Leading law firm in dispute with CIG over BO rules

Walkers, Grand Cayman

(CNS): Walkers is suing the Department of Financial Services and the Registrar of Companies over information law firms must provide about their clients to authorities under the Companies Act. Walkers, one of the Cayman Islands’ largest law firms catering to the offshore financial sector, filed a consent order on Friday to restrain the government from pursuing or initiating any action regarding further requests for information or fines under the law when identification expired, in the context of a full lawsuit filed last month.

In February, Walkers filed a lawsuit asking the courts for a declaration that, under the proper interpretation of the relevant legislation, “the expiration or renewal from time to time of a passport, driver’s license or any other document issued by the government for any ‘registrable person’ is not a ‘relevant change’ within the meaning of this section”.

The company is seeking to avoid being fined for documents that were filed but expired and have not yet been renewed, as they claim it is not a significant change.

In the lawsuit, Walkers says that on January 14 he received more than 500 separate letters from the Registrar for his clients requesting information under the “relevant change” section of the Companies Act because the documents of identification of these “registerable” persons had expired.

Officials demanded details of correspondence with each person regarding expired IDs and any restriction notices issued as a result and threatened administrative fines of CI$5,000 if they did not respond within a stipulated time.

But lawyers argue that the expiration or renewal from time to time of a passport, driver’s license or other government-issued document is not a “relevant change” for the purposes of the law. and does not make the details of such registered persons “materially incorrect”. or incomplete”, and that the registrar should not impose a fine until at least six months after becoming aware of an offence.

The need for companies in the financial sector to provide the information stems from pressure Cayman has faced from the Financial Action Task Force due to shortcomings in the country’s anti-money laundering regime. The Cayman Islands is required to have effective penalties in cases where owners or their service providers do not file up-to-date and truthful beneficial ownership information.

See the consent order and lawsuit on Court Services public register
Cause No: FSD0025 of 2022.