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McKeeva Bush queries fairness of latest transparency demands


(Grand Cayman - CNS Business): As pressure mounts for offshore centres to reveal more information on what goes on in the world of offshore finance and the details of the thousands of companies and entities involved, Cayman’s opposition leader has questioned the fairness and risk that would bring. Speaking at the recent Commonwealth meeting in South Africa as part of a wider panel discussion on ensuring technical and legislative capacity for ethical tax-raising in small states, McKeeva Bush said the issue of beneficial ownership spelt the return of an uneven playing field, tipped against Cayman and other similar jurisdictions. Whatever happened over the latest demands, he said, consideration must be given to the protection of the legitimate right to privacy.

“In spite of the Cayman Islands complying with the highest standards of openness and transparency in our financial industry,” Bush said, quoting local attorney Anthony Travers, the “playing field is now tilted significantly against the crown dependencies and the overseas territories by the application of these initiatives.”

Speaking at the recent 59th Commonwealth Parliamentary Association Conference in Johannesburg, the United Democratic Party leader and former premier pointed to Delaware in the United States, where companies are not required to undertake any enquiries regarding the beneficial ownership, even though some one million companies are formed a year in that state and others like it .

Meanwhile, even though Cayman complies with all the international standards and regulations, including the Global Forum on Transparency & Exchange of Information on Taxation, which provides for information sharing on request under the direction of the OECD, and the EU Savings Tax Directive, which requires a cross-border exchange of information on bank interest to EU Treasury Departments, as well as the Financial Action Taskforce initiatives, even more is being demanded.

“Detailed, consideration must be given as to the likely effect of any such proposals on the fundamental principles underlying the financial services industry in the Cayman Islands and the other overseas territories and the crown dependencies, in particular, the protection of the legitimate right to privacy,” Bush said regarding the beneficial ownership question, which had been raised by UK Prime Minister David Cameron recently in correspondence with the CIG when it offered to take part in the latest  of automatic exchange initiatives.

Bush noted that earlier mechanisms for exchange of information that Cayman has been a party to have been available only to tax authorities or for the purposes of law enforcement.

“These initiatives presuppose the pre-existing information on beneficial ownership will be available in the very few cases where legitimate enquiry is made,” he said, adding that the few cases number in the tens annually out of the tens of thousands of vehicles and trillions of dollars that flows through the Cayman Islands.

“The history of compliance in this area is good and is recognized as such by the OECD and the FATF.  Very careful consideration must be given to the question of whether we are now to have a further initiative requiring complete transparency on all beneficial ownership, with the attendant risk that this information, if made public, would be available not only to journalists and financial competitors but to terrorists and crime syndicates,” he warned.

He also queried how much such a public database would affect the competitive model of the Cayman Islands against those jurisdictions that would be unlikely to introduce anything similar.

“Into this latter category we can include the relevant United States jurisdictions, Delaware, Nevada and Wyoming, the Asian power houses, Hong Kong and Singapore and, no doubt, Dubai,” Bush said.