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  • Tag Archive: Transaparency

    1. Cayman Islands Beneficial Ownership Transparency Bill 2023

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      Cayman Islands Beneficial Ownership Transparency Bill – Introduction

      In August 2023, the Cayman Islands legislature introduced the Beneficial Ownership Transparency Bill 2023 (BOR Bill) after extensive consultations with key stakeholders in the financial services industry.

      This bill aims to streamline and enhance the existing beneficial ownership framework while aligning with international standards, particularly Recommendation 24 of the Financial Action Task Force (FATF) Recommendations.

      In this article, we look at the key aspects of the BOR Bill and its implications, with a focus on investment funds.

      Consolidating Existing Legislation

      One of the primary objectives of the BOR Bill is to consolidate various pieces of beneficial ownership legislation into a single cohesive framework.

      This consolidation simplifies compliance and ensures consistency across the Cayman Islands’ financial landscape. It also brings the Cayman Islands in line with international best practices, promoting transparency and accountability.

      Enhancing Transparency

      The BOR Bill takes a step further in promoting transparency by ensuring that legal entities operating within the Cayman Islands provide accurate and up-to-date beneficial ownership information.

      This aligns with FATF Recommendation 24, which emphasizes the importance of granting access to reliable beneficial ownership data.

      Key Changes Impacting Investment Funds

      For investment funds, fund managers, and advisors in the Cayman Islands, several critical changes deserve attention:

      Inclusion of All Partnerships

      The BOR Bill brings all partnerships, including exempted limited partnerships commonly used in investment fund structures, under the beneficial ownership regime.

      This means that such partnerships will be subject to the same disclosure requirements as other legal entities.

      Removal of Exemptions

      The current exemptions available under the existing beneficial ownership regime will be eliminated.

      This includes the exemption for funds registered under the Mutual Funds Act (Revised) or the Private Funds Act (Revised).

      Instead, these registered funds will have to follow an “alternative route to compliance.” They must provide their corporate services provider with contact details for a licensed fund administrator or another licensed contact person within the Cayman Islands who can supply beneficial ownership information promptly upon request.

      Redefined “Beneficial Owner”

      The definition of “beneficial owner” will be revised to more closely align with Cayman’s Anti-Money Laundering Regulations.

      While the ownership and control percentage thresholds (25%) remain unchanged, this alignment ensures consistency and clarity in identifying beneficial owners.

      Securities and Virtual Asset Entities

      Entities registered with the Cayman Islands Monetary Authority under the Securities Investment Business Act or the Virtual Asset (Service Providers) Act will no longer be exempt.

      They will be required to establish and maintain a beneficial ownership register.

      What Should Investment Funds Do?

      While there is no immediate action required until the BOR Bill becomes law (expected in phases), Cayman Islands investment fund clients are advised to prepare for compliance in advance. Here’s how:

      • Identify Entities: Review all Cayman Islands vehicles to determine whether they fall within the scope of the new legislation.
      • Register Compliance: For funds under the Mutual Funds Act (Revised) or the Private Funds Act (Revised), ensure they meet the “alternative route to compliance” requirements.
      • Review Existing Registers: Entities already subject to beneficial ownership regulations should assess their existing registers to ensure they align with the revised “beneficial owner” definition.
      • Understand Obligations: Familiarise yourself with the enhanced obligations under the BOR Bill to ensure future compliance.

      Public Register Considerations

      The BOR Bill acknowledges the Cayman Islands Government’s commitment to the UK government regarding public beneficial ownership registers.

      However, it does not implement public access provisions but lays the foundation for future regulations.

      The introduction of public registers hinges on future resolutions from the Cayman Parliament and ongoing consultations between the Cayman Islands Government and the UK government, considering recent judgments and privacy considerations.

      Cayman Islands Beneficial Ownership Transparency Bill – Conclusion

      The Cayman Islands’ Beneficial Ownership Transparency Bill 2023 reflects ongoing efforts to align with international standards while maintaining its status as a global financial hub.

      Staying informed and prepared is crucial for investment funds and stakeholders to navigate these changes effectively.

      If you have any queries about the Cayman Islands Beneficial Ownership Transparency Bill  then please get in touch