Island jurisdictions grapple with push for beneficial ownership registry

Tim Dawson of Maples and Calder explains requirements for Cayman's beneficial ownership registry. - Photo: Kayla Young

As the Cayman Islands works to establish a beneficial ownership registry that will be accessible to law enforcement, another island nation continues to wrestle with international pressure on the subject.

The Bahamas already requires registered agents to maintain beneficial ownership information but faces ongoing pressure from U.S. regulators to increase transparency, Bahamian lawyer Ryan Pinder of Graham Thompson said at the 2017 STEP Caribbean Conference.

The Society of Trust and Estate Practitioners forum brought together business professionals from across the region at the Kimpton Seafire Resort for three days of discussion on tax policy, asset protection and information exchange.

With Cayman’s registry scheduled for completion by the end of June, conference attendees grappled with the implications for privacy.

In the wake of major information leaks such as the Panama Papers, Pinder questioned whether full public registers will eventually become necessary. For now, however, public registers are not the international norm.

While the United Kingdom offers mostly publicly searchable registers, the United States does not. The European Union is pushing for centralized registries, but members are not yet required to make the information public.

Cayman’s registry will not be publicly searchable and will not automatically guarantee information exchange. Caymanian and British authorities will be able to submit registry information requests but will not have the ability to “fish” for information, said Maples and Calder associate Tim Dawson.

Crown dependencies and overseas territories have been under pressure for years to establish such registries. Cayman agreed to comply with the U.K. request last spring.

Pinder decried U.S. pressure for offshore jurisdictions to take registries one step further and make beneficial ownership information publicly searchable. He called such pressure “a new form of economic colonialsm” and “an attempt to drive the Bahamas to go beyond what is recognized as international regulatory standards.”

He questioned whether the U.S., in turn, would establish a public registry to level the playing field.

Pinder said adequate treaty arrangements already exist for authorities to request necessary information from the Bahamas.

He criticized the U.S. Foreign Account Tax Compliance Act’s attempt to establish trust registries as a backdoor way to create a public register.

He said Latin American clients have resisted public registries because of safety concerns. He added that clients continue to place high value on financial privacy.

Embrace transparency

Also at the conference, British Virgin Islands lawyer Tim Prudhoe advised offshore jurisdictions to embrace transparency and find benefit in a politically turbulent world.

“There are lots of people wanting to plan their assets. We are just as well placed as others to take advantage of that heightened anxiety,” he said.

In a world of data breaches and hackers, he described a “veritable crusade for transparency” and called confidentiality dead.

He said privacy in an absolute sense can no longer be expected and is no longer a selling point. He pointed to a recent survey in which 77 percent of those polled expected a network of tax information exchange agreements to be established by 2020.

“One way or another, there is going to be information exchange,” he said.

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