Cayman Islands: Cayman Confidential: Exploration of Evolving Regimes

Significant developments this year, both in legislation and business practice, demonstrate the evolving nature of confidentiality regimes and considerations in the Cayman Islands, writes Simon Dickson and Rhiannon Williams.

The repeal of the Confidential Relationships (Preservation) Law (2015 Revision) and the publication of the Data Protection Bill, 2016, plus enhanced awareness of the importance of cyber security, all play a role in the framework balancing transparency with adequate and internationally recognised safeguards to protect the confidential information of both individuals and businesses.

CONFIDENTIAL INFORMATION DISCLOSURE LAW, 2016: A WELCOME REFORM

On 22 July 2016 the Cayman Islands Government published the Confidential Information Disclosure Law, 2016 (the CID Law) which repeals the Confidential Relationships (Preservation) Law (2015 Revision) (the CRP Law) and establishes a new statutory regime in the Cayman Islands for the disclosure of confidential information.

The CRP Law dates back to 1976 and was enacted with a view to maintaining the confidentiality of commercial activities which take place in, or in connection with, the Cayman Islands. The CRP Law applied to certain categories of individual and set out what constituted confidential information, certain gateways through which information could be lawfully disclosed and prescribed penalties for unlawful disclosure of confidential information.

Penalties for breaching provisions of the CRP Law were severe and included fines, imprisonment and the disgorgement of profits. However, given that there have been no prosecutions in the almost 40 year period since the CRP Law was introduced, it could be argued that these strict penalties were practically ineffectual.

The CID Law appears to be more of an enabling piece of legislation compared to the punitive approach adopted by the CRP Law. The key differences can be summarised as follows:

  • the abolition of the criminal offence of disclosure;
  • it must be established that the information imparted was subject to a duty of confidence before any breach can be established (instead of the automatic protection of information imparted to a person carrying on business of a professional nature); and
  • an additional "whistleblowing" gateway through which information can be lawfully disclosed in certain circumstances if it is in relation to "a serious threat to the life, health, safety of a person or in relation to a serious threat to the environment."

The decriminalisation of disclosure is welcome, not least because it was an ineffective deterrent. However, notwithstanding such decriminalisation, businesses should remain vigilant to their on-going obligation to maintain confidentiality. The CID Law does not contain any specific penalties for contravening its provisions, and so the court will apply common law and rules of equity in the event of any breach. The publication of the CID Law and the amendments to the statutory framework which it enacts play a key role in balancing the Cayman Islands' obligations to be financially transparent with its duty to protect the confidentiality of lawful business activities.

THE DATA PROTECTION BILL: A WORLDWIDE CONCERN

The Data Protection Bill, 2016 (the DPB) was published by the Cayman Islands Government on 1 April 2016. This draft legislation aims to balance the rights of individuals to expect that their personal data will be kept safe, and the legitimate requirements of businesses and public authorities to collect and use such data.

The need for data protection legislation has become increasingly urgent over recent years. Exponential increases in technical innovations and applications have meant that more public and private entities are collecting and maintaining personal data, and the ease with which this data can be transferred across national boundaries has significantly improved. The negative consequences of such personal data being used illegitimately, both to the individual concerned personally and to the reputation of the disclosing entity, are a worldwide concern and have led to data protection legislation being implemented in most developed countries.

The DPB is modelled on the UK's Data Protection Act 1998, with some simplification and enhancements customised to the Cayman Islands. The UK legislation is itself based on the EU's Data Protection Directive, which is generally considered to be the most rigorous data protection standard globally. The key purpose of aligning the DPB with the EU legislation is that it is hoped that the EU Commission will consider the DPB to be an "adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data" in the Cayman Islands, as required by Principle 8 below; the effect of such a decision is that personal data can flow from EU member states and other countries which have adequately adopted these principles to the Cayman Islands without any further safeguards being required. If and when this legislation comes into force businesses operating here will also need to ensure that they comply with each of the Principles at all times, and Principle 8 in particular when dealing with their overseas clients and colleagues.

