Input sought on beneficial ownership plan

| 01/12/2016 | 7 Comments

(CNS Business): Government is hoping to steer through amendments to the Companies Law in January to allow the development of a centralised platform for beneficial ownership information and is seeking comment on the proposals. The financial services ministry has stated that it will not consider the introduction of a public register until that becomes the accepted and implemented international standard. But a deal with the UK to avoid broader publication while enabling relevant law enforcement authorities immediate access is the first step in avoiding that possibility.

International pressure on governments to lift the veil on the chain of offshore entities that many global corporations are using to their tax benefit has fuelled the call for public registers of the actual owners of companies registered offshore. This, it is believed, will enable greater tax scrutiny and assist with the fight against global financial crime.

The Cayman Islands Government and other offshore centres are seeking to avoid direct public access because it  is considered by many as an unnecessary attack on the right to privacy. Cayman has been at the forefront of discussions with the UK on how the relevant authorities in Britain and elsewhere can get immediate and unfettered access to the details of who really owns what very quickly during an investigation without also exposing the details of all owners to the glare of public, and in particular media, transparency.

The change to the law will formalize the collection of the information that offshore companies are already obligated to provide in the Cayman Islands, but from now on that information will feed into a central platform using online technology. Officials said that they were “extremely aware of the risk of cyber-attacks and the potential for illegal disclosure of confidential information” with the introduction of a register.

“The design and technical specifications of the centralised platform and the beneficial ownership registers will be designed to mitigate against these risks,” they stated in the consultation documents, but they are asking the public to raise any specific technology concerns regarding the design of the centralised platform during this public discussion period.

Once the draft bill has been published in the Gazette, the usual 21-day public consultation period will provide another opportunity for stakeholders to comment before it goes before legislators.

The government has already conducted a public consultation and officials claimed that the strength of the current regime, which collects, maintains and updates beneficial ownership information through the licensed and regulated corporate service providers (CSPs), was considered the preferred system but government has created the concept of a centralised platform where that information can be fed.

Discussions with the UK in 2015 validated that Cayman’s CSP and centralised platform approach were ‘similarly effective’ to that of a central register. On this basis, the Cayman Islands entered into an Exchange of Notes with the UK to implement the centralised platform, to augment the sharing of beneficial ownership information with the UK. The Exchange of Notes was signed in April 2016, and the majority of crown dependencies and overseas territories signed similar agreements.

If approved in the Legislative Assembly, the Companies (Amendment) Bill, 2017 would allow the centralised platform to be implemented by 30 June 2017, in accordance with Cayman’s agreement with the UK.

The deadline for comments is close of business on Friday, 9 December. All comments should be emailed to Policy Advisor Wilbur Welcome (wilbur.welcome@gov.ky) in the Department of Financial Services Policy and Legislation.

   See consultation documents in the CNS Library

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Category: Finance, Financial Services

Comments (7)

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  1. Anonymous says:

    As a first, money-making step, there should be a public online portal where, for a small fee, anyone, anywhere in the world can quickly verify if a Cayman Islands entity representing itself internationally is actually paid up in good standing, in arrears, or struck, with registered office info and contact. If there is misconduct among registered offices or Cayman Islands entities abroad – let them be easily weeded out from the good. This reputation-restoring transparency doesn’t necessarily require trailblazing UBO disclosure. Bahamas, BVI and others are doing this already and it has been well-received.

  2. Anonymous says:

    Not permitting direct public access is the equivalent of putting profits before deterring fraud and corruption. The private sector and journalists are central to rooting out fraud and corruption and the proposed secret register is deliberately designed to impede them.

    • Anonymous says:

      If knowing the UBO info of companies is of such overriding concern to journalists (who feel they have a right to know), then why should the standards of disclosure be so abnormally onerous in just the Cayman Islands and not uniformly applied globally? On what basis have the Cayman Islands been singled out (by journalists) as the nexus of evil for the planet? For example, why has Delaware been overlooked as the creator of an exponential quantity of (just as “mysterious”) entities, and one of the lowest due diligence bars on the planet?

      • Anonymous says:

        Mmmm good question. I suppose one could point to BCCI, Parmalat, Madoff, Enron, Olympus AND JUST ABOUT EVERY MAJOR CORPORATE FRAUD IN THE LAST 50 YEARS……

        • Anonymous says:

          And the 600 companies onshore that were involved should be overlooked but the 4 companies in Cayman were the cause of it all?? Go love yourself with your BS.

        • Anonymous says:

          Knowing or not knowing UBO had nothing to do with any of those cases. Ignorance is bliss.

        • Anonymous says:

          You do realize that those historic events were all perpetrated and master-minded by abusers outside the Cayman Islands; and that the existing contemporary regulator to regulator reality includes information exchange (including beneficial ownership, tax info, and on and on)? Can you point to an actual specific disclosure problem that exists today? The fact that busy-body conspiracy-fueled journalists are barred from leafing through a catalogue of beneficial ownership, that they have no legal authority to peruse (like anywhere else), is not a valid indictment of the fair and useful regulatory apparatus that already exists.

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