The Beneficial Ownership Transparency Act 2023 and Beneficial Ownership Transparency Regulations 2024 came into effect on 31 July 2024, bringing long anticipated enhancements to the current beneficial ownership reporting regime and alignment with global standards.
The enhanced reporting regime introduces greater coverage of entities, and reduces alternative routes to compliance, however the beneficial owner threshold remains consistent at 25%.
The Cayman Islands government has confirmed that enforcement relating to the new requirements will be suspended until early next year.
Getting ready for the changes
There are several key changes that may impact your entities.
- In addition to companies incorporated, formed or registered in the Cayman Islands and limited liability companies formed under the Limited Liability Companies Act, the revised definition of legal person now includes the following:
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- A limited liability partnership registered under the Limited Liability Partnership Act
- A limited partnership registered under the Partnership Act
- A foundation company
- An exempted limited partnership registered under s9 of the Exempted Limited Partnership Act
Foreign entities registered under the applicable legislation are excluded.
Entities currently relying on any of the below exemptions will need to re-evaluate compliance under the new legislation:
- Entities claiming an exemption under S245 (1)(c) of the Companies Act or S71(1)(d) of the Limited Liability Companies Act where registration of beneficial ownership was exempted by the entity being regulated in an equivalent legislation jurisdiction that is designated as having measures for combating money laundering and the financing of terrorism which are equivalent to those of the Islands in accordance with section 5(2)(a) of the Proceeds of Crime Act
- Entities claiming exemption as managed, arranged, administered, operated, or promoted by an approved person as a special purpose vehicle, private equity fund, collective investment scheme or investment fund, including where the vehicle, fund or scheme is a Cayman Islands exempted limited partnership
- A general partner of a vehicle, fund or scheme referred to above which vehicle, fund, or scheme — (i) is registered or holds a license under a regulatory law; or (ii) is managed, arranged, administered, operated, or promoted by an approved person
Assessing compliance under the updated legislation is key. Here are some of our recommendations:
- Partnerships should assess reportability under the updated beneficial ownership regime
- Entities currently complying with the beneficial ownership regime should review their current classification
- Entities employing a current exemption should consider whether the exemption still applies under the updated regime
- Entities should document their findings and make notifications and appointments and should ensure that the appropriate details are filed with their registered office service provider
Consider your next steps with IQ-EQ
Reach out to us today to discuss your situation in more detail. We can help you navigate these changes and ensure your compliance and readiness.
About the author
Deanna is a Client Director in the Cayman Islands for IQ-EQ. She has over 20 years of experience in the finance industry with specialist knowledge in business development, regulatory compliance, hedge funds and alternative assets. Deanna is also a chartered accountant with over 15 years post-qualification experience.
