By 
The Cayman Islands has often been referred to pejoratively as a “secrecy jurisdiction”. The two main supports for the secrecy allegation were on the one hand the existence of “secrecy” legislation, The Confidential Relationship Preservation Law (CRPL) dating back to the 1970s, which made it a criminal offence to divulge “confidential information” as defined in that Law, and on the other hand the absence of publicly available information about the directors and shareholders of Cayman Islands companies unlike, for example, the UK.
In fact, not only was nobody ever held criminally liable for divulging confidential information, but no prosecution was ever brought under CRPL. More significantly, the one thing the law never did was to prevent confidential information being shared with law enforcement agencies and foreign tax authorities. The Cayman Islands has been at the forefront of requiring licensed service providers to collect and retain verified beneficial ownership information and providing an effective mechanism of making such information available at the request of foreign law enforcement and tax authorities. In this respect it was streets ahead of the UK, which did not require such information to be verified so that Michael Mouse could be named as a shareholder or director, or US states, which did not even require such information to be collected in the first place.
In any event, the so-called “secrecy” law was repealed in 2016 and replaced with the Confidential Information Disclosure Law, 2016 (CIDL), which is a more modern and fit-for-purpose law based upon civil liability for breach of confidence under common law and as such wholly unobjectionable.
The question of the lack of availability of public information as to the directors and shareholders of Cayman Islands companies has also been addressed recently by the coming into effect of an amendment to the companies legislation and by a significant government announcement.
Public register of directors
Section 5 of the Companies (Amendment) Law 2019 introduced a requirement for the Registrar of Companies to make available to the public, upon payment of a fee, the names of the current directors of a Cayman Islands company and this Law came into force on October 1, 2019. Now for the very first time anyone who wishes to know the identity of the directors of a Cayman Islands company may pay CI$50 (US$60) and visit a kiosk in the lobby of the Government Administration Building in George Town to find out. A similar provision applies in relation to Limited Liability Companies under section 3 of the Limited Liabilities Companies (Amendment) Law 2019.
Beneficial ownership registers
On October 9, 2019, the Cayman Islands government gave a formal commitment to implement public registers of the beneficial ownership of companies when such registers become implemented by the UK and by EU member States by 2023 pursuant to the requirements of the Fifth Anti-Money Laundering Directive.
This announcement follows the earlier announcements from the Crown dependencies of Jersey, Guernsey and the Isle of Man made in June.
At first sight it appears to be a policy shift by the Cayman Islands government, which had hitherto opposed the mandating by the UK government of beneficial ownership registers in the Overseas Territories by Order in Council. However, this is too simplistic an analysis. The position of the Cayman Islands government has always been that there should be a level playing field and that it will comply with global international standards. The announcement therefore represents a timely recognition that global standards will inevitably advance to the point of public beneficial ownership registers and that the Cayman Islands will take the necessary steps in advance of that time to be ready to comply when the time comes. As Cayman Finance said in its response to the announcement: “Now that the UK and EU are establishing an emerging global standard for ownership registers to be public, the Cayman Islands financial services industry will work closely with the Cayman Islands Government to ensure we meet that standard also.”
It has to be borne in mind that the issue here is not the collection of beneficial ownership information or the sharing of that with relevant authorities, which already happens, but solely whether such information should be made public.
The Cayman Islands, together with the Crown Dependencies, have by their respective announcements, placed themselves at the forefront of the development and implementation of global standards, rather than being seen as reluctant followers. Whether Bermuda and the British Virgin Islands will follow suit remains to be seen, but it is difficult to see how they could not without doing themselves reputational damage.
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