For many years, Cayman Islands service providers have collected and maintained due diligence information on clients in relation to new and ongoing business arrangements. The information includes details on the ultimate beneficial owners of Cayman companies. Cayman Islands service providers gather this information for the purposes of best practice, to comply with domestic legislation and to hold itself out as a leading jurisdiction as it relates to combating money laundering and terrorist financing. Consistent with its proactive approach, the Cayman Islands has now introduced new legislation and regulations (the “Beneficial Owner Regime”) requiring Cayman companies to establish and maintain beneficial ownership registers and to allow access by a competent authority. Below is a description of the nature of this access and the competent authority.
Under the Beneficial Owner Regime, “competent authority” means the Minister charged with responsibility for Financial Services and includes the person designated by the Minister. It is understood that the Minister has now designated the General Registry or the Registrar of Companies in the Cayman Islands to exercise the functions of the competent authority. One of the functions of the competent authority is to establish a search platform by means of which access may be provided to information on all beneficial ownership registers maintained on behalf of companies subject to the Beneficial Owner Regime.
Under the Beneficial Owner Regime, the search platform must:
**be secure and accessible only by the competent authority
**be able to search all company beneficial ownership information provided to the competent authority by corporate service providers or the Registrar by the name of an individual, legal entity or company
**prevent communication to any person of the fact that a search is being made or has taken place, except where the competent authority expressly discloses such communication.
While the search platform is accessible in this way, it is not open to the public and requests shall only be made to the competent authority in the manner described in the Beneficial Owner Regime. Licensed Cayman Islands corporate services providers or the Registrar if so engaged (ordinary resident companies have the option of engaging either the Registrar or a corporate services provider, however, all other companies subject to the Beneficial Owner Regime must engage a corporate services provider), shall provide an information technology solution, either directly or through another corporate services provider, that enables the corporate services provider or Registrar, as the case may be to provide the information on the beneficial ownership register to the competent authority by way of the search platform.
Provided that a senior official designated by name or position by the competent authority, representing one of the below bodies, certifies that the formal request for a search is proper and lawfully made for any purpose under the legislation governing the affairs or responsibilities of the body, the competent authority shall execute a search of a company’s beneficial ownership register by means of the search platform. These authorities include:
**the financial intelligence unit, as defined in the Proceeds of Crime Law (2016 Revision)
**the Financial Reporting Authority, as defined in the Proceeds of Crime Law (2016 Revision)
**the Cayman Islands Monetary Authority
**the Tax Information Authority,
**any other body which is assigned responsibility for monitoring compliance with money laundering regulations under section 4(9) of the Proceeds of Crime Law (2016 Revision)
In addition to the above, the competent authority shall execute a search of a company’s beneficial ownership register by means of the search platform if formally requested to do so by the Financial Crime Unit of the Royal Cayman Islands Police Service if a senior official of the Unit certifies that the request for the search is in response to a request from a jurisdiction that has entered into an agreement with the Cayman Islands Government respecting the sharing of beneficial ownership information. For clarification, while the above parties may request a search, no person shall use the search platform to search a company’s beneficial ownership register except the competent authority.
Search Is Confidential
Neither the competent authority nor any employee, servant or agent of the competent authority shall disclose any information relating to a request for beneficial ownership information, including the fact that such a request was made or that a search was carried out, to any person other than the authorized personnel of the competent authority or the law enforcement agency that requested the search.
The implementation of the Beneficial Owner Regime and information technology solutions to secure client information demonstrates the proactive role of Cayman Islands service providers in ensuring that the integrity of the jurisdiction is protected. It also confirms the leading role of the Cayman Islands in combating money laundering and terrorist financing. Because of its efforts, the Cayman Islands can expect to remain on any international “white list” where a level playing field, transparency, good governance and a robust compliance culture are required.
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 firstname.lastname@example.org