Tackling financial crime: Beneficial ownership and the importance of verified information

Posted On: 
24th April 2017

Access to accurate, real time information is what makes all the difference in the fight against financial crime, says Cayman Islands’ Financial Services Minister, Wayne Panton.

There is now considerable cross over between the UK and Cayman Islands' financial services industries, says Wayne Panton.
Cayman Islands

Since a Cornishman named Bodden settled in the Cayman Islands in 1658, we have nurtured closer ties with the United Kingdom. Globalisation has ensured that those bonds of kinship now extend beyond the familial, cultural and linguistic, and are evolving most rapidly in our Financial Services industries, where there’s considerable cross over and cooperation from both a commercial and regulatory perspective.

Over the past decade in particular, we have worked together both in supranational bodies and bilaterally, with the shared objective of stamping-out corruption, tax evasion, money laundering and terrorist financing, and I am reassured that forthcoming changes to the way we share information will deepen those bonds. 

Indeed, whilst it isn’t widely known that we’ve been providing beneficial ownership information on Cayman structures to UK authorities for over ten years, the debate surrounding the Criminal Finances Bill has raised awareness that from June 2017, our new Beneficial Ownership Platform will give legal and tax authorities in the UK access to that information within 24 hours, seven days a week.

However, there are notable areas where we differ in our approach. In the Cayman Islands, for example, beneficial ownership information is collected by licenced and regulated corporate service providers and trustees – it doesn’t rely on the self-reporting method that’s typical of the public registry system in the UK – and we impose a much lower ownership disclosure threshold of 10 per cent.

Additionally, for over 15 years Cayman’s legislation has required verification of that information.  This is crucial because the fight against financial crime, in all its guises, requires access to accurate, real time information, as compared with the public disclosure of private financial details, as called for in the proposed amendment tabled by Baroness Stern, Baroness Kramer, Lord Rosser and Lord Kirkhope of Harrogate.

It’s worth noting that the Financial Action Task Force (FATF) and the Organisation for Economic Co-operation and Development (OECD) do not require public registers of beneficial ownership, either. Tax and law enforcement opinions indicate the reasons for this may be twofold: firstly because public registers do not improve the capabilities of law enforcement agencies or regulatory authorities - beneficial ownership information on Cayman structures is already available to UK agencies, all EU member states and the G20 - and secondly because by making registers of beneficial ownership public, it can reduce the candour of reporting in central platforms.

There are also associated risks of implementing public registers of beneficial ownership, the most obvious being the implications for privacy and data protection. The right to privacy for law-abiding citizens is a fundamental principle of common law that is enshrined in the Cayman Islands constitution. The proposed amendment to the Bill is clearly at odds with our obligations to our citizens and those who entrust us with their investments, and we believe that the risks to data protection deserve closer scrutiny.

The Cayman Islands Government fully supports the proposed Criminal Finances Bill; its stated aims are closely aligned with our own, which is evidenced by our long history of working in partnership with the United Kingdom to tackle corruption, tax evasion, money laundering and terrorist financing. The Bill as it currently stands is, we believe, a robust and proportionate response to the challenges we all face.

Wayne Panton is the Cayman Islands’ Minister for Financial Services, Commerce and the Environment