The chief executive of Cayman Finance, the organisation representing the financial services industry in the Cayman Islands, has questioned the logic and potential effectiveness of the planned implementation of a public central registry of beneficial ownership by the UK Government.
The UK Government recently issued details of its proposals. But Gonzalo Jalles believes the proposal does little to resolve the real issues describing it as designed to “simply satisfy an ill-founded hunger for reducing privacy rights”.
“Notably, the proposal does not regulate corporate service providers and put the responsibility of reporting solely on the companies and its beneficial owners (self-reporting),” Jalles said. “By contrast, the Cayman model ensures a third-party (the corporate service provider) is responsible for having the information, and failure to comply with one of its clients can easily cost its license and livelihood.
“Also notably, the proposal seeks to collect information of those owning more than 25 percent of a company and report it on annual basis, while the Cayman standard works at the minimum with anybody owning 10 percent of a company or beneficial interest.
“The question to ask is how difficult would it would be to those wanting to preserve their privacy for the right reasons or their secrecy for the wrong ones to find four additional owners with 20 percent each including family members and accomplices?”
He notes that it is clear the proposal goes further than Cayman’s current system in one aspect: the information will be available to the public. But he questions the validity of this approach.
“Does a system without rigorous checks and balances to prevent a ‘garbage in – garbage out’ result make whatever output is produced widely available to the public increase trust? Or is trust better promoted by ensuring the right information is available to the appropriate parties, continuing to allow for rightful individual privacy while eliminating secrecy?”
Gonzalo Jalles, Cayman Finance