The UK government’s plans to create a publically accessible register of data about who are beneficial owners of companies continues – and subsequent European plans to add trusts to the list – continue to send shockwaves through the offshore financial world. The Cayman Islands government has strongly opposed such a move unless done globally, a report said.

Cayman Islands Premier Alden McLaughlin has said that the British Overseas Territories are united against such a registry, according to The Cayman Compass, a local news service.

“Unless such registers become the new global standard…neither we, nor any other overseas territory or Crown dependency intend to go first and intend to have our economic (sic) experimented with and potentially damaged,” McLaughlin was quoted as telling the jurisdiction’s legislature.

The Cayman Islands is not the only UK-related jurisdiction unhappy about a move that critics fear could put legitimate client privacy at risk. Bermuda, a British Overseas Territory, has said it will only sign to such a registry if the UK, US and Canada do so, and not before.

The issue is controversial because while a registry might sound an effective way to stop money laundering and other illicit financial activity, there are fears that disclosure of beneficial ownership could leave owners under threat, particularly if they are from jurisdictions with weak governance, corruption and other problems. Anti-offshore campaigners argue that disclosure of such ownership is necessary to prevent tax evasion.  

In 2013, David Cameron, the UK prime minister, announced plans to create a registry of beneficial ownership data that could be viewed by the public. The European Parliament has endorsed the idea of passing legislation to create such registers and has gone further than UK proposals because they include beneficial owners of trusts. As trusts are typically a feature of Anglo-Saxon law rather than Continental European law, such a move is seen as disproportionately affecting the UK and its various territories and dependencies.

George Hodgson, deputy chief executive at the Society of Trust and Estate Practitioners, told this publication that territories such as the Cayman Islands and Bermuda fear that other major countries besides the UK will not adopt such a register, so it would make little sense for them to do so. UK legislation is going through parliament and locations such as the Cayman Islands are expected to follow it. “There is real concern that such overseas territories will be put at a competitive disadvantage by this,” he said.

On the issue of how trusts have been targeted by the European parliament as entities to be put on a register, Hodgson said UK official figures show that at least one in four beneficiaries of trusts can be classes as vulnerable and that a public register raises a serious issue of such persons’ welfare.