The Beneficial Ownership Transparency Act, 2023 (the “BOT Act”) is now in force. The BOT Act was gazetted in December 2023 and was brought into force on 31 July 2024 by the BOT Act Commencement Order. The new Beneficial Ownership Transparency Regulations, 2024 (the “BOT Regulations”) were also published and commenced on 31 July, as was the Guidance on Complying with Beneficial Ownership Obligations in the Cayman Islands (the “BOT Guidance”).

The Ministry of Financial Services & Commerce (the “Ministry”) has confirmed that although the BOT Act is now in force, enforcement under the new regime will not commence until early next year. Registered offices and other corporate service providers had been required to file relevant beneficial ownership information for their entities monthly under the prior regime, but these monthly uploads have now been suspended until the Ministry notifies them to recommence filing under the new regime.

Why is the regime changing?

The Cayman Islands remains committed to ensuring transparency of beneficial ownership information and is now enhancing the strength of its regime in line with evolving international standards for beneficial ownership transparency and reporting.

What is changing under the new BOT Act?

There are a number of changes, but the main change is that the regime is expanding to bring more entities into scope. All of the exemptions under the previous beneficial ownership regime are removed under the new regime, although in some cases they have been replaced with ‘Alternative Routes to Compliance’ (ARTC). Exempted limited partnerships and limited partnerships, which were previously out of scope, have now been brought into the regime and will need to take steps to comply with the BOT Act. The other material change is that the definition of beneficial owner has been revised to align with the definition under the Cayman Islands anti-money laundering (AML) regime, although the threshold remains at 25%, whereas for the purposes of the AML regime it is 10% or more.

The BOT Act as now in force does not allow for public access to beneficial ownership registers. Although consistent with the Cayman Islands’ prior commitment to the United Kingdom, the BOT Act does contain legislative provisions for the Cayman Islands Government to make regulations to provide for public access in the future.

What does my entity need to do?

All Cayman Islands companies, limited liability companies, foundation companies, limited liability partnerships, limited partnerships and exempted limited partnerships will need to consider how they are affected by the changes and will need to take steps to comply with the new BOT Act.

The steps which need to be taken depend on whether any ARTCs are available. ARTCs are available to:

• Entities that are licensed with CIMA under a regulatory law, including CIMA licensed (re)insurers (note this will not include Securities Investment Business Registered Persons or Virtual Asset Service Provider Registrants);
• Entities that are listed on the Cayman Islands Stock Exchange or an approved stock exchange, or are subsidiaries of a listed entity, this ARTC will function very similarly to the exemption for such entities under the prior regime; and
• CIMA registered Private Funds and Mutual Funds, which have the option of appointing an eligible Contact Person to provide the beneficial ownership information within 24 hours of a request being made. Eligible Contact Persons are limited to CIMA licensed fund administrators or other entities licensed or registered with CIMA for providing beneficial ownership information, such as the entity’s Registered Office. The ARTC is optional, and some registered funds may prefer to maintain a Beneficial Ownership Register (BOR).

If none of the ARTCs above apply, the entity will need to maintain a BOR. An entity may also choose to maintain a BOR rather than rely on an ARTC.

If the entity was maintaining a BOR under the prior regime, the entity will need to review the new definition of beneficial owner to assess whether there are any changes to the registrable persons, and provide additional particulars (i.e. nationality and nature of ownership/control interest).

If the entity has not been maintaining a BOR, it will need to identify its registrable persons and provide the relevant particulars to its Registered Office or other corporate service provider. 

Foreign registered companies and trusts remain out of scope of the BOT Act. However, trustees which are Cayman entities will need to consider their obligations under the BOT Act.

When will enforcement start?

The Ministry of Financial Services & Commerce has confirmed that although the BOT Act is now in force, enforcement under the new regime will not commence until early next year. The BOT Act and the BOT Regulations provide for the imposition of administrative fines to be imposed for a breach of the BOT Act or the BOT Regulations. Cayman Islands legal persons should ensure they are in compliance with the new regime by 1 January 2025.

[View source.]