CF_Mag_2015_web-V2

38 Cayman. Moving finance forward.
Alongside a raft of measures
outlined at the G8 summit in
Northern Ireland in summer 2013,
Prime Minister Cameron proposed
a public register of beneficial
company ownership, revealing
ultimate ownership and control.
Taking the lead on the issue, Prime
Minister Cameron insisted that
the UK’s Crown Dependencies
and Overseas Territories (IFCs)
outline the steps they would take
to implement central registers of
information and open the contents
of those central registers to law
enforcement agencies.
From the perspective of the
IFCs, the UK proposals were
Far from being a corporate
domicile, which enables secrecy,
Cayman’s regulatory framework
for licensed corporate service
providers ensures that the correct
information is requested, recorded
and verified, due diligence takes
place and also that information on
beneficial ownership information
is regularly refreshed and updated.
This contrasts with the UK’s selfreporting
system, which, despite
accessibility to the public, is easily
manipulated where real criminal
intent to conceal ownership exists.
Individuals engaged in fraud are
highly likely to provide false or
inaccurate information, while those
on the right side of the law that do
The right to privacy for law-abiding
citizens is a fundamental principal of
common law and is enshrined in the
Cayman Islands constitution.
(Member States having two years
to implement central registries in
accordance with its provisions). It
is noticeable that many EU Member
States, including France and
Germany, as well as the US, have
failed to announce plans for any
kind of public corporate register.
Without a global standard yet being
devised or applied, if any – or all
– of the smaller IFCs introduced
a publicly accessible database of
ownership information, additional
costs would likely see client business
migrate to jurisdictions where a
central register is not required.
This opinion was shared by the
leading IFCs, with a firm view being
expressed that their processes for
corporate ownership record keeping
far exceed the proposed central
registry in the UK. For the Cayman
Islands, its regulatory framework is
significantly superior to its onshore
counterparts in many ways – for
example, in 2000, when Cayman’s
anti-money laundering regulations
were introduced, Cayman also
required full retrospective duediligence
on existing client
relationships, something said to
be too onerous to undertake in
the UK, US and elsewhere.
counter intuitive. Recognising
the importance of improving
transparency of ownership and
control of companies, but on a level
playing field, the Cayman Islands
government highlighted the merits
of Cayman’s existing central data
collection system where beneficial
ownership information is collected
by its licensed and regulated
corporate service providers and
trustees. This has been a legal
requirement in Cayman for over
10 years, as part of a licensing and
supervision process – which includes
onsite regulatory inspections.
Industry bodies, including the IFC
Forum, raised concerns about the
viability of a public register of
beneficial ownership on privacy
grounds, as well as for the potential
for abuse of the system.
make full disclosure run the risks
of loss of privacy and cybercrime,
such as identity theft. The right to
privacy for law-abiding citizens is a
fundamental principal of common
law and is enshrined in the Cayman
Islands constitution.
While considerable doubts have
emerged over how accurate
information could be collected via
a central public register, from a
commercial standpoint, industry
figures in Cayman argued that it
would not be in the jurisdiction’s
best interests to lead such an
initiative, without certainty that the
same standards would be upheld in
all competing jurisdictions.
The impact of the Fourth EU
Directive on Anti money-laundering
(AMLD) is still a while away
Late last year, following a period of
industry consultation, the Cayman
Islands rejected the introduction
of a central register, in the form
proposed by the UK for its IFCs.
The Cayman Islands government
announced that it would instead
continue with its current regime
of providing beneficial ownership
information to law enforcement,
tax and regulatory authorities, in
the way it had been doing for the
past 10 years and which was in line
with the global standards dictated
by the Financial Action Task Force
(FATF). The FATF prescribes three
alternative methods of collecting
beneficial ownership information:
requiring a jurisdictions companies
registry to obtain and hold the
information (as the UK proposed),
requiring companies to hold such
information, or by using existing