Offshore sector scrambles to repair damage
(CNS): Various major law firms have issued advisories and statements to clients over the last two days after a pretty bad day on Tuesday for the Cayman Islands’ reputation on the global financial stage. Cayman was blacklisted by the EU because government missed a deadline it was well aware was approaching, and then topped the Tax Justice Network’s Financial Secrecy Index. While the sector could have easily batted away the latter alone, the former is more of a challenge.
The sector played down the blacklisting as a technical problem that will not impact business, and rushed to back government’s efforts to stay on the case to get Cayman off the EU list as soon as possible.
Speaking on behalf of the financial services sector, Cayman Finance CEO Jude Scott said Cayman had a track record of meeting evolving global standards and that was expected to continue.
“As an organisation, we stand ready to work with government, as it sees fit, as it cooperates with the EU to be removed from the list. We anticipate this decision will happen in the not too distant future,” Scott said in a release.
He said the recently introduced modernised legislation to enhance oversight of investment funds was in response to an evolution in global regulations, primarily driven by the European Union. Since about 30 other jurisdictions were removed after a taking the necessary actions, “we look forward to the same happening with regard to the Cayman Islands”, he said.
But in the meantime, the industry’s clients could continue to expect the usual high professional standards from their Cayman service providers, Scott said. He noted that as a premier global tax neutral financial hub, Cayman has adopted at least as many global standards for transparency as any G20 country – and more, when agreements specific to International Financial Centres (IFCs) and UK Overseas Territories are included.
Repeating the message that this jurisdiction proactively shares tax information with more than 100 other governments under the Organisation for Economic Cooperation and Development Common Reporting Standard, he said Cayman was recently rated by the OECD as largely compliant, the second highest of a six-tier rating.
He said this was the same rating given to G20 countries like the USA, UK, Canada, Australia and EU member states Austria, Belgium, Denmark and Germany. As he noted all of Cayman’s positive ratings by the OECD regarding economic substance, he said that it found the Cayman Islands tax neutral regime is not harmful.
With the full support of industry, Cayman Finance is confident that the Cayman Islands Government will take all necessary actions to address any remaining EU concerns in a timely manner to ensure removal from the list at the earliest possible opportunity, the release stated.
Meanwhile, the Cayman Islands Directors Association also noted it was “obviously disappointed by the recent EU decision to include the Cayman Islands on its list of non-cooperative jurisdictions for tax purposes”. CIDA and other private sector organisations had “worked tirelessly” along with the Cayman government, “to devise and implement relevant and effective legislation”.
CIDA added, “As one of the world’s leading financial centres and a domicile of choice for investment funds, we are committed to continued cooperation and engagement on this issue. We remain optimistic that there will be fair play and proper recognition of the steps which have been and continue to be taken to address the EU’s concerns.”
STEP Cayman Islands, the organisation that represents the trust sector, said it “supports the work of the Cayman Islands Government and its resolve to continue to engage with the EU to ensure that Cayman is removed from the EU list of non-cooperative jurisdictions with all haste”.
Cayman International Insurance, formerly IMAC, also indicated support for the Cayman Islands Government in taking the necessary steps. “This technical listing does not impact or hinder Cayman Islands based international insurers and reinsurers from supporting our clients and meeting their insurance needs.
“Internationally recognised standards for regulation will continue to be met and we are confident that recent legislation passed by the Cayman Islands Government will be affirmed as meeting the required standards and will lead to our removal from the listing at the next possible opportunity.”
Cayman Islands Institute of Professional Accountants CEO Sheree Ebanks said that while it was disappointing that Cayman had been placed on the list of non-cooperative jurisdictions, the CIIPA fully supports government’s efforts towards delisting.
“CIIPA is committed to continue to work with government to overcome the technical issues that led to the EU’s decision, and with the excellent public sector-private industry collaboration will be removed from this list at the earliest possible opportunity,” Ebanks said.
