Addressing the issue or political window dressing?

By Gonzalo Jalles, CEO, Cayman Finance

The UK Government has issued details into its planned implementation of a public central registry of beneficial ownership, which can be found here:  https://www.gov.uk/government/consultations/company-ownership-transparency-and-trust-discussion-paper

While many NGOs and extreme sectors of the media agree with the politicians in calling this a bold step in the right direction for success and focus on criticizing places like Cayman, urging them to implement similar initiatives, it is worth reading the 11 page document and taking the time to consider whether it does resolve the real issues or simply satisfy an ill-founded hunger for reducing privacy rights.

Notably, the proposal does not regulate corporate service providers and put the responsibility of reporting solely on the companies and its beneficial owners (self reporting).

By contrast, the Cayman model ensures a third-party (the corporate service provider) is responsible for having the information, and failure to comply with one of its clients can easily cost its license and livelihood.

Also notably, the proposal seeks to collect information of those owning more than 25% of a company and report it on annual basis, while the Cayman standard works at the minimum with anybody owning 10% of a company or beneficial interest.

The question to ask is how difficult would it would be to those wanting to preserve their privacy for the right reasons or their secrecy for the wrong ones to find four additional owners with 20% each including family members and accomplices?

It is clear the proposal does go further than Cayman’s current system in one aspect; the information will be available to the public.   Is that the real end objective?  Does a system without rigorous checks and balances to prevent a “garbage in – garbage out” result make whatever output is produced widely available to the public increase trust?  Or is trust better promoted by ensuring the right information is available to the appropriate parties, continuing to allow for rightful individual privacy while eliminating secrecy?

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