Article

Conflict between UK, Cayman over financial investigations


Added on 17/09/2018

 

(Cayman Compass) -- Cayman government says UK accusations are ‘baseless’

The National Crime Agency, the U.K.’s equivalent of the FBI, has claimed it is not getting the information it needs from the Cayman Islands in its anti-money laundering and criminal investigations.

In an article published by the BBC, Donald Toon, director of the NCA, said a number of investigations had led to companies registered in the Cayman Islands but local authorities did not cooperate when asked for information about the owners of these firms.

The Cayman Islands last year introduced a beneficial ownership registry that, under an agreement struck with the U.K. government two years ago, is supposed to respond to British law enforcement requests within 24 hours and in urgent cases within one hour. The Foreign and Commonwealth Office released a statement Saturday indicating that the Cayman Islands government had pulled out of this agreement, known as an “exchange of notes” in reaction to the U.K. parliament’s threat to impose publicly accessible beneficial ownership registries in the overseas territories. This has made co-operation on crime fighting “more difficult,” according to the statement.

Mr. Toon told the BBC, the NCA can generally obtain “clear, unambiguous beneficial ownership information” from the British Overseas Territories “but we are having difficulty with Cayman.”

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The Cayman government was entirely aware of the U.K. concerns, he told the BBC.

The Office of the Premier responded with a statement that “there is absolutely no merit in Mr. Toon’s allegation.”

The statement made no reference to the exchange of notes agreement.

The government said, the “complaint is a gross misrepresentation of a single situation and is no basis on which to accuse the Cayman Islands of being uncooperative.”

Neither the BBC report nor the government’s response indicate which case the NCA director was referring to.

However, the government said, since then, there has been only one case, in May 2018, in which a legal issue affected Cayman’s response time to an NCA request.

“That issue was resolved and the information was, in accordance with our commitment to cooperation, provided to the NCA,” the statement noted.

The type of criticism from U.K. law enforcement of Cayman’s information-sharing regime has become unusual in recent decades.

In fact, the government said, the criticism is surprising given that the NCA itself had written to thank the Cayman Islands for its “continuing and excellent support” in relation to an international, high-profile investigation into money laundering.

A later statement from the Foreign and Commonwealth Office cast more light on what

Mr. Toon may have been referring to in the BBC interview.

A spokesman for the FCO said that the Cayman Islands had pulled out of an information-sharing agreement with U.K. law enforcement.

“The Cayman Islands withdrew from the Exchange of Notes after the U.K.’s Sanctions and Anti-Money Laundering Act was passed in May. Recently, the Cayman Islands Government has also stopped the Royal Cayman Islands Police Service (RCIPS) from being the competent authority for dealing with Beneficial Ownership requests.

“Both of these steps make our cooperation on serious organised crime more difficult,” the statement said.

Premier: Criticism may be politically motivated

Cayman and the U.K. have been at loggerheads over a decision by the U.K. parliament to insert a clause in the recently passed U.K. Sanctions and Anti-Money Laundering Act that threatens to impose publicly accessible registers of beneficial ownership in the overseas territories, if necessary through an order in council.

Overseas territories leaders called the move a throw-back to colonial rule and argued that the established non-public registers of beneficial ownership in the territories were working well and providing those with a legitimate interest in the information, such as law enforcement and tax authorities, with the information they need.

The statement from the Premier’s Office suggested that the NCA’s comments may have been politically motivated.

“Assuming the reporting is accurate, then what is even more worrying is that this baseless attack on Cayman’s economy and reputation appears to be due to our public criticism of and affirmation to challenge the recent attempt by the U.K. Parliament to legislate for Cayman (and other British Overseas Territories) in areas that are a part of our devolved administration,” the government said.

“The fact that the U.K. Parliament in May 2018 imposed an unjustifiable and inequitable requirement on the British Overseas Territories and not the Crown Dependencies is bad enough. Now it appears that in furtherance of that agenda the NCA has entered the political arena against what it has previously described as one of its most cooperative and excellent supporters,” the response noted.

“We hope we are wrong about this and look forward to the NCA correcting the public record.”

The statement added that the Cayman Islands will continue to cooperate and support the NCA and all other law enforcement agencies and tax authorities to combat money laundering, tax evasion and all other forms of crime.

In the BBC report, the NCA director, Mr. Toon, further indicated that following the Paradise Papers, criminals were hiding their ill-gotten gains in new tax havens that are well beyond the overseas territories. He did not name these jurisdictions but said they were small island nations in which information about the owners of registered companies is difficult to access.