Cayman Islands Government Invites Comments on Draft Beneficial Ownership Transparency Regulations, 2024

Further to the publication of the Beneficial Ownership Transparency Act, 2023, which came into force on 31 July 2024, the Cayman Islands Government is seeking comments on draft Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024 (the “LIA Regulations”) and draft Beneficial Ownership Transparency (Access Restriction) Regulations, 2024 (the “Access Restriction Regulations”). Once finalised, the new regulations, will allow members of the public to apply for beneficial ownership information subject, however, to legitimate interest requirements and/or restrictions in certain circumstances.

As anticipated, the LIA Regulations set out the framework for members of the public, who can evidence a legitimate interest, access to beneficial ownership information for a specific legal person, subject to a two part test.

A member of the public (the “Applicant”) may apply for access to information in relation to a legal person on the basis that the Applicant is:

• a person engaged in journalism or bona fide academic research;
• acting on behalf of a civil society organisation whose purpose includes the prevention or combating of money-laundering, its predicate offences or terrorism financing; or
• seeking information in the context of a potential or actual business relationship or transaction with the legal person about whom the information is sought,

and has a legitimate interest in the information sought for the purpose of preventing, detecting, investigating, combating or prosecuting money laundering or its predicate offences or terrorist financing.

The Access Restriction Regulations allow individuals to apply to the competent authority for protection from public disclosure under the LIA Regulations for periods of 3 years where they believe that their association with the legal person, if disclosed, will place them, or an individual living with them, at serious risk of kidnapping, extortion, violence, intimidation, or other similar danger or serious harm.

Conclusion

The draft regulations show the Cayman Islands continued commitment to transparency and anti-money laundering initiatives while remaining in line with international standards and best practices and providing safeguards for the protection of individual privacy in warranted circumstances.

With the Cayman Islands’ continued focus on quality, innovation and expertise, it seems reasonable to expect that the changes brought about by the Regulations will be absorbed by the market and in no way hinder the Cayman Islands’ continued success.

HSM can assist with all beneficial ownership matters and provide the necessary advice as to the application of the new beneficial ownership regime. Please connect with HSM Partner, Christian Victory or HSM Managing Partner, Huw Moses, for any enquiries.

The HSM Group specialises in Corporate and Commercial Law, Litigation, Restructuring, Insolvency, Private Client, Immigration, Employment Law, Family Law, Property, Debt Solutions and Intellectual Property in addition to providing comprehensive corporate services through HSM Corporate Services Ltd.

This publication is intended only to provide a summary of the subject matter covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice. Alternative solutions also exist which may better suit the requirements of a particular individual or entity.