.K. has implemented its own central register this year. From January 2016, U.K.-registered companies are required to identify people with significant control, defined as individuals who control 25 percent of a company’s shares or voting rights.