THE PRINCIPLES

The DPB is centred around eight Data Protection Principles (the Principles)

  1. Personal data shall be processed fairly and only if specific conditions are met (for example, consent has been given). Additional conditions apply to sensitive personal data.
  2. Personal data shall be only obtained and processed for specified lawful purposes.
  3. Personal data shall be adequate, relevant and not excessive in relation to the purpose(s) for which they are collected or processed.
  4. Personal data shall be accurate and, where necessary, kept up-to-date.
  5. Personal data shall not be kept for longer than is necessary.
  6. Personal data shall be processed in accordance with the rights of individuals as specified under this Data Protection Law.
  7. Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss, destruction of, or damage to, personal data.
  8. Personal data shall not be transferred to a country or territory unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.

Although each of the Principles is important, the last two are interconnected and of particular interest. Principle 8 is relevant due to the importance for the Cayman Islands of operating internationally, as discussed above.

The obligations imposed by Principle 7 play a vital role in enabling private and public entities to adhere with the obligations imposed by Principle 8 (and the other Principles).

All such public and private entities should take note that any failure to adhere to Principle 7 (and indeed all of the Principles) is a breach which could give rise to enforcement action by the Information Commissioner, which includes monetary penalties and criminal prosecutions; given the necessity for increasingly complex information security systems as discussed further below, it is clear that maintaining "appropriate technical and organisational measures" will be both expensive and an evolving process.

CYBER SECURITY: AN OVERRIDING CONSIDERATION

In addition and complementary to any legal obligations, recently there has been tremendous commercial focus on the importance of maintaining appropriate information security systems in light of well-publicised breaches of, and unauthorised disclosure of data by, professional firms and government entities, causing severe financial and reputational loss. The Cayman Islands, on account of its role as an international finance centre, is particularly vulnerable to cyber attack. Due to the increasing threat of such attacks, on 25 May 2016 the Cayman Islands Monetary Authority (CIMA) issued guidance to its licensees to raise awareness generally and remind licensees to remain focussed on their organisations' data security.

CIMA's guidance notes that as well as reviewing and strengthening its own security strategy, CIMA strongly encourages its licensees to assess their cyber security risks and strategies and to test their information security systems for vulnerabilities. In future, CIMA plans to review its licensees' approaches to data security risk management by examining the technical controls, incident response and / or staff training a licensee has in place, as appropriate to its business and risk profile.

CAYMAN: TRANSPARENCY, CONFIDENTIALITY, SECURITY

These legislative and commercial developments are part of the evolution of confidentiality regimes in the Cayman Islands which are important in maintaining its reputation and position as an international finance centre.

They also demonstrate the balance which needs to be struck between operating in a transparent manner whilst protecting the confidentiality of lawful business activities, and also between the protection of individuals' data and the legitimate requirements of business and public authorities to use such data.

Awareness of and adherence to good information security practices is of the utmost importance, both to enable compliance with the legislation and in response to the escalating risk of cyber attacks on the Cayman Islands generally.

About the Authors

Simon is a Partner in the Litigation and Insolvency Department in the Mourant Ozannes Cayman Islands office. Prior to this, he was a barrister in chambers in London. Simon has extensive experience in insolvency and restructuring, fraud and asset tracing and regulatory matters. Simon graduated from Durham University in 1996. He was called to the Bar of England and Wales in 1998 (currently non-practising) as a Harmsworth Scholar and the Cayman Islands Bar in 2002. He is a member of the Honourable Society of the Middle Temple.

Rhiannon specialises in all areas of corporate, finance and commercial work, with a particular focus on investment funds. Rhiannon advises on joint venture arrangements, mergers and acquisitions, corporate finance, corporate governance and regulatory issues, as well as the establishment, management and restructuring of Cayman investment funds. Rhiannon is an Attorney of the Grand Court of the Cayman Islands and a Solicitor of the Senior Courts of England and Wales (currently non-practising). Rhiannon studied Economics at Churchill College, Cambridge and studied law at the BPP Law School in London.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.