Highlighting Cayman’s ‘lead on global transparency as a cooperative jurisdiction’, UK Chancellor of the Exchequer George Osborne has written to the Minister of Financial Services, Wayne Panton, welcoming Cayman’s participation in the discussion for the development and subsequent implementation of a global standard for the sharing of beneficial ownership information.

‘Cayman has taken a lead on global transparency as a cooperative jurisdiction, including through your early commitment to the Common Reporting Standard, your joining the Multilateral Convention and the important role that you have played and continue to play in the Global Forum for Tax Transparency’, Mr Osborne wrote in his letter, which was dated 10 May and received by the Ministry today (Wednesday, 18 May).

‘This has been influential in helping achieve rapid global uptake of these standards and a step-change in global tax transparency’.

Mr Osborne also wrote that he has asked officials to ensure that arrangements are put in place so that the Cayman Islands, along with other committed jurisdictions, will be able to participate in discussions as the global standard is developed.

‘It will be important, as you say, to ensure that the new standard respects the confidentiality and security of data and that appropriate legal gateways are in place. I also very much agree with your comments about the importance of a level playing field and hope that we can work together to convince all countries and jurisdictions to join this important initiative’, he wrote.

On behalf of Government, Minister Panton wrote to Mr Osborne on 6 May in order to agree to participate in the discussions. In addition to raising the points regarding confidentiality and data security, in his letter he noted that having a level playing field is vitally important in order for global mechanisms to be effective and that as such, he looked forward to other jurisdictions making similar commitments to the initiative.

See attached:

Mr. G. Wayne Panton’s letter to Mr Osborne

Mr Osborne’s reply

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Beneficial ownership: Cayman Govt says US must sign first

From IFC Review

The Cayman Islands will not adopt a mechanism for the exchange of beneficial ownership data that is not implemented by the United States, reports the Cayman Compass.

Speaking at a press conference on Tuesday, Premier Alden McLaughlin called for a level playing field in terms of financial transparency and stated that a standard without U.S. participation “is not a global standard.”

The premier confirmed that government’s position on beneficial ownership had not changed after the Anti-Corruption Summit in the U.K. last week.

Cayman’s participation in the summit was predicated on it joining an initiative for the automatic exchange of beneficial ownership data. This initiative of 40 countries aims to develop a global standard for the automatic exchange of beneficial ownership data between law enforcement agencies and tax authorities of the partner countries.

Premier McLaughlin said government fully supports access to beneficial ownership data by foreign law enforcement agencies to help detect and prosecute corruption, tax evasion and other serious crimes. However, Cayman has not agreed to a specific method of exchanging this information.

“For the record, Cayman has not agreed to implement a mechanism [to exchange beneficial ownership data]. Indeed, there is no mechanism to implement. It does not yet exist,” the premier said.

“What we have agreed to is to participate in the global discussion that will lead to the development of such a mechanism.”

This was confirmed in a letter to U.K. Chancellor of the Exchequer George Osborne days before the conference.

The letter, dated May 6, by Minister for Financial Services Wayne Panton, included several caveats for Cayman’s participation in the initiative.

“Once this standard is agreed and adopted by all Overseas Territories, Crown Dependencies, G-20 and OECD member states, we will participate in its global implementation,” the minister wrote.

“[Along] with reciprocity, the standard must ensure the full confidentiality and security of the data exchanged, and be subject to appropriate legal gateways.”

On this basis, Cayman is prepared to join the initiative for the automatic exchange of beneficial ownership data, the letter stated.

“We make this commitment to the initiative while recognizing its iterative nature, and we reserve our position on the interlinking of registers until the discussion of the point becomes clearer.”

While Cayman had not been asked to implement any standards, the premier said, it has gained for the first time “a seat at the table to develop the mechanism itself.”

Cayman had to fight to get an invitation to the summit, Mr. McLaughlin noted, and “had we not hustled in that way,” the discussion would have been led to the detriment of Cayman without its participation.

During the summit, government extended an offer to grant countries participating in the conference the same type of access to its beneficial ownership data that it has negotiated with the U.K.

From June 2017, U.K. authorities will have expedited access to information on who truly owns Cayman-registered companies and other entities, through a centralized platform which has not yet been developed, at the Department for International Tax Cooperation. However, the data is exchanged only on the basis of individual requests rather than the wholesale automatic exchange of all beneficial ownership data that the global standard aims for.

Cayman is pursuing both standards, the premier said, because it is committed to transparency.

In this spirit, Cayman will replace its Confidential Relationships (Preservation) Law, which often has been characterized as a “secrecy law,” with a Confidential Information Disclosure Law. In addition, government has passed legislation completely abolishing the use of bearer shares, which could be used to conceal the beneficial owner of an entity. Bearer shares had already been immobilized since 2000.

“Before someone says that we go too far with information sharing, we are also preparing a new Data Protection Law,” the premier said. The law would clarify and safeguard legitimate privacy rights.

The anti-corruption conference has passed the responsibility for the development of the global beneficial ownership standard on to the Financial Action Task Force and the Organization for Economic Cooperation and Development.

This hand-off to the international standard setters is precisely what is needed, said Minister Panton, adding that Cayman is comfortable with and has had a lot of experience in dealing with both organizations.

“We know the people involved and they understand our position,” the minister said. “I would foresee that we will continue that track record of engagement to influence the direction of a new standard.”

