The Cayman Islands have checked all of the boxes when it comes to the identification, verification and maintenance of beneficial ownership information. This is evidenced by the general culture of compliance by directors, legal counsel, fund administrators and other service providers. It is also confirmed by the implementation of legislation and regulations requiring businesses to conduct due diligence and retain records and to file beneficial owner information with the Cayman Islands competent authority.
If you want to do business with any service provider in the Cayman Islands, you will be asked to provide ultimate beneficial owner information in connection with the engagement of any new business. Existing clients must also undergo periodic updates to due diligence information provided by them. Failure to provide relevant information to Cayman Islands service providers will usually result in the service provider turning away potential, new business or termination of existing relationships. These practices demonstrate the high integrity of Cayman Islands service providers and their ongoing efforts to comply with, and apply, applicable legislation.
The Cayman Islands recently updated its Proceeds of Crime Law, Anti-Money Laundering Regulations, Terrorism Law, Companies Law and other laws. At a high level, these laws require that:
**any person carrying out relevant financial business to steps to identify, assess, and understand its money laundering and terrorist financing risks. Such risk assessments must be documented and must be kept current. Companies must also maintain appropriate mechanisms to provide assessment of risk information to competent authorities and regulatory bodies.
** relevant companies must take reasonable steps to identify any individual who is a beneficial owner of the company
Not only must details of beneficial owners be filed with the Cayman Islands competent authority via a secure platform, any updates to the information must also be submitted. The legal structure therefore mandates ongoing compliance. The structure is also transparent and enforced, with imprisonment being one of the consequences for breach.
Cayman Islands Approach In-Line With International Standards
The FATF Recommendations appreciate that information that relates to the beneficial ownership of corporate vehicles can be found in a number of different places, including company registries, financial institutions, DNFBPs, the legal person itself, and other national authorities, such as tax authorities or stock exchange commissions. The FATF Recommendations recognise these different sources and the need to provide flexibility for countries to implement the requirements in a manner that corresponds with their legal, regulatory, economic and cultural characteristics. An effective system is one that prevents the misuse of legal persons for criminal purposes. The system in the Cayman Islands is effective. It is a combination of accepted methods referred to in the FATF recommendations: relevant financial institutions maintain beneficial ownership registers, this information is kept up-to-date, mandatory filings of beneficial owner information must be made with the Cayman Islands competent authority and beneficial owner information is accessible by the Cayman Islands competent authority for applicable purposes, including requests from law enforcement bodies. Existing regulator-to-regulator relationships and mutual legal assistance treaties also complement the Cayman Islands compliance culture. It is an effective system that is fully transparent and in-line with the highest standards.
About The Author
Alric Lindsay is a Cayman Islands corporate/funds lawyer and an independent fund director approved by the Cayman Islands Monetary Authority and licensed under The Directors’ Registration and Licensing Law. Alric also acts as voluntary liquidator to Cayman Islands entities. Alric can be contacted at email@example.com