Cayman Islands Imposes First Fines for Beneficial Ownership Violations: Alignment with FATF Standards
The Cayman Islands, a British Overseas Territory known for its financial hub status, have taken the first enforcement actions against organizations that have failed to comply with beneficial ownership disclosure rules. The Registrar of Companies (RoC) announced on February 1, 2021, that 19 fines of $5,000 had been issued to non-compliant entities within the territory.
Enforcing Long-Standing Laws
The RoC’s decision to impose fines comes after years of introducing beneficial ownership regulations yet only recently enforcing them. According to the islands’ corporate watchdog, these are the first enforcement actions since the laws took effect.
Aligning with FATF Standards
The RoC’s decision to levy fines is part of the Cayman Islands’ ongoing efforts to align their regulations with the Financial Action Task Force (FATF) standards. The international organization sets anti-money laundering and counter-terrorist financing guidelines for governments and the private sector worldwide.
“The Cayman Islands Government is committed to fully implementing the FATF Recommendations, including the requirement for companies to maintain a register of their beneficial ownership information.” — Government Representative
Beneficial Ownership: Increasing Transparency
Beneficial ownership refers to individuals, typically shareholders or those who exert significant influence over a legal entity. Disclosing this information aims to increase transparency and aid in the prevention and detection of financial crimes.
Consequences of Non-Compliance
The new penalties serve as a sign that the Cayman Islands are taking action to address this issue, as the European Union and other international bodies have increased pressure on financial jurisdictions to meet FATF standards:
- To protect their economies
- Reduce money laundering risks
Other Jurisdictions Following Suit
The Cayman Islands aren’t the only ones taking steps to strengthen their regulatory framework as part of the FATF compliance process. Other jurisdictions, such as Bermuda and the British Virgin Islands, have also intensified their efforts to improve transparency and crack down on financial crimes.