However, government expects the development of a global standard to take years. Mr. McLaughlin believes that initially the U.K. referendum on its membership in the European Union will create “a lull” surrounding the issue.

Even when implemented, it is far from certain that all OECD and G-20 countries are going to adopt it. Most notably, the United States, although represented at the event through Secretary of State John Kerry, was not in a position to even sign the summit communique, which outlined the steps to be taken to combat corruption agreed by the conference participants.

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Cayman hasn’t committed to automatic sharing of ownership data

From IFC Review

Contrary to international media reports and a press release from No. 10 Downing Street, the Cayman Islands government did not commit to the automatic exchange of beneficial ownership information prior to the Anti-Corruption Summit in London last week, reports Cayman Compass.

The government also confirmed it did not sign the summit communique that sets out a common approach to tackling corruption, which, according to the UK prime minister’s website, was agreed by all participating countries.

The Cayman Compass understands that due to the late invitation to the summit, the Cayman Islands government was not involved in the negotiation and formulation of the joint statement of summit participants and therefore did not become party to it.

Last Wednesday, government released a statement saying, “The Cayman Islands has confirmed to the U.K. that it will join the initiative for the development of a global standard for the sharing of beneficial ownership information.”

This initiative was launched in April by the so-called G5 countries – the UK, Germany, France, Italy and Spain – and subsequently joined by another 35 countries. Before Cayman joined the initiative, the European participating countries released a statement under the title “Initiative for automatic exchange of beneficial ownership information.”

In the statement, the initiative members commit “to establishing as soon as possible registers or other mechanisms requiring that beneficial owners of companies, trusts, foundations, shell companies and other relevant entities are identified and available for tax administration and law enforcement authorities” and the “automatic exchange of information on beneficial ownership.”

However, Wayne Panton, the minister for financial services, explained in an interview with the Cayman Compass on Thursday that Cayman has not committed to an automatic exchange of ownership information. “We have agreed to making a political commitment to this process [of developing a global standard],” he said. But a new global standard on sharing beneficial ownership information is “a long way down the road,” he added.

This does not appear to have resonated with U.K. Prime Minister David Cameron, who praised the British Crown Dependencies and Overseas Territories. “All of them have committed to having registers of beneficial ownership and crucially most of them now have committed to the automatic exchange of information and automatically sharing those registers of beneficial ownership with other countries,” he said after the conference.

A press release from No. 10 Downing Street also noted that “40 jurisdictions, including a number of Overseas Territories and Crown Dependencies with major financial centers, will automatically share beneficial ownership information.” The Economist, The Guardian and other media reported on the issue and included Cayman among the 40 countries.

The Guardian explicitly noted, “The Cayman Islands were invited to the summit after they made concessions over the automatic exchange of beneficial ownership information.”

The question of whether the data is shared automatically or not is crucial because government and the financial services industry are still defending Cayman’s existing beneficial ownership regime.

Corporate services providers on island collect and maintain the information identifying the true owners of companies and other entities. This data is shared only in specific circumstances when requested by foreign law enforcement and tax authorities under a bilateral agreement.

In April, Cayman concluded an agreement with the UK under which government would develop a “centralized platform” which has access to each corporate service provider’s beneficial ownership data. From June 2017, this platform will enable a quicker handling of individual information requests by UK law enforcement and tax authorities, but it will not exchange all of the data automatically.

The Cayman Islands government hopes that the members of the beneficial ownership initiative will also adopt this mechanism rather than develop an automatic exchange system as the global standard.

The Ministry of Financial Services announced that government informed HM Treasury in the UK that “in order to foster greater collaboration between law enforcement and tax authorities in the fight against corruption and tax evasion, it is welcoming jurisdictions that are participating in the initiative for the exchange of beneficial ownership information to enter agreements with Cayman that are similar to the Exchange of Notes currently in place with the UK.”

Speaking at the Summit, Premier Alden McLaughlin said Cayman had shown its leadership role in the fight against corruption for over 20 years and offered to extend the agreement with the U.K. to all conference participants.

“Some examples of our engagement include the recent Exchange of Notes and a Technical Protocol with the United Kingdom on the exchange of beneficial ownership information, an arrangement which I am happy to announce today we are prepared to extend to all countries participating in this current initiative,” he said, omitting mentioning the beneficial ownership initiative, included in his official speaking notes.

“Because of these efforts, our credentials in the fight against corruption cannot be seriously challenged,” the premier added.

“I believe we’ve earned our seat at the table to be part of the development of any new global standard.”

In the same vein, Jude Scott, the CEO of Cayman Finance, appeared on Sky News following the summit in London, hailing Cayman’s existing regime for collecting verified beneficial ownership information as superior to centralized registers that are based on self-reporting, such as the one implemented by the UK.

“If we look at ensuring that we have top quality information that is accurate and complete, the system that we have in Cayman is far superior to what has been proposed [by the U.K.].” Mr. Scott advocated that Cayman’s system should consequently become the global standard.

The Anti-Corruption Summit communique referenced the beneficial ownership initiative for the automatic exchange of beneficial ownership information and called on the Financial Action Task Force, the Organization for Economic Co-operation and Development and the Global Forum on Transparency and Exchange of Information for Tax Purposes to develop initial proposals “on ways to improve the implementation of the international standards on transparency, including on the availability of beneficial ownership information and its international exchange.”

However, Roy Tatum, senior political adviser to the premier, confirmed Friday that the Cayman Islands has “not in fact signed the communique.”

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