Cayman tops TJN 2020 Secrecy Index

| 18/02/2020 | 63 Comments
Cayman News Service
Alex Cobham, Tax Justice Network chief executive

(CNS): The Cayman Islands government hit back at the Tax Justice Network after it topped the TJN Financial Secrecy Index this year for the first time, which happened on the same day that Cayman became the only UK Overseas Territory to be blacklisted by the European Union. Officials here criticised TJN’s methodology and accused it of ignoring the significant changes Cayman has made. This jurisdiction was ranked third in 2019 but this year it passed even Switzerland and the US to become TJN’s most secretive jurisdiction.

In a release issued Tuesday about the publication of its Financial Secrecy Index 2020, the global watchdog said Cayman topped the list of countries most complicit in helping individuals hide their cash from the rule of law.

But challenging the TJN’s findings, the chief officer in the financial services ministry, Dax Basdeo, said Cayman’s standards of transparency are based upon recognised global standards, despite the jurisdiction’s blacklisting Tuesday by the European Union.

“Unfortunately, the TJN’s methodology remains flawed, as does their definition of regulatory standards, which are not recognised by any global standard setting body,” Basdeo said. “We do not work in ‘secret’, rather we continue to work cooperatively with tax and law enforcement authorities around the world, as is reflected by independent assessments of our regime.”

Aside from the continuous changes to the legal regime, Basdeo claimed that Cayman’s “transparency and international cooperation frameworks remain in line with evolving global standards. The TJN ignores that the Cayman Islands meets the global standards.”

He said the TJN’s weighting system penalizes countries with successful financial services industries, as it incorrectly equates a country’s success in financial services with secretive banking, anonymous shell company ownership, anonymous real-estate ownership or other forms of financial secrecy.

“The Cayman Islands does not permit shell companies, bearer shares or anonymously numbered bank accounts that conceal ownership,” he said. “We were also among the first International Financial Centres (IFCs) to commit to public registers of beneficial ownership. That puts us at the forefront of initiatives to enhance tax cooperation and transparency.”

TJN’s assessment criteria is geared toward countries with direct taxation systems, leaving Cayman with a full secrecy score on how public revenue is collected because it comes from transactions on goods.

Basdeo said Cayman has a close working relationship with the UK’s National Crime Agency and shares information with countries around the world, so that tax administrations can pursue individuals or entities if they fail to pay the full amount of the taxes they owe to their home countries.

Nevertheless, the TJN stands by its work, which it says is based on IMF measurements.

In the release launching the index, the TJN said that financial secrecy around the world is decreasing as a result of recent transparency reforms. On average, countries on the index reduced their contribution to global financial secrecy by 7%. But it said the US, Cayman and the UK had created an “Anglo-American axis of secrecy” that constitutes the greatest global threat of corruption and tax abuse.

“The Tax Justice Network is calling on policymakers to priorities sanctions against these backsliders,” it said as it introduced the new rankings. The growth of Cayman’s global role points to major risks emanating from its hedge fund industry, which the TJN said was cloaked in secrecy,

“The world has started to win the fight against financial secrecy and that’s good news for everybody,” said Alex Cobham, TJN’s chief executive. “Financial secrecy has kept drug cartels bankable, tax abuse feasible and human trafficking profitable – but the majority of countries are now making it clear that this is not the world we want.”

He added, “It is deplorable, however, that in the face of this progress, an Anglo-American axis of secrecy has actively chosen to double down on the practices that exacerbate corruption, tax abuse and global inequalities.”

See the full index here

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Category: Business, Financial Services

Comments (63)

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  1. BeaumontZodecloun says:

    Is it just me, or does Alex Cobham look like he and Adam Sandler were separated at birth?

  2. Anonymous says:

    Who cares what the ITJN says? Anyone who puts “tax” and “justice” in the same sentence obviously doesn’t know a thing about business. Tax is not a moral issue. Tax laws and tax authorities are explicitly formed on the presumption that nobody will ever pay $0.01 more than they absolutely have to. If google or Apple decided to voluntarily pay 20% tax instead of 15% there would be a class action lawsuit filed against them by shareholders before the announcement was finished.

    Anyone that wants to pay more tax than they have to is welcome to do that. I am sure the politicians of the world will thank you as they fly off on their next first class junket or check the balance of their pension schemes.

    But leave the other 99.99% of us out of it.

  3. Anonymous says:

    No one cares what TJN says.

  4. Anonymous says:

    If you are wondering how broken our local regulation is: Oliver Barrett Lindsay, who operated Lindsay Capital, and CMGT from the CEC/SEZ, was formally charged the by SEC in July 2018 for his role in a $30mln stock fraud, and was not suspended by CIMA until October 2018. Despite the headlines, it still took CIMA four months to cancel those business credentials.

