Statement on Beneficial Ownership

By Premier Hon. Alden McLaughlin, MBE, JP, MLA

26 November, 2015

Legislative Assembly

Members of this Honourable House are aware of the Government’s ongoing discussion with the United Kingdom in regards to the collection and sharing of beneficial ownership information.

While discussions on beneficial ownership information will not be on this year’s official Joint Ministerial Council agenda, following recent correspondence and telephone discussions with the UK Overseas Territories Minister Hon. James Duddridge, I do expect to have discussions on this subject with the Foreign and Commonwealth Office while my team and I are in London next week.

Today I will summarise for this Honourable House, our financial services industry, and the public the evolving shift in the UK’s position on beneficial ownership. I also will reiterate our Government’s position.

As quick background, in 2013 the UK chaired the G8 Summit, placing anti-corruption at the core of its agenda. At the time, their call for public, central registers of beneficial ownership information was, to a degree, matched by actions in the European Union as part of its 4th Anti Money-Laundering Directive. Immediately following the G8 Summit, Government clearly stated that we would continue to ensure that our jurisdiction met international standards, and that we would take further actions only when proposed standards were adopted internationally.

Stemming from that commitment to the UK, we conducted a public consultation on beneficial ownership and, in December 2014, we published the results in our Consultation Report on Maintenance of Legal and Beneficial Ownership Information. This report included two main points. First, we reiterated our commitment to international standards, and in particular we stated our support for the G20 High-Level Principles on Beneficial Ownership Transparency. Second, we outlined a number of areas in which possible enhancements of our regime could be undertaken.

However, the UK Government’s stance on anti-corruption and ensuing initiatives has evolved since the 2013 G8 Summit.

The public is aware that the Acting Overseas Territories Minister, the Rt. Hon. Grant Shapps, visited Cayman this past August, during which we were pleased to hear his support for our beneficial ownership regime. He said, and I quote, that ‘there is more than one way to skin a cat’. This perspective is certainly in line with the Financial Action Task Force’s recommendations, which allows multiple ways in which a jurisdiction may satisfy requirements regarding beneficial ownership information.

A further important shift in the UK’s position came one month after Mr Shapps’s visit, with their acknowledgement that beneficial ownership information will NOT need to be available to the public. As a result of this important repositioning, consideration shifted to the standards by which the Cayman Islands, and indeed all Overseas Territories, maintains beneficial ownership information, and the protocols for information sharing between competent authorities.

To develop the enhancements outlined in our 2014 consultation report, the Ministry of Financial Services has formed joint public- and private- sector working groups to consider and recommend enhancements relating to the availability, accuracy and access to beneficial ownership information.

However, the UK’s position has evolved yet again. Just this week, the UK Overseas Territories Minister Duddridge has had telephone conversations with me as well as the Premiers of the British Virgin Islands and Bermuda on the issue of access to beneficial ownership information. He has told me that the UK is now seeking direct access by its law enforcement agencies to beneficial ownership information in the Cayman Islands and other Overseas Territories. I have advised him that this is not something to which the Cayman Islands can agree.

The information concerned does not belong to the Cayman Islands Government. It is property of the owners of the respective legal entities. Further, as far as we are aware, there is no country in the world that allows unrestricted access to beneficial ownership information by the law enforcement agencies of another country.

There are established mechanisms in place that allow requests for information to be made to the relevant authorities in Cayman by overseas law enforcement agencies, tax and regulatory authorities. The information collected and shared through these mechanisms is importantly, information which we have cross checked and verified – we do not simply rely on an honour system. These mechanisms were approved by the UK and have been assessed to be in accordance with globally accepted standards. They are working well and our position is that they should continue to be the means by which the UK and other countries obtain information on beneficial ownership of legal entities in the Cayman Islands.

To do otherwise would place the Cayman Islands at a competitive disadvantage with other jurisdictions that do not permit unfettered access to beneficial ownership.

The Cayman Islands, as we have said time and time again, is fully committed to complying with international standards with respect to the provision of financial services and particularly as it relates to transparency and beneficial ownership information. We have demonstrated this full commitment in number of meaningful ways, such as being an early adopter to the Convention on Mutual Tax Assistance and leaders in the implementation of US and UK FATCA as recent examples. However, what we are not prepared to do is to adopt a scheme which our competitors (some of whom are G20 member states) do not subscribe to, put ourselves at a competitive disadvantage and thereby cause our business to migrate to competitor jurisdictions. That will not serve our interest obviously but ironically neither would it serve the interests of those who would have us do that: business would simply move to less well regulated jurisdictions.

Our position on beneficial ownership information remains the same:

1. We will not agree to a public register unless and until that becomes the global standard and all of our competitors also subscribe to that standard.
2. We will not agree to unfettered access to Cayman Islands beneficial ownership information by external law enforcement, tax or regulatory authorities. Requests for such information must continue to meet established criteria and to be dealt with by the relevant Cayman Islands authorities established for that purpose and approved as being in accordance with global standards.

Colleagues, the summation of the matter to date is this: Cayman’s position on beneficial ownership information has not changed. We will uphold our commitments to globally acceptable standards.

This is the message I have already delivered to Mr. Duddridge and which I intend to reiterate when we meet in London next week. Honourable colleagues, I am looking forward to the continued, united support of this House as we work assiduously to best position the Cayman Islands in relation to beneficial ownership.

END

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