It was announced in May that the Confidential Relationships (Preservation) Law would be repealed by September 2016.
Financial services minister Wayne Panton on Friday said that the current law has fuelled the jurisdiction’s tax haven label, and replacing it would detract unwanted and unfair criticism.
Panton refuted claims from international organisations, including the Organisation for Economic Cooperation and Development (OECD), that the Cayman Islands was one of the most secretive jurisdictions in the world.
“The [Confidential Relationships (Preservation) Law] has served its purpose,” he told the Cayman Islands’ legislative assembly. “It was a good law with good intentions but over time, particularly in recent years, it has become clear that the provisions dealing with the criminal sanction is bringing negative publicity, confusion and unwarranted criticism to the jurisdiction.”
The financial services minister explained that the removal of the controversial criminal sanctions clause of the ‘secrecy law’ was not something he felt was necessary.
He added that the clause “had never actually been utilised, no one has ever been charged with a criminal offence under this law in terms of the unlawful disclosure of information”.
Under the current legal framework, anyone who divulges, wilfully obtains, or attempts to obtain confidential information covered by the scope of the law could face a fine of $5,000 (£3,756, €4,523) and face imprisonment of two years.
The new law
Panton said the proposed Confidential Information Disclosure Law revises the circumstances in which a person may be authorised to disclose confidential information without the express consent of the person to whom the duty of confidentiality is owed.
It also clarifies the local competent authorities to whom information can be disclosed and under what circumstances.
The criminal sanctions have been removed but the new bill retains the common law civil liabilities.
Panton assured the legislative assembly that the new law would not put the Cayman Islands at an international disadvantage.
The bill passed, unopposed, to a second reading.