08/09/21

CAYMAN ISLANDS: Government seeks input for beneficial ownership revamp.

As published on caymancompass.com, Wednesday 8 September, 2021.

Government is inviting public comments on its proposals to reshape Cayman’s beneficial ownership legislation, including by creating a single act to make the legislation more effective in fighting crime.

Beneficial owners are persons who ultimately own or control an entity, even if the entity is held in another name.

The Ministry of Financial Services has issued a consultation paper on 4 Oct., titled Enhancement of the Beneficial Ownership Framework, which includes questions for the public to answer.

Financial services minister André Ebanks said, “This consultation is important, because a strong beneficial ownership framework strengthens our commitment to fight criminality not just locally, but also globally.”

He said, “Government’s proposals are therefore intended to place Cayman in an even stronger position with global standards that fight criminal activity, such as money laundering and terrorist financing; and, at the same time, creating a more streamlined and concise legislative act.”

Minister Ebanks noted that in 2017, Cayman and other UK Overseas Territories entered into agreements, called Exchange of Notes, with the UK. These further strengthened the territories’ respective beneficial ownership frameworks.

“But as global standards for these frameworks continue to evolve, it’s necessary to revisit ours to ensure such standards are observed in a proactive, transparent, orderly manner,” he said.

In 2019, Cayman committed to introduce a public beneficial ownership register by 2023, after UK legislation threatened to impose such a register through an order in council, if Cayman and other UK Overseas Territories did not act on their own accord.

By 2023, public beneficial ownership standards are expected to become the global standard, the ministry said.

The consultation paper reviews the legal acts that make up Cayman’s beneficial ownership framework, taking into account the beneficial standards set by the Financial Action Task Force, the global standard setter for anti-money laundering.

The paper also takes stock of feedback received to date from Cayman’s financial services industry and addresses data security.

The ministry is asking the public to comment on six main proposed changes to the existing framework:

1. Creating a single act for beneficial ownership, in line with other jurisdictions including the Bahamas, the Isle of Man, Guernsey, Jersey, and the British Virgin Islands.
2. Including limited partnerships and exempted limited partnerships into the framework, in anticipation of changes to the global standard.
3. Requiring additional data reporting, including the nationality of the beneficial owner and the mechanism by which the beneficial owner holds control.
4. Reducing filing duplications, as much as possible, to make it easier for the financial services industry to file beneficial ownership information with the General Registry, which is the competent authority for this purpose. A “competent authority” is a person or organisation that has legal authority to perform a specific function. In this case, the General Registry is the competent authority for receiving, maintaining and providing access to the beneficial ownership register.
5. Improving access to beneficial ownership information for other local and international competent authorities and financial institutions, in preparation for public access.
6. Obligating those accessing beneficial ownership information to inform the General Registry of any discrepancies in the information.

Three key acts – Companies, Limited Liability Companies, and Limited Liability Partnership – would be amended under the proposals.

Minister Ebanks added that consequential amendments to any other act that references beneficial ownership provisions would also be made.