    Rani Jarkas, who received a lifetime ban from the US Securities Industry via FINRA in 2014, is still touting Cayman Islands as its international headquarters for Cedrus Investments…and without any valid SIBL securities license to do so.

    Bad press is just going to keep coming and coming, until we appoint local regulators that are willing to get ahead of the next headline.

    • Anonymous says:

      Who owns CEC? – enough said.

    • Chris Johnson says:

      White collar fraud is alive, well and living in the Cayman Islands. Whether it be Hedge Funds, investment scams, customs, fraud in companies licensed under Local Companies Control Law, Executorships, real estate fraud and of course CIFA. It is perpetrated by locals and expats alike.

      Many people would not recognize fraud if it bit them in the backside. Above all the regulators have not a clue whilst Enforcement Departments are not enforcing.

      Several entities must be audited but often auditors miss fraud and pay dearly for such.

      Cayman brags about it regulations and its effort in the area of White Collar fraud. Yet it marches on regardless whilst the world watches on and antics of fraudsters appear on Criminal Minds or Law and Order, as they did in The Firm.

      I imagine our Auditor General is having a fit with what she finds but where it leads to, who knows.

      CIG needs come crashing down on fraudsters before Cayman gets even more bad publicity.

      • Anonymous says:

        When have auditors “paid dearly” for missing fraud, Mr Johnson, here or anywhere else?

      • Anonymous says:

        Fraudsters are everywhere and more everyday. Most of yours operate primarily offshore and are not easy to catch even if you had US resources and expertise which you do not. However you should at least be on top of CIFA and your government companies.

      • Anonymous says:

        So when the big accounting firms attest to how well run things are how is it that they do not then suffer when those they have given their “blessing” to turn out to be crooks on a truely grand scale?

  5. P&L says:

    I first came across TJN years ago when I found this online

    It definitely shed some light on Caymans’s story. I don’t think his motives are as negative as some people assume. Read his papers. One of his main issues is that the wealth generated by offshore industries is often not positively invested in the communities around them. Sound familiar? Growing wealth disparity. Sound familiar? Read the man’s papers. Don’t just assume because Cayman made his list that he doesn’t know what he’s talking about. Offshore industries were never about benefiting locals. At least understanding the history helps manage expectations and hopefully help think more clearly on ways to better structure our socioeconomic foundations.

    • Anonymous says:

      yeah, and the ‘wealth’ generated by onshore shenanigans, graft, and corruption, pales to what has happened in lesser jurisdictions. It isn’t perfect for an ideologue, and even ugly for a social justice champion. The world is an ugly place sometimes. Capitalism and free markets, as much as they exploit many, are still preferential to totalitarian and central controlled markets. I wish the world was fair and cared for all people, but it just isn’t so.

  6. Anonymous says:

    CIMA is still waiting to see if it needs to regulate Fintech ICO/Blockchain shams in SEZC.

    “The US Securities and Exchange Commission has charged convicted criminal Boaz Manor, Cayman special economic zone company BCT Inc. SEZC, his business associate and another business, CG Blockchain Inc., with raising more than $30 million in a fraudulent initial coin offering.

    Manor, an Israeli-Canadian former hedge fund manager served jail time after the collapse of Portus Alternative Asset Management in 2005. He received a four-year prison sentence and was ordered to pay CAD$8.8 million in disgorgement after money was misappropriated from the Toronto-based hedge fund he co-founded.

    The SEC and the Department of Justice, which filed separate criminal charges, allege that Manor darkened his hair, grew a beard, and used aliases, such as Shaun MacDonald, to hide his identity and conceal the fact that he had served about one year in prison after pleading guilty to criminal charges of money laundering and disobeying a court order arising from the collapse of Portus.

    He also received a lifetime ban for most capital markets activity in Ontario.”

    • Anonymous says:

      CEC literally gave an office to a convicted felon serving a lifetime ban. Do they not have Google?

    • Anonymous says:

      How is it possible that Campbells Corporate Services did not have red sirens going off when they ran BCT Inc’s principals through their normal client compliance checks? Are they not doing those?

    • Anonymous says:

      CIMA is bound by the law, not rumours that “they are a crook” which takes time. We might know they are a crook, but lawyers prove it just like you are not a crook until you are convicted of drunk driving.

  7. Moi says:

    Who didn’t see this coming? After the success of leaving the EU one could see there would be a price to pay. Nonetheless, getting out of the Union was the best move.

