Countries all over the world have embraced using (semi-) public UBO (Ultimate Beneficial Owner) registries as transparency has become a high priority. The European Union (EU) has decided that all their countries need public UBO registries and these regulations are flowing over into their Caribbean territories and islands, like the Cayman Islands and the British Virgin Islands (BVI).
The UK government has said that their overseas territories need to adopt public UBO registries by 2020. This is a concern for these islands since they believe it will infringe on the privacy of their clients that use the islands for estate planning and asset protection purposes.
Current UBO registers
Regulations surrounding UBO are not new in these areas, Cayman and BVI do have central UBO registers currently. The Beneficial Ownership Secure Search System Act, (the "BOSS Act") was enacted in 2017 in the BVI. This BOSS Act facilitates the effective storage and retrieval of beneficial ownership information for all BVI companies and legal entities using the Beneficial Ownership Secure Search system. The Cayman Islands also has a Beneficial Ownership Register but, as in the BVI, the information is not accessible to the public. The information is only accessible to government agencies currently. The concern of the islands is not in the collection of the data but the fact that the information will become publicly available. By making it public, anyone will be able to know the ultimate beneficiaries and owners of companies or trusts and could use this information however they see fit.
Islands like the Caymans and BVI have a reputation as being used to hide money in the past, but this has changed and unfortunately the public opinion has not. Most of the entities are used for completely legitimate and transparent deals. Many clients see a UBO public registry as an invasion of privacy and bringing in too much transparency. There are questions being asked as to why the UBO data needs to be available to the public. But the reputation of the islands can make it hard for them to fight making UBO registries public.
Differences in UBO Regulations
UBO is not the same in every country. The definitions vary, many say that if you have a 25% or more interest in a company, trust or foundation you are considered a UBO while other countries (and companies like TMF) say that if you have 10% or more you are considered UBO. Understanding the differences in the new legislations in the islands is important for compliance. While the laws have not fully been enacted yet, there will be penalties for non-compliance and not registering the UBO in the public register.
This is the start of a global trend of many countries deciding to enact public UBO registries. It is expected that other islands like Curacao, which is part of the Kingdom of the Netherlands, will have to enact a UBO registry in the future.
These changes in the ways UBOs are registered may also have companies and private shareholders looking to move their businesses to countries that currently do not have UBO laws, like the United States.
TMF has the expert, local knowledge to help your company register with the UBO registries in the Cayman Islands and BVI. Our experts know how to file the information as well as keep it updated when there are any changes. While these new rules can put an additional obligation on a company, TMF can assist with these and other services. Let us know how we can help you.
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.