CAYMAN ISLANDS: Cayman moves toward more beneficial owner access

The Cayman Islands Government is moving towards expanding who can access beneficial ownership information about financial entities registered here, beyond law enforcement agencies. Cabinet is expected to consider the Beneficial Ownership (Legitimate Interest Access) Regulations, 2024 shortly, which poses the question of what legitimate interest is and who has it.

The government continues to battle against full public access, but the coming regime change will offer some members of the public access to some ownership information. However, the key issue will be how legitimate interest is defined. While the press and certain non-profits from across the world are likely to be some of the first to claim that legitimate interest, it remains very unclear who decides whether they do or not, given that such access could be said to clash with privacy rights and data protection legislation.

A press release issued by the financial services ministry on Thursday, following Premier Juliana O’Connor-Connolly’s meetings at this year’s Joint Ministerial Council in London, said that as the minister for Financial Services, she had reaffirmed Cayman’s position of “reasonable cooperation with the UK” on beneficial ownership transparency. She said the CIG was also introducing “robust access” to information “based on legitimate interest protocols that align with evolving global standards and our constitutional obligations”.

But this new regime is far from clear.

The concept of legitimate interest recognises that access to beneficial ownership information extends beyond law enforcement based on the 2022 EU Court judgment (Sovim v Luxembourg). This judgment balanced transparency with privacy rights by requiring access to beneficial ownership information only where there is a “legitimate interest” and is an important guide to what legitimate interest actually is though it is not yet properly defined.

“While there is currently no recognised global standard for legitimate interest access (LIA), it is prudent that we carefully balance transparency with privacy rights while taking the necessary steps to introduce LIA in relevant money laundering and sanctions legislation,” the premier said in the ministry’s release.

Officials added that, in keeping pace with these and other global developments, the Cayman Islands has invested time, effort and expense over the past few years in developing and implementing the Beneficial Ownership Transparency Act. This now aligns with current global standards and consolidates all of the Cayman Islands’ previous beneficial ownership legislation. It also fosters compliance through “multilayered robust verification requirements”.

The ministry claims that this law augments Cayman’s reputation for international cooperation by providing rapid, unfettered access to our law enforcement agencies and competent authorities. Access is also provided to government agencies, including those involved in public procurement, licensed financial institutions, and regulated designated non-financial businesses and professions.

It also assists us with preparations for the Cayman Islands’ 5th round of mutual evaluation under the Financial Action Task Force (FATF), which sets the global standard for beneficial ownership transparency.

As part of the framework, the Beneficial Ownership (Access Restriction) Regulations, 2024, are expected to be published and enacted on 9 December. These will form the legal framework for protecting people for whom disclosing their beneficial ownership information to the public would establish a threat of serious harm.

The rules relating to legitimate interest access will come later and will permit certain members of the public to access information once they have demonstrated a legitimate interest for doing so.