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UK demands ownership registry

| 30/03/2015 | 3 Comments

CNS Business(CNS Business): UK leaders have been battling with British overseas territories and crown dependencies to “open their books” and comply with the demands to create a beneficial ownership registry, which would affect around 2.5 million companies. Now, offshore financial centres, including the Cayman Islands, are being told to end their fight against beneficial ownership and reveal the identities of the companies’ ultimate owners on a central registry.

Although British Prime Minister David Cameron initially told BOTs that it was up to them how they dealt with the issue of beneficial ownership, last week, his government told Cayman Islands’ leaders, as well as the British Virgin Islands, that they have until November to create a centralized registry or a similar system.

In January the Cayman Islands objected the proposed register and said that it would raise compliance costs, reduce competitiveness, while also introducing more opportunities for fraud.

A spokesperson for the Ministry of Financial Services told CNS Business, “Cayman will ensure that competent authorities (such as law enforcement, regulatory, supervisory, tax authorities, and financial intelligence units) within our jurisdiction have timely direct access, in appropriate circumstances, to accurate and current information regarding beneficial ownership of legal entities.”

Letters from the UK were sent to officials, signed by ministers from the Treasury and the Foreign Office, asking territories to “improve transparency” and implement this new requirement. Bermuda, which already has a central register, was told to make the information more accessible to law enforcement agencies.

UK officials have stated the main focus of a central register is to help combat international tax evasion, as it will become more difficult to use offshore shell companies to unfairly dodge taxes.

Cayman Financial Services Ministry stated, “Cayman commits to continue our work with the UK to build an alternative framework through which to provide UK law enforcement, tax and regulatory authorities beneficial ownership information of legal entities in a timely manner and subject to appropriate protocols and safeguards.”

The spokesperson added that Cayman would “present our timetable for the implementation of these plans by the time of the 2015 Joint Ministerial Council meeting. We anticipate that we will match the timetable in respect of the implementation of the EU’s Fourth Anti-Money Laundering Directive.”

Earlier this month CNS Business spoke with Cayman Finance CEO Jude Scott. Discussing Labour Leader Ed Miliband’s statement that British territories would have to have a central registry in place within six months if his part won the general election, Scott said that if Labour’s position on the issue was “from the standpoint of not having a good understanding on what is actually done here, we are happy to work through that so they have a better understanding, so they really see this is a world class system in achieving what we are all trying to do to prevent these negative things like terrorism financing.”

Scott pointed out that Cayman’s financial industry already has a very strong system in place, which is far superior to what is being suggested. He said the idea of a beneficial ownership registry would be very detrimental to the industry because it’s a lower quality system to what is already being used in the Cayman Islands.

Scott told CNS Business the current system in place for the Cayman Islands requires, by law, a validation process to ensure that all clients they are doing business with are not involved with tax evasion, money laundering or financing terrorists. He explained that people involved such crimes are unlikely to self-report the true owners of the companies.

CNS Business plans to have a sit down interview with the Ministry of Finance this week to learn more on this issue and how the Cayman Islands Government will tackle this latest development.

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Category: Finance, Financial Services

Comments (3)

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  1. Anonymous says:

    If the main point of a public corporate register is to detect offshore tax evasion, then what the @#$% is the endgame of UK FATCA? Surely the leadership on both sides have heard of this colossal and expensive undertaking and our trailblazing, globe-setting Model 1 IGA? If not, why not? CIMA? Cayman Finance? Alden?

  2. Anonymous says:

    There are already measures in place to detect tax fraud and free exchanges of information with the UK tax authorities. This is more about limiting the services offshore centers can provide so that they can’t compete as well against London as a place to do business. The offshore jurisdictions need to stick together on this one and tell the UK that no means no. The UK will back down eventually.

  3. FaJesus says:

    The UK can go first.

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