The Cayman Islands will introduce a public register showing the beneficial owners of companies based in the jurisdiction by 2023.
The register – part of the EU’s 5th Anti Money Laundering Directive (5AMLD) – will show the beneficial owners of all financial entities domiciled in the territory, which is key to showing who is behind shell companies.
Alden McLaughlin, premier of the British Overseas Territory, said the government had committed “to introducing a public register of company beneficial ownership when it becomes an international standard” in 2013.
McLaughlin said the introduction of the UK’s public beneficial ownership register – launched for companies in 2016 and set to be extended to properties owned by companies and legal entities in 2021 – and the EU’s 5AMLD “represents a shift in the global standard and the practices used to combat illicit activity”.
The Cayman Islands has no corporation tax and does not impose direct taxes on residents, and is a popular base for wealthy individuals and for multinational corporations to establish offshore subsidiaries.
The move brings the Cayman Islands in line with British crown dependencies – Jersey, Guernsey, and the Isle of Man – which announced plans in June to introduce public registers of the true owners of offshore firms by 2023.
“Financial secrecy is not tolerated in our jurisdiction,” the Cayman government said in a statement.
“While undue focus is often placed on our jurisdiction, we fully appreciate the need to ensure coherent and efficient registration and exchange of beneficial ownership information to facilitate the transparent flow of legitimate capital,” it said.
Anti-corruption organisation Global Witness called on other British Overseas Territories to follow the Cayman Islands’ lead.
“This commitment from the Cayman Islands to reveal the real people behind companies on their shores shows how company transparency is now the global standard in financial integrity,” Naomi Hirst, a campaigner at Global Witness, said.
“The writing is on the wall for the rest of the British Overseas Territories who will today be feeling the pressure to follow suit and announce their own plans as a matter of urgency,” she added.
Cayman Finance, the jurisdiction’s financial services association, said it supported the government’s decision to introduce the register.
“Our commitment to the highest global standards for transparency with tax and law enforcement authorities is already a key reason why leading international investors prefer to do business in the Cayman Islands so we are very confident they will continue to do so,” the association said in a statement.