  8. Anonymous says:

    How many local white collar investigations/arrests in 2019? We ignore the stated problems and always wait for the shoe to drop onshore.

  9. Anonymous says:

    I can only guess Dax doesn’t read offshore alert, or is living in blind denial. How can someone that senior be so misinformed about the utility and purpose of our corporate veils, and also deaf to the headlines that flow from that industry, as our “regulator” failures pile up?! But I guess his would be the normal default operational settings to advance him to where he is in the CIG. It would have to be.

    • Anonymous says:

      Oh stop…offshore alert hates Cayman and does anything he can to “find” cayman stories. I don’t know what happened to him , but he is so obviously biased it is not real.

      • Anonymous says:

        It sure would help our case if we had just a few investigations and a few arrests.

        The question is why have we not had any?

        • Anonymous says:

          For what? Do you know of a crime having been committed or are just assuming one has?

          • Anonymous says:

            CEC literally gave an office to a convicted fraud artist serving a lifetime ban without even googling his name. Most of us are doing everything right, and staying in our lane, but this other radioactive universe exists with impunity, and that shouldn’t sit well. Especially under hair-trigger international scrutiny. Worse for us to falsely deny it happens. Clearly it does!

          • Yes, I know of many crimes that have been committed in Cayman.

            You have to be extremely delusional to believe Cayman is crime-free or relatively crime-free.

            David Marchant

      • Anonymous says:

        Several massive frauds from SEZ bandits, just in last 12 months, and CIMA is still taking a “wait and see” approach to regulation. We shouldn’t fault Marchant for reporting what we might otherwise reign in by caring to.

      • Anonymous says:

        Offshore Alert does not hate Cayman, they simply report the cases going on in Cayman because there is no other way to find out unless you want to spend your days going through paper filings at the courthouse. All proceedings in the Cayman courts should be published online for a minimal fee.

        • Anonymous says:

          I agree for the most part, but I take great exception to sad Family Court matters being indecently broadcast in this way, especially when children are involved.

      • Re. “offshore alert hates Cayman and does anything he can to “find” cayman stories”. I “find” stories on Cayman because … er … it’s one of the main jurisdictions that OffshoreAlert covers. Duh!

        And I don’t “hate” Cayman. I simply report on the jurisdiction fairly and accurately, as any responsible reporter should do about anything that he or she covers.

        And I don’t hide behind anonymity!

        David Marchant

  10. Anonymous says:

    DART’s signatories operate hundreds of nominee companies, specifically to conceal their portfolio’s ownership. Who are the shareholders of Verdant Isle? We provide an open, few questions asked platform for those who, maybe aren’t evading taxes, or doing anything illegal, but are certainly trying to be sneaky AF and limit their liability via a disposable fronting company. That’s the best case. Then there are the criminal launderers for corrupt regimes and conflict zones, on watch and sanctions lists, that are still somehow allowed to operate here, and even after those are uncovered (by foreign regulators), no investigations or white collar arrests!

    • The Storm says:

      If you knew how much Dart secretly owned, he wouldn’t be able to walk the streets. GAME OVER!

  11. Anonymous says:

    From the TJN website regarding Cayman:

    “The deterioration is a result of Cayman increasing the volume of financial services it provides to non-residents…”

    So because we’re successful in attracting international business that in itself means were doing something wrong and need to be punished. They fail to make any direct substantive link between increased business and “secrecy”.

    “The growth of Cayman’s global role points to major risks emanating from its hedge fund industry, which uses companies, trusts and limited partnerships that are cloaked in secrecy.”

    There is no secrecy for hedge funds, trusts or LPs. Maybe they were looking at files from the 70s.

    These guys have one agenda and one agenda only. Force small countries like Cayman to bow down to them or else. Kinda sounds like economic terrorism doesn’t it.

    Interestingly China doesn’t make the list And the President of the FATF is from. You guessed it, China.

    • Anonymous says:

      “because we’re successful in attracting international business”

      Cocaine dealers are successful in attracting international business, because they offer something that can’t be found elsewhere, and for specific reasons.

      What is it that makes Cayman a “successful” banking location? Is it something in the limestone? Is it generations of experience in twisting palm thatch into rope that fosters a knack for spreadsheets?

      The only thing that Cayman has, like other jurisdictions who cater to the white collar criminal class, is (a) sovereignty, and (b) a low population that is apathetically removed from the actual consequences of this “business”. This allows a certain limited group of people to profit while the rest of you can memorize Bible verses in schools designed to keep you ignorant.

      Sally Skirtraiser is also successful in attracting business. Just mind your own.

