Working group tackles beneficial ownership proposal

The political debate over a beneficial ownership registry for Cayman Islands companies is far from over. But in the meantime a new working group, led by the Ministry of Financial Services and Cayman Finance, is working on the technical side of a new centralized system to access beneficial ownership information in Cayman.

The working group “will also be tasked with considering the technical aspects of the system. Once the technical specifications have been established, a tender can then be produced,” Angela Piercy, spokeswoman with the Ministry of Financial Services, said in an email.

“Comprising representatives from Government, Cayman Finance and other industry associations, this group has been working to ensure that Cayman’s regime will continue to meet internationally accepted standards,” she said in a separate statement.

The centralized system is the result of negotiations with the United Kingdom, which has been pressuring the Cayman Islands to create a beneficial ownership registry to make it easier for law enforcement and tax authorities to find out who owns companies in the country.

The working group recently received an explanation from Brac Informatics, a local IT company, describing how the system would be technologically possible.

The proposal, announced by Financial Services Minister Wayne Panton late last year, would not create a central register kept by government. Instead, the idea behind the system is to have a central way for government to access the data kept with financial services companies. Speaking with reporters in December, Mr. Panton said the system would allow government to go into service providers’ databases without their knowledge to access data on ownership when the government gets requests from foreign governments.

“We will be able to reach out and interrogate information from the corporate service providers,” Mr. Panton said.

Jude Scott, CEO for Cayman Finance, said in a recent written statement, “The proposed centralised access technology concept would be non-public, with strictly local access; and maintains the key elements of Cayman’s current effective regime.

“Importantly, the proposed concept is intended to utilise technology to provide more efficient and faster access for appropriate beneficial ownership information requests,” he noted.

“Cayman Finance is working closely with the Cayman Islands Government to provide industry input on the design of such a technology based system enhancement to take into account key elements of such a concept, including security and appropriate access protocols for information,” he said.

Cayman Finance, responding separately to email questions from the Cayman Compass in December, said through a spokeswoman, “The service provider verified beneficial ownership regime in Cayman has often proven itself effective for information exchange and cooperation to support legitimate requests by appropriate overseas authorities.”

The spokeswoman continued, “My understanding is that the Cayman Islands government has quite rightly come to agreement with the U.K. that Cayman’s service provider verified beneficial ownership regime is in line with international standards.

“Cayman’s regime is world-class based on its technical merits. There may be further political rhetoric in the future on the matter, but as long as the U.K. views Cayman’s [beneficial ownership] regime on its merits, they will agree it is a standard setter that should not be forced to change, but rather should be emulated,” she wrote.

“Agreeing with the U.K. that the current Cayman [beneficial ownership] regime combined with some refinements for timing and efficiency is a prudent outcome and will be well received by clients and the industry globally,” she noted.

UK law enforcement comes for a visit

Senior officials with the U.K.’s National Crime Agency and the Foreign and Commonwealth Office visited Cayman in February, according to Ms. Piercy.

“We had an opportunity to explain, in more detail, the merits and potential mechanics of our proposed centralized platform, which would be locally accessed and non-public. This would be an additional enhancement to our current, strong anti money-laundering regime, and would be a similarly effective, viable alternative to the U.K.’s approach of a central register,” Mr. Panton said following the meeting.

The National Crime Agency leads the U.K.’s efforts to fight serious and organized crime. According to the NCA, “We have national and international reach and the mandate and powers to work in partnership with other law enforcement organisations to bring the full weight of the law to bear on serious and organised criminals.”

In a press release after the visit, Premier Alden McLaughlin said, “Government continues to maintain a position of zero tolerance on illicit activity and financial crime.

“Our commitment to the U.K., and to other foreign authorities, is to collaborate and cooperate to ensure that those responsible for illicit activity can be prosecuted in the relevant jurisdictions,” he said.

“Cayman Finance worked closely with the Ministry of Financial Services in preliminary discussions and working groups in the short period leading up to the FCO and NCA visit and endorses Government’s position to maintain and enhance the current effective CSP verified beneficial ownership regime, as well as supporting Government’s proposed concept to further enhance the current system with a technology platform,” Cayman Finance’s Mr. Scott said in a written statement.

“We appreciate the efforts of the Cayman Islands Government in communicating the benefits of our current system in the global fight against financial crime. We are pleased to see that progress is being made and that our existing effective system is receiving appropriate positive international recognition,” he said.

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