The UK House of Commons has passed a bill that would require public ownership registers in the Cayman Islands and other British Overseas Territories by December 2020.
The Sanctions and Anti-Money Laundering Bill is intended to improve transparency in these jurisdictions for the purposes of the detection, investigation or prevention of money laundering.
A new clause in the bills states that the Secretary of State must provide all reasonable assistance to the governments of the British Overseas Territories to enable each of them to establish a publicly accessible register of the beneficial ownership of companies registered in each jurisdiction.
The bill has comes under fire by Jude Scott, CEO of Cayman Finance, who called the vote a "vain attempt" to tackle global problems like corruption and tax evasion, by unfairly discriminating against a few jurisdictions.
He suggested that global problems such as tax evasion and money laundering require global solutions and standards that apply to all jurisdictions.
“Cayman’s existing verified ownership regime remains in force – and remains superior to existing ownership regimes in the UK and around the world," said Scott. "This vote simply continues the legislative process for potentially requiring changes to Cayman’s ownership regime more than two years from now, during which time there will still be on-going dialogue with the UK."
The Bill has passed all of its stages in the Commons and will now be returned to the House of Lords.
Scott continued: “The Cayman Islands is a transparent jurisdiction that already meets or exceeds the full range of globally-accepted standards for transparency and cross-border cooperation with law enforcement and tax authorities. Cayman became an early adopter of automatic data exchange by signing onto agreements such as the European Union Savings Directive, the OECD’s Common Reporting Standard, US FATCA, and country–by–country reporting principles under the BEPS process. The Cayman Islands also has had a world class verified ownership regime in place for more than 15 years whereas only eleven out of twenty-eight E.U. countries have a register at all. For all of those reasons, the OECD’s Global Forum in 2017 assessed our jurisdiction to be “largely compliant” with the international standard for transparency and exchange of information, the same rating given Canada and Australia.
“The Financial Action Task Force has recognized that verifiable private registers like Cayman’s which are searchable by appropriate tax authorities and law enforcement agencies remain the more effective approach. Recent reporting about multiple defects in the UK’s own current public, but unverified, register system prove the point. The House demonstrated a remarkable display of double standards by voting down a requirement to perform basic anti-money laundering checks on the hundreds of thousands of UK companies formed annually through Companies House in the UK.
“We are a long way from any change in Cayman’s existing verified ownership regime. The Cayman Islands financial services industry will support fully all actions taken by the Cayman Islands Government to assess its options for responding to this unjustifiable encroachment into matters within Cayman’s domestic competence.
“In the meantime, Cayman Finance notes the UK Government’s explicit assurance that it will work with the Cayman Islands in shaping any implementation of this legislation; that the UK will respect the Cayman Islands’ constitutional rights; and its assurance that it will work with the Cayman Islands to protect its interests. Cayman Finance will support the Cayman Islands Government in ensuring that the UK delivers on these assurances in any proposals to make changes to the Cayman Islands’ globally endorsed existing Anti-Money Laundering regime and it’s highly successful, well-regulated and globally significant financial services industry.”
David Burt, the premier and minister of finance of Bermuda, said the action taken in the UK Parliament today signals a significant backwards step in the relations between the United Kingdom and the Overseas Territories.
Burt commented: "In the case of Bermuda, it is ironic that in the very year we celebrate the 50th Anniversary of our Constitution, Bermuda is confronted with this regrettable ‘about face’ which fails to acknowledge this long history of full internal self-government. The Government of Bermuda has a strong constitutional position and the people of Bermuda can rest assured that we will take the necessary steps to ensure our Constitution is respected. This attempt to legislate for Bermuda from London is a return to base colonialism and is an action that has no place in 2018. It is especially telling that the Crown Dependencies are not included in this amendment which is restricted to the Caribbean OTs and Bermuda."
Cayman Finance, Jude Scott, Tax, UK Government, House of Commons, Cayman Islands