      • Anonymous says:

        oh dear, you have no idea. Compliance is driving business away from these islands, which is great if its not good, but even the good ones are going. Its insane what has to be proved and checked and double checked and you clearly have no idea because you would not write such tosh if you did.

  12. Anonymous says:

    Can we please get out of the “hiding money for rich people” business? Seriously, let’s transition away from this sleazy, immoral (legality aside) trade and remake Cayman into a tech development destination or maybe backtrack from the madness of the last four decades and make Cayman a luxurious ecotourism hotspot. There must be something we can base our economy on other than catering to the world’s tax cheats/evaders.

    • Anonymous says:

      why?…its what this ‘great christian nation’ was built on….

    • Anonymous says:

      Hahaha! You can try to do tech business in Cayman but you;’re going to be paying tax to the onshore countries even if you are fully operating from Cayman and you’ll have high audit and compliance requirements to be in business in the first place. Go educate yourself before making stupid comments.

  13. Anonymous says:

    Why hold other countries responsible for their own citizens paying taxes before the money leaves the country. Why is it Cayman’s job,

  14. Anonymous says:

    Rubbish! If it gets any harder to maintain an account in the Cayman Islands I will resort to putting my few dollars under my mattress as we did in the good old day. I say ignore them, they are only seeking attention.

  15. Anonymous says:

    we have an economy based on tax evasion and money laundering. face facts.
    honesty is the first step.

    • Anonymous says:

      You obviously do not work in the Cayman financial industry.

    • Anonymous says:

      Probably not tax evasion anymore, but everything else in the “sneaky” category seems to carrying on if headlines are to be believed. We could also add widespread amnesia to our affliction list! Nobody seems to want to recollect or acknowledge the shortcomings, even those in recent memory from last 6-12mos!

    • Anonymous says:

      Okay. I need to hide $5,000,000.00. CNB’s total income is CI$43,404,350.00. Bank of New York Mellon total income $16,451,000,000. Where shall I go? Or perhaps buy 3 houses in Toronto?

  16. Anonymous says:

    We can’t start to deal with these issues until we openly acknowledge what the real objectives are of entities like the EU and TJN. We also need to support the establishment of an organization that will highlight those countries &/or organizations that are harmful to the global economy by unfairly targeting countries like the Cayman Islands.

  17. Anonymous says:

    We’re #1!

  18. TrueJustice says:

    Cayman will NEVER make their grade. No use trying.

    I wonder what Alex Cobhan and TJN call France TAXING 14 former African Colonies putting 85% of their foreign reserve into France Central bank – $500bn a year, causing great poverty in these countries? If they don’t pay, there is either leadership assasinations or military Coup d’etat (French phrase).

    TJN also need to let France pay back Haiti $40m blackmail money after declaration of independence.

    Thats just scraping the surface of other INJUSTICE. Talk about neo-colonial and International Corruption. Want to keep the poor poor and subservient.

    Tax Partial Justice Network just need to “get behind Cayman”.

    • Boris. says:

      And make the uk pay back all that they have stolen from their colonies, raped them and left them in poverty. Its ironic that they dictate to the rest of the world on ethics.

  19. Anonymous says:

    Give him PR and it will all go away.

  20. Anonymous says:

    When will these government officials learn that the world is not going to pay attention to them but they will pay attention to the TJN?. They need to let go of the arrogance and pay attention.

  21. George Town says:

    But its the individual’s right to hide their cash from the EU elites. This body just want to tax and control. Cayman has always treated its customers respectfully. The worse we can do is continue disclosing people’s account to these elites, and lose the repitation that gave us a name. I think its time to break ties. A hell with them!

  22. Anonymous says:

    Hedge fund attorney and independent directorship greed will catch-up with itself.

  23. Anonymous says:

    What a freaking set of morons. We will never get it right according to their standards.

  24. Anonymous says:

    Alex Cobham clearly has an agenda against Cayman and has no idea what he is talking about.

    • Anonymous says:

      One does not have to look too far to identify what motivates organizations like the TJN. When you have an organization that has received EUR 711678 from the European Commission it should be expected that their work product will reflect the opinions and beliefs of European Commission and possibly some of their other funders.

      • Anonymous says:

        You are absolutely correct.

      • Anonymous says:

        TJN aren’t wrong.

        • Anonymous says:

          Yes they are…US and China are by far the largest Money launderers and secret funds/companies suppliers. Tax dodging is huge business in the US, even the bloke in charge is at it.

          • Anonymous says:

            Maybe so, but we deserve our share of condemnation. With our hands to our eyes, we actually host unregulated blockchain exchanges – and more than one.

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