Minister denies secrecy law

(CNS): While other offshore financial service centres are rushing to change legislation regarding the secrecy laws that govern their banking systems, Minister Alden McLaughlin has said that the Confidential Relationships (Preservation) Law, which is sometimes referred to as Cayman’s secrecy law, does not need to be repealed to save the Cayman Islands from blacklisting as he says it is not a secrecy law, but a law which facilitates the exchange of information.

There is, however, much debate in the financial industry as to whether the law is in fact a barrier or a gateway, and that given the current global perception regarding off offshore financial centres, the law, at the very least, needs a name change.  A number of leading figures in the industry and Leader of the Opposition McKeeva Bush have all called for the law to be changed. However, Minister McLaughlin said last week that, despite being called a secrecy law, it is nothing of the sort.

“The Confidential Relationships (Preservation) Law is not a secrecy law. It provides gateways to information with the permission of the courts,” the Minister stated. The area of controversy, in particular, is that the law criminalises anyone who gives information about a company unless it has gone through the legal process, but McLaughlin said there has never been a single criminal prosecution under it.  “There is no doubt that the name creates some perception issues but the law protects relationships and information, which is important.”

He said, however, that governmentwas in the process of developing a Data Protection Bill, which may go some way to achieving the same objectives, and there was a possibility of getting rid of the criminal sanctions part of the existing law.

“Government is looking very carefully at this and will make some announcements about possible changes soon, but a mad rush to repeal it may create problems,” McLaughlin added. He also noted that the law of unintended consequences had never been repealed and that it was easy to create more problems for the future by rushing to repeal a law without considering all the implications.

Moreover, he said he was confident that the law would not cause any extra problems regarding the potential blacklisting of the Cayman Islands during the G20 summit, as during all of Caymans inspections, assessments and reviews by what he called "the alphabet soup of organisations", none of the agencies had ever identified that piece of legislation as an obstacle.

He said the law was originally drafted on the back of the common law, which is still in effect in the UK and literally thousands of requests for information have been met through that very law.

However, the leader of the opposition recently added his voice to the growing chorus for the law to be repealed. “We should give serious consideration as to whether the Confidential Relationships (Preservation) Law is still necessary in this country,” McKeeva Bush said. “This law is potentially a misnomer in any event because, although it criminalizes the disclosure of unauthorized confidential information, it nonetheless allows access to foreign authorities using proper internal procedures to obtain information when investigating or prosecuting serious crimes.”

Other leading financial figures have also questioned the law. Tim Ridley, former Chair of CIMA, has said that if not repealed it needs to be amended to suit its purpose. The law has also been criticised as badly worded and causing unnecessary delays and costs just to disclose one or two documents.