Improved Ownership Structure in the Cayman Islands Now Actively in Effect
The Cayman Islands has introduced a new Beneficial Ownership Transparency Act (BOT Act) and associated regulations, which came into force on a specified date. This legislation aims to enhance transparency in the island's financial system and align with international standards.
All legal entities operating within the Cayman Islands, including those previously out of scope or exempt, must now assess how the BOT Act applies to them. They are required to identify their registrable beneficial owners and familiarise themselves with the enhanced obligations under the BOT Act, which includes providing additional information about their beneficial owners to the corporate service provider that maintains their beneficial ownership register.
The definition of "beneficial owner" under the BOT Act has been amended to align more closely with the definition used under the Cayman Islands Anti-Money Laundering Regulations (AMLR). This includes entities such as general partners, blockers, special purpose vehicles, entities registered under the Securities Investment Business Act or Virtual Assets (Service Providers) Act, and investment fund vehicles.
In-scope entities will need to provide information such as the nationality of any individual beneficial owners to the corporate service provider that maintains their beneficial ownership register. Industry members are to suspend filing beneficial ownership information under the previous framework until further notice.
Registered funds have the option to take an "alternative route to compliance" under the BOT Act. This requires them to provide a contact person at a licensed fund administrator or another person in the Cayman Islands that is licensed or registered under a regulatory law. Registered funds that choose this route should ensure their corporate service provider in the Cayman Islands is able to act as their contact person for providing beneficial ownership information.
The BOT Act provides for administrative fines for breaches of the act or regulations. Enforcement of the new requirements in the BOT Act framework will be suspended until early next year.
The Cayman Islands Government has also committed to providing regulations for public access to beneficial ownership information at a later date, in line with the BOT Act. The government authority responsible for the Cayman Islands' jurisdiction and the implementation of the Beneficial Ownership Transparency Act is the Cayman Islands' Ministry of Financial Services.
Other legal persons that were out of scope or exempt under the previous beneficial ownership regime should consider their beneficial ownership classification and obligations under the BOT Act and prepare to establish and maintain a beneficial ownership register if necessary. Investment funds registered with the Cayman Islands Monetary Authority (CIMA) will need to determine whether they will establish and maintain a beneficial ownership register or take the "alternative route to compliance".
This new legislation is part of the Cayman Islands' ongoing efforts to strengthen its financial sector and promote transparency and accountability.
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