Beneficial Ownership Transparency Act: Cayman Islands Q1 2025 update 

It was a busy first quarter of 2025 for the Cayman Islands Monetary Authority (CIMA) as multiple regulations came into full effect. The Beneficial Ownership Transparency Act (BOTA) was enacted by the Cayman Islands parliament on Nov. 24, 2023, and came into effect on Jan. 1, 2025. The legislation is part of continued efforts made by the current government to establish the Cayman Islands as a global standard in transparency for asset managers looking to start funds in tax-friendly countries and to further enhance regulations already in effect around beneficial ownership. While recent acts have been put in place around data privacy and security, this specific legislation aims to be consistent with more robust international standards regarding accountability of investors and fund managers responsible for transparent reporting beneficial ownership. The updated regime modifies existing legislation to improve monitoring for terrorist-linked individuals or activities, money-laundering transactions and tax evasion.

Who is affected?

The legislation expands the range of entities considered under CIMA’s jurisdiction to comply with the new requirements. While trusts and registered foreign companies are still not included, the regime now includes exempted limited partnerships and foundations. All entities under scope are required to perform the following duties:

• To establish and maintain a beneficial ownership register
• The register must be kept current
• Notification of changes to the register must be made within 30 days of discovery of change

A contact person should be designated to be responsible for maintaining the register and ensuring compliance with the legislation, notifying legal person of changes

A beneficial owner is defined as in BOTA section 4.1 of the legislation:

“(1) In this Act, “beneficial owner” in relation to a legal person means an individual who meets any of the following specified conditions —

• The individual ultimately owns or controls, whether through direct or indirect ownership or control, twenty-five per cent or more of the shares, voting rights or partnership interests in the legal person;
• The individual otherwise exercises ultimate effective control over the management of the legal person; or
• The individual is identified as exercising control of the legal person through other means.

Possible exemptions to BOTA

CIMA also introduced the beneficial ownership transparency (access restriction) regulations, 2024, which were effective Dec. 9, 2024. This regulation provides guidelines for restricting public access to beneficial ownership information disclosed under certain circumstances and conditions. The conditions are noted in Section 3.1 of the regulation, “Application to prohibit disclosure of information on the search platform.”

As stated, “An applicant may apply to the competent authority in the form set out in Schedule 1 to prohibit the disclosure of information on the search platform relating to the applicant to any member of the public, where the applicant reasonably believes that the disclosure of the information on the search platform relating to the applicant and the applicant’s association with a legal person will place the applicant or an individual living in the same household as the applicant at serious risk of —

• kidnapping;
• extortion;
• violence;
• intimidation; or
• any similar danger or serious harm.

CIMA will review applications and decide whether to grant or deny the restriction on the search platform. The authority can also revoke an approval if circumstances change. There are also other possible exemptions noted within BOTA.

Conclusion

There will be challenges early on which come with any new legislation that includes providing additional information. Ultimately, along with their updated anti-money laundering (AML) regulations, updated data privacy laws and now BOTA, the Cayman Islands continues to enhance its reputation as a leader in the fight against illegal acts and in improving overall investor protections.