Beneficial ownership issue left open ended after JMC

(CNS) UPDATED: The Cayman Islands and other overseas territories have agreed to hold beneficial ownership information in their jurisdictions via “central registers or similarly effective systems”, according to the communique released by the FCO following this week’s meeting in London with territory leaders and the UK government. The agreement on the thorny issue appears to have been left open-ended without the feared pressure from the British to make the registers public.

In a statement released by the premier’s press office, Alden McLaughlin said, “Our position on beneficial ownership, and our zero tolerance position on corruption and illicit activity, remains unchanged.” He said there has been a mischaracterisation of the issue of beneficial ownership and of public central registers being the only solution for sharing of information.

“We have effective mechanisms for the sharing of information for tax purposes both on request and by automatic exchange of information,” the premier stated. “These mechanisms have been assessed and blessed as being in accordance with current international standards.” He added, “From any objective perspective, we are transparent for tax purposes and we collaborate to avoid an abuse of our system by criminals.”

In the communique the British overseas territories leaders collectively stated, “We agreed that addressing this issue would be given the highest priority and that progress on implementation would be kept under continuous and close review.” the communique states. A technical dialogue is now expected between the territories and UK authorities on developing a timely, safe and secure information exchange process for law enforcement.

Staving off either a publicly accessible register or even one that allows the UK law enforcement agencies direct access to information without a request of any kind was a commitment made by Alden McLaughlin before he set off for London.

“The significance of this JMC, and the mark of its success, is that we have advanced a mutual understanding with relevant UK agencies,” said Wayne Panton, the financial services minister. “The core issue for the UK and its territories is to further enhance our cooperation on investigations related to serious crime.”

He said that Cayman had invited representatives from the UK’s National Crime Agency and the Serious Fraud Office to engage with the Attorney General’s Chambers and the financial intelligence unit here in order to improve effective and efficient collaboration.

The communique also confirms public statements made by British Prime Minister David Cameron previously that it was not appropriate to refer to British overseas territories as “tax havens”, an official acknowledgment that will be welcomed by the offshore industry. The territories with financial service sectors, including Cayman, have also all committed to be early adopters of the new OECD global standard on tax transparency, with first exchange of data taking place in 2017.

Meanwhile, coming under fire in the UK from various NGOs such as Transparency International for not going far enough, the FCO’s BOT minister, James Duddridge, told the UK media that “an enormous amount of progress” had been made over the past few years on financial services transparency, but the technical side of implementing such information sharing was “tricky” and that there was no timetable yet for implementing any registers.

The agreed formal outcome of the London meeting covers a wide range of other issues, and while all of the agreed commitments will not directly impact Cayman as much as the issues regarding the offshore industry, agreements on the environment may be another important factor.

Against the backdrop of plans that threaten to destroy acres of unique and ancient coral reef structures and other marine habitat in the George Town Harbour in order to construct a costly cruise berthing facility, Cayman has committed to protecting natural resources.

The territories have agreed with the UK to create an Overseas Territories’ Environment Ministers Council to “enhance dialogue amongst all territories … and encourage them to meet annually to drive the environmental agenda in the wider context of small states and islands.”

The goal is to share scientific research and information. The agreement acknowledges that the territories are vulnerable to climate change with coastal erosion, severe weather events and flooding, and the need to better understand the risks. The communique also outlines the importance of the marine environment to island communities.

“We recognised that long-term sustainable use of marine resources is a key element of overall marine conservation strategy for the overseas territories. Together we will strive to enhance the management of the marine ecosystem alongside local traditions and sustainable marine usage across the overseas territories. We affirmed that such enhancements must be based on the best available scientific research, must deliver clear objectives,” the agreement states.

See communique here.