However, the various organisations all failed to address the fact that the blacklisting could have been avoided if government had not missed the deadline to introduce specific legislation, even though the date was well known for a considerable period. Not one organisation queried how this had happened.
Even the opposition passed up the opportunity to point out that this wasn’t just a technical failure.
A release from the opposition said they were still ready to assist the government in its efforts to be removed from the blacklist. After Opposition Leader Arden McLean met last week with the premier and financial services minister, he “expressed solidarity” with government in protecting the jurisdiction, particularly the financial services sector.
“While it is unfortunate that despite having made genuine efforts to address the concerns of the European Union, we still find ourselves on the list of un-cooperative jurisdictions, I am hopeful that this will soon be reversed.”
He added, “We need to ensure that we take a close look at the processes we employ when we are preparing and executing responses and solutions to these obligations. We must ensure that delays are kept to a minimum and that any proposed changes are implemented in a timely manner, and with the full support of the industry. This is a classic example of how quickly things can become derailed with just a few weeks of delay.”
Despite the aspiration that Cayman will be de-listed soon, the EU his indicated it is unlikely to be before October, some eight months away.
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Category: Business, Financial Services
Cayman, other OTs and the UK need to have their own blacklist. The EU should be on it for starters.
Right, that’ll work. Mickey Mouse should be at the top of the list, but only because he wont care, like the rest.
….and who cares????!!!! How quickly we forget ,hyprocrites…that’s how we became who we are! I see no problem with EU ‘blacklist’ what do we get from them? 4% P.A. Move on Cayman.
Does anyone else find it amazing that CIG, who receive directly some 50% of their finance from financial services, and probably another 20-25% in indirect import taxes etc did not bother to hurry themselves to get the legislation passed well ahead of the deadline? Sheer incompetence…yet the port which they have acted illegally on and will only benefit a handful of businesses gets prioritized? Seriously?
A handful of THEIR businesses!
There is a lot of talk around this subject. But we need to be looking at those entities who are tasked with dealing with and preventing these issues . That would be the Minister of Financial Services, her chief officer (Dax Basdeo) and CIMA. And don’t forget the lazy asses at the TIA.
All given massive new resources to deal with these matters and have summarily failed.
Hang on a sec – legislation was required by a certain deadline to comply with the EU’s demands and the only body that can initiate the process of that legislation through the LA is the Cabinet as a whole and the Minister of Financial Services in particular and the Premier as well in terms of managing his Cabinet and the LA.
Remind me again how any failure in that process could possibly be the fault of CIMA and/or the TIA? The buck stops with the Minister and the Premier.
Ultimately the Minister of Financial Services is totally responsible. Total incompetence. She should apologize and resign.
You mean another BS deadline that intendeds to further destroy the Cayman finance industry, maybe it was for the best to miss it.
It is now time to take on the EU front on and do like the US government and reject and ignore their blacklist, if we are compliant with the US FACTA who the EU considers as not up to their standards and and OECD what else more do we need to prove to a bunch of delirious bureaucrats in Brussels.
The Cayman Islands need to sit with the US Treasury and the UK Treasury and all fight this situation with the EU as all three needs each other, because once the EU takes out Cayman it is on to the US and UK next.
Well, I dont know if any of the 1000s of rules and regulations stop a single instance of money laundering but they sure have made it a pain in the butt for ordinary people to use the bank. You can’t even sell anything for cash and walk into the bank and deposit the money, or withdraw cash from one bank and deposit it into another without a paper trail. Everyone is considered a criminal unless proven otherwise. Seems like things were better when suitcases full of cash were allowed.
My bank refused to give me three hundred pounds without knowing where it was going? My company accounts handle hundreds of millions of dollars at the same bank. I have been banking there for over 52 years.
For the inquisitive it was for my aging aunts new TV set.
I will not mention the bank’s name but Harry please come out of retirement. Dem were good days!
😄😄
We need to change the narrative. I’m sick to death of hearing people spout about us being a “world class financial jurisdiction” and “fully supporting” whatever OFAC/FATF/EU nonsense is currently on the agenda. Like if they say it enough it will become true.
How about we say a public “thank you” to the EU for confirming that we have a much more competitive tax and regulatory environment than they do and that we look forward to continuing to do billions of dollars of business as usual with the Americas, Asia and the Middle East, where 96% of our clients live.
We have incompetent MLA’s who won’t consult experts as they want to travel….priority now is Hollywood.
It’s better to consult with experts while sipping Champagne on a super yacht in Monaco.
Better for who?
No, London is the priority now. Maybe another nice side trip to Monaco too.
Did we miss the deadline by a few days because Cabinet was occupied with Port and Gay Marriage issues?
and trying to stuff the port down our throats…cha ching
9:40 You got that right. This is a classic example of a self-inflicted injury. I’m just surprised that none of the entities who stand to get impacted by this haven’t taken legal action against CIG – maybe that’s coming?
Unbelievable.
“Don’t worry rich people we are working hard to make sure you can continue to dodge taxes in the Caymans.”
Where are they?
Wake up they are everywhere around the Seven Mile Beach Corridor.
I am sure you do your utmost to pay more tax than the law requires.
Good let them law firms scramble. They the main contributiors to this money laundering mess we have on our hands.
Idiots like you are the reason the world thinks we are money launderers.
You have absolutely no clue.
You the idiot if you think money laundering dont go on here.
Some perhaps, but a lot less than goes on in Delaware or London or Paris or Berlin or Zurich.
Correct, 12:47, a point made by Private Eye magazine, no friend of Cayman’s by any stretch of the imagination a few years back, when it pointed out the extent of illegality in, especially, London.
Or New York.
Trump condo’s in NYC the biggest money washing operation.
More than half the condos bought at Trump Tower on Fifth Avenue in NYC were bought by Russians and Chinese. Sound familiar?
London too
Two words. REAL ESTATE
6 words. Practicing Law Without a Practicing Certificate.
That is an offense, involves money laundering, and appears to be a mainstream practice of numerous law firms.
Do tell… Im all ears, as would be most of the rest of the world. Or is that just another story that sounds good but has less truth in it than a Grisham novel?
Significant numbers of non Caymanian lawyers are practicing Cayman Islands Law in overseas offices (including of Cayman firms) without being admitted as Cayman Islands Attorneys at Law, and without holding a Cayman Islands Practicing Certificate. It is an offense to practice Cayman Islands Law without being duly admitted and entitled to practice. Any money so earned would appear to constitute the proceeds of crime. If true, would the dealing with those funds not constitute the proceeds of crime under our “all offenses” regime?
Tell us more 1:26. I want to hear a lot more about lawyers practicing law without law degrees.
Practicing law without a practicing certificate. No one said anything about a lack of law degrees, but I am sure a number of paralegals and secretaries are doing that too.
You need to develop an understanding of reserved activities (for practising law) and those which can be delegated to secretarial and paralegal staff. It kinda works like this all around the world.
Read our legal practitioner’s law. What happens in relation to the practice of other countries law is of no concern.
Perhaps in the past. You still have to get the money through the banking system which is highly regulated. Try rock up to the bank with US$200K rolled up in a carpet and see what happens.
FYI, as far as I was aware, real estate is now relevant financial business so real estate brokers face sanction for failing to act in accordance with the AML regs.
And yet what do we do with a recently convicted realtor who stole client monies? Grant them a real estate agent’s license!
Boy, that’s some kind of serious AML shit we got going on. Idiots.
That was pld fashioned stealing, not money laundering.
Stealing money, and then spending it, is money laundering. You are dealing with the proceeds of crime.
But no sanctions are enforced on real estate brokers. Like so many laws here, laws are simply not enