Cayman wants to impose higher fines to companies that are not following the rules as the jurisdiction discusses a raft of financial services legislation to adress CFATF's criticisms.
In total eleven bills were scheduled for debate regarding Cayman's regulatory framework, most of them designed to enhance the existing anti-money laundering and counter financing of terrorism (AML/CFT) regime and to meet the criticisms contained in the latest report by the Caribbean Financial Action Task Force (CFATF), which raised numerous concerns about this jurisdiction's vulnerability to financial crime.
The biggest change proposed would see tougher sanctions imposed. One of the key criticisms by CFATF is that the current maximum fine of CI$25,000 against trusts and corporate service providers that fail to maintain updated beneficial ownership information is not enough.
The maximum of CI$25,000 may not serve as a deterrent for a breach as significant as obligation to maintain beneficial ownership information"
"The maximum of CI$25,000 may not serve as a deterrent for a breach as significant as obligation to maintain beneficial ownership information, particularly in the case of larger companies who can afford to pay such a fine of KYD$25,000 for breaches is not proportionate to other fines, neither is it fully dissuasive," Financial Services minister Tara Rivers quoted from the report.
The amended bill would implement increased fines for repeat offences.
"The bill therefore proposes an overall increase to relevant fines in a tiered approach for first, second, and third convictions with the ability for the Grand Court to order that the entity be struck off of the register of companies on the third conviction should the court determine that to be an appropriate order to make," Rivers said. A second offence would come with a $100,000 fine. A third offence would require the court to determine appropriate measures.
Officials at the financial services ministry have denied that this relates to any preparations to implement the controversial public beneficial ownership register.
Government has consistently said it will resist the impending order-in-council by the UK to introduce a public register of all the people that own companies and other financial entities domiciled in Cayman until it becomes a global standard. However, some of this current legislation will require offshore companies to be much more transparent.
Under the FATF methodology, this disclosure includes the company name, proof of incorporation, legal form and status, address of registered office, basic regulating powers and a list of directors.
"The Companies Law does not currently provide for a list of directors to be made publicly available," River said. "We note that some of our competitors, including Jersey, Guernsey, Luxembourg, Hong Kong, Bahamas, Ireland and Bermuda all have made a list of directors available to the public."
"Because of the importance of this requirement for an FATF review and the potential impact to the financial services industry, careful consideration was given to the information which should be included in the list of directors."
The proposed amendment to the Companies Law would require only the names of current company directors and current alternative directors be made public.
Before debate, premier Alden McLaughlin announced a number of measures to bolster the financial services industry, including funding for 100 new positions for enforcement purposes.
"This includes the strengthening of the dedicated Anti Money Laundering Unit at the Cayman Islands Monetary Authority and a dedicated cross-border Money Laundering and Terrorist Financing Task Force within the Royal Cayman Islands Police Service," McLaughlin said.
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