The Caribbean jurisdiction is considering a "legitimate interest" test to determine which persons and organisations should have access to public registers of companies' beneficial owners.

The government of the Cayman Islands has given a fresh twist to the debate over beneficial ownership public registers since this idea was rejected just over a year ago by a top European court. 

Next year, the Ministry of Financial Services and Commerce will work with “relevant stakeholders” to allow the introduction of an “enhanced beneficial ownership framework under” the new Beneficial Ownership Transparency Act, a statement from the Caribbean jurisdiction said late last week. 

The government said it remains committed to bringing in public registers of public ownership of companies. 

Debate was stirred in 2022 when the  Court of Justice of the European Union’s (CJEU) ruled against public registers. Last week, the British Virgin Islands appeared to row back from going for complete public disclosure by referring to a “legitimate interest test” to be shown by people seeking access to beneficial ownership data.

The Cayman Islands appears to be taking a similar line.

The Cayman government said: “We are currently progressing to provide access to those members of the public who meet the 'legitimate interest test’ required by that case. This will include access to parties who are genuinely seeking information so as to prevent or combat money laundering and terrorist financing (for instance media and civil society organisations under specific circumstances per the ECJ Judgment). We anticipate that this enhanced beneficial ownership framework will be introduced no later than Q4 2024.”

Statements from the Cayman Islands and BVI highlight how significant the CJEU ruling – which provoked criticism from those demanding more transparency in the fight against illicit finance and tax evasion – has been. For years, governments around the world have pushed for more openness about beneficial ownership, although privacy campaigners have also warned that without safeguards, important information could fall into the wrong hands, such as kidnappers. (This publication has commented on this matter.)

In late October the Financial Action Task Force, aka FATF, said it welcomed moves by the Cayman Islands and Panama in making progress to improve their AML and CFT regimes. (The FATF is an intergovernmental group focused on fighting money laundering and counter-terrorism finance.)

The legislation grants access to the Cayman Islands central register of beneficial ownership information by “competent authorities, law enforcement agencies, licensed financial institutions, and the public,” the government said.

“We recognise that the UK continues to champion anti-money laundering and counter-terrorist financing efforts,” André Ebanks, Minister of Financial Services and Commerce, said in the statement. “As such, the Cayman Islands greatly values our partnership with the UK, along with our sister Overseas Territories and Crown Dependencies, to protect the global financial system and the public from criminality and illicit financial flows.”

“This framework will make strides towards greater transparency, in accord with the updated commitment to the UK and also to prepare for the Financial Action Task Force’s 5th Round of Mutual Evaluations,” Ebanks said.

“We fully acknowledge the importance of aligning with evolving global standards and, in this regard, we are actively taking steps to meet the new FATF standards related to transparency, as demonstrated by the passage of the Beneficial Ownership Transparency Act on the 23rd November 2023. This Act will provide for access to the Cayman Islands central register of beneficial ownership information by competent authorities, law enforcement agencies, licensed financial institutions, and the public,” the Cayman Islands’ government statement continued.

“We are dedicated to maintaining our strong bilateral partnership with the United Kingdom in all respects, including jointly combatting illicit financial flows in a proportionate manner in order to achieve a responsible and transparent global financial system,” the jurisdiction’s government added.