LONDON – Summing up the recently concluded Joint Ministerial Conference in London, Cayman Islands Government officials said the discussions were constructive, and reaffirmed that Cayman continues to maintain its zero tolerance position on corruption and illicit activity.

“Our position on beneficial ownership, and our zero tolerance position on corruption and illicit activity, remains unchanged,” said the Premier Hon. Alden McLaughlin, noting that the JMC communiqué recognises the appropriateness of Cayman’s regime to tackle the global issue of series crime including corruption and serious fraud.

The communique affirms the position taken by the Premier in the Legislative Assembly last Thursday specifically that:

1. The OTs should not be referred to as tax havens;
2. There is agreement to hold beneficial ownership information in central registries or “similarly effective mechanisms”.
3. There is no agreement to public registries.
4. There is no agreement to direct access to information by foreign law enforcement, tax or regulatory authorities.

“The significance of this JMC, and the mark of its success, is that we have advanced a mutual understanding with relevant UK agencies,” added Hon. Wayne Panton, Minister for Financial Services. “The core issue, for the UK and its territories, is to further enhance our cooperation on investigations related to serious crime.”

Cayman therefore has invited representatives from the UK’s National Crime Agency and the Serious Fraud Office to engage with its Attorney General’s Chambers and Financial Intelligence Unit in order to improve effective and efficient collaboration.

The communique continues to recognise that central registries are not the only effective medium by which beneficial ownership information may be properly held.

“Unfortunately, there has too often been a mischaracterisation of the issue of beneficial ownership and of public central registers being the only solution for sharing of information in terms of tax cooperation and collaboration in relation to the global investigation and prosecution of serious crime such as corruption and serious fraud,” said Premier McLaughlin.

“We have effective mechanisms for the sharing of information for tax purposes both on request and by automatic exchange of information. These mechanisms have been assessed and blessed as being in accordance with current international standards. They include bilateral tax information exchange agreements and multi-lateral approaches such as the Multilateral Convention in relation to which we were an early adopter and in relation to which a total of 90 countries will now be automatically reporting in 2017 or 2018, in accordance with Common Reporting Standards promulgated by the OECD. Other bilaterals include both the US and UK FATCA-styled inter-government agreements,” the Premier continued. “From any objective perspective, we are transparent for tax purposes and we collaborate to avoid an abuse of our system by criminals.”

Minister Panton also underscored the decision by the UK and the British Territories to include in the communiqué that it is inappropriate to refer to the territories as tax havens, and that the territories are responsible for their own tax rates and generating public revenue.

The communiqué also recognises the contribution of the Overseas Territories’ international financial services industries to the global economy.

“As an international centre, Cayman welcomes this acknowledgement that we support the prosperity and development in the global economy,” Minister Panton said.

Related story:

Overseas Territories promise to create central registers of beneficial ownership: statement from Global Witness

UK’s Overseas Territories take small step towards transparency

Today, the UK’s Overseas Territories announced that they would put information on the people who ultimately own and control companies – so-called beneficial owners – in centralised registries ‘or similarly effective systems’, representing a small step towards greater transparency. However, the Territories have refused to match the UK’s commitment to make beneficial ownership information public.

“The UK’s Overseas Territories lie at the heart of the global secrecy industry; companies registered here are the most abused in the world,” said Rosie Sharpe, campaigner at Global Witness. A study by the World Bank into more than 200 cases of grand corruption concluded that companies from the UK’s Overseas Territories are most popular with the corrupt.

“Creating centralised registries of company ownership is a small step forward but it falls short of what is needed. The information must be fully public,” said Sharpe.

“This measure may help the UK track down tax evaders and the corrupt, but what about the rest of the world? The only way for tax inspectors and law enforcement to easily know that someone is hiding money in a bank account that belongs to a company is for information on the people who own and control companies to be public,” said Sharpe.

One of the Overseas Territories, Montserrat, recently announced that it will make information on beneficial owners public, albeit not online and for a small fee.

“David Cameron is hosting an anti-corruption summit next May. But the UK will lack credibility in calling for other countries to get better at tackling corruption when its own backyard remains shrouded in secrecy. We need a fully public register,” said Sharpe. “David Cameron said that he would continue to make the case to the Overseas Territories for company ownership transparency. Private centralised information is not a transparency measure.”

In addition to falling short as a result of not making beneficial ownership information public, there are also concerns that:

· No timetable is set out.

· The Communique allows the Overseas Territories to create ‘similarly effective systems’ but does not define what this means.

The UK has been pushing for the Overseas Territories beneficial ownership information to meet three criteria:

· UK and domestic law enforcement and tax authorities must be able to access info without restriction.

· UK and domestic law enforcement and tax authorities should be able to quickly identify all companies that a particular beneficial owner has a stake in, without needing to submit multiple and repeated requests.

· Companies or their beneficial owners must not be alerted to the fact that an investigation is under way.

Meeting these criteria may help UK law enforcement, but what about the rest of the world?