The Cayman Islands government has recently concluded a consultation on a proposal to introduce a public register of the beneficial owners of Cayman-registered entities. The proposal has not been well received. The government had committed to carrying out the consultation following the June 2013 G8 Summit, at which the UK’s Prime Minister, David Cameron, called for greater transparency within the Overseas Territories and Crown Dependencies on matters of taxation.
The proposed register would serve as a repository of information relating to the ultimate ownership of Cayman companies and other legal structures, allowing individuals both inside and outside Cayman to determine who controls, and more importantly profits, from them. The proposal has been described by some as being impractical. Others have branded it as an ill-conceived plan for increasing the tax base of jurisdictions overseas, while failing to reflect global regulatory standards that any jurisdiction should aspire towards. It has also drawn criticism for being an unwarranted and disproportionate intrusion on the legitimate right to personal privacy.
While some commentators have dismissed the proposal out of hand, others have expressed concern that the government would be responsible for collecting relevant data, a task that it is not well suited to undertake. They say that instead the process of gathering data should be managed by private sector regulated corporate service providers, much like is the case now, but with expanded roles and responsibilities.
A common lament by industry groups is that a public register will make Cayman less competitive, placing it at a disadvantage when compared with other offshore centres, as well onshore jurisdictions like the City of London and Delaware, which do not require the disclosure of beneficial interests. Concerns about competitiveness are likely to resonate across the offshore Commonwealth.
While the outcome of the consultation is not yet known, the general sense is that David Cameron may not get his way on this initiative. The Cayman Islands (and the rest of the OTs for that matter) will likely continue to declare their commitment to financial transparency; however, establishing public registers of beneficial interests is likely to be regarded as being incompatible with that broad aim.