When the Legislative Assembly convenes next month, lawmakers will debate a suite of new rules to make it easier for law enforcement and tax authorities to find out who owns Cayman Islands companies.
Under a deal reached with the United Kingdom, Cayman will make it easier for local and overseas authorities to search beneficial ownership information. The agreement means Cayman will set up what the Financial Services Ministry calls a “centralised register” to access the data held by financial services companies.
The new system is a compromise from months of back and forth between Cayman representatives and the U.K. It does not create a central, government-held register of who owns companies. The information will not be public.
The data will remain with service providers, companies like Appleby and Maples and Calder, and government will be able to access the information from there. Under the agreement, service providers are not supposed to know when Cayman authorities access ownership information.
Foreign authorities will be able to request ownership information by making requests through existing treaties or multi-lateral agreements. The agreement with the U.K. defines an owner as anyone who holds more than 25 percent of a company.
The Financial Services Ministry has not said who will be responsible for responding to requests for information or searching the register. The proposed amendments have not been released for public review.
A notice announcing the Feb. 22 legislative session describes the amendments: “A bill for a law to amend the Companies Law (2016 Revision) in order to require companies incorporated in the Islands to establish and maintain internal beneficial ownership registers which may be searched by the competent authority through a central access platform and amend the Companies Management Law (2003 Revision) as a consequence of amendments made by the Companies (Amendments) Law, 2016, and the Limited Liability Companies (Amendment) Law, 2016.”
During the negotiations with the U.K., the Financial Services Ministry agreed to have the new system set up by this summer. The legislative amendments have to be approved for the deal to move forward.
One of the biggest concerns raised during public consultations on the new system is the treat of hackers. The online system could pose a tempting target for hackers around the work.
In a consultation late last year, government noted: “The Cayman Islands Government is extremely aware of the risk of cyberattacks and the potential for illegal disclosure of confidential information.”
The consultation documents state, “The design and technical specifications of the centralized platform and the beneficial ownership registers will be designed to mitigate against these risks.”
A group of digital security experts has been working with the Financial Services Ministry to try to make the system as secure as possible.
The Financial Services Ministry announced this week that its staff hosted assessors from the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes earlier this month. The group came to Cayman to review how the jurisdiction shares tax information. Minister of Financial Services Wayne Panton said this week: “Given our track record on tax cooperation over the years, we remain optimistic that our regime is in line with global standards.
“We now look forward to working with the Global Forum over the coming months to finalise the report.”
At last year’s Anti-Corruption Summit, hosted by then-U.K. Prime Minister David Cameron, Premier Alden McLaughin said Cayman would join a group of 40 countries to develop a new global standard to share company and trust ownership information.
At the summit, Mr. McLaughlin offered any participating countries access to Cayman’s beneficial ownership information in the same way U.K. authorities will be able to request it.
Accepting the initiative in principle, the premier said the U.S. would have to share the same information. The premier and representatives from other small jurisdictions some call “tax havens” said the U.S. had a “double standard” and needed to share ownership information the same way.
News Source: The Cayman Reporter