Cayman Islands and UK Governments Announce Cooperation Enhancements
On 11 April 2016, the Cayman Islands government formally announced a commitment to enhance its existing robust arrangements with the UK government on the exchange of beneficial ownership information in relation to Cayman Islands companies. This proposed enhancement was originally signalled in December 2015, following several months of discussions between the UK and Cayman Islands authorities.
Over the last 20 years, the Cayman Islands has established itself as a leading domicile for international business, finance and investment funds by consistently being in the vanguard of jurisdictions that have cooperated and collaborated with the international community. The Cayman Islands introduced internationally compliant legislation reflecting advances and evolution in anti-money laundering and know your customer laws many years ago.
The Cayman Islands has also been an early adopter of tax information exchange arrangements, such as bi-lateral tax information exchange agreements, US FATCA, UK style FATCA and the OECD Common Reporting Standard, into which it has entered with some 95 countries. This approach has ensured that the Cayman Islands continues to meet the high standards of due diligence required by, and to have the confidence of, the international institutional business and regulatory community.
UK law enforcement agencies already have a right to request certain information under existing international agreements with the Cayman Islands, so, in effect, the announcement of 11 April 2016 will primarily provide a more streamlined process.
We understand that the enhancement announced will be finalised by June 2017 and the details of the operation of the new centralised beneficial ownership platform are still to be finalised. Whilst we do not yet know all of the details, we anticipate that the Cayman Islands requirements may approximate those recently adopted in the UK. The UK regime requires companies to maintain a register of persons with beneficial ownership or control which exceeds a certain threshold, and includes a 25% ownership test. However the registers for Cayman Islands companies will be privately maintained by licensed service providers in the Cayman Islands and will not be public, although that information will be accessible directly, subject to certain safeguards, by the Cayman Islands authorities on proper request made by UK law enforcement agencies.
The Cayman Islands government has announced that they will consult further with the industry as they go through the normal consultation process during the implementation process. Therefore, there is no immediate action that clients need to take, for now.
We will update you with more information over the coming year as and when more details are released as to how the Cayman Islands will implement these enhancements.