BO law under review ahead of public register

(CNS): The public is being invited to comment on the government’s proposals to reshape the Cayman Islands’ beneficial ownership legislation into a single law to make it more effective in fighting crime and to pave the way to meet the forthcoming changes to the regime, which is expected to lift the lid on who really owns what in the world of international finance.

A consultation paper released Tuesday, Enhancement of the Beneficial Ownership Framework, includes questions for the public to consider about how Cayman’s financial sector manages the law around beneficial owners — those who ultimately own or control an entity that may be held in another name.

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

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, Ebanks explained. “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.

After a holistic review of the legal acts that make up the beneficial ownership framework, the consultation takes account of the current global standards for beneficial ownership, set by the Financial Action Task Force and Cayman’s 2019 commitment to introduce a public beneficial ownership register by 2023. The latest review also includes feedback to date from Cayman’s financial services industry and data security.

Three key acts — the Companies, Limited Liability Companies and Limited Liability Partnership — would be amended under the proposals. Ebanks also said consequential amendments to any other act that references beneficial ownership provisions would be made. 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 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, 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 General Registry
   of any discrepancies in the information.

The consultation paper is in the CNS Library.

The window of opportunity for comment closes on Monday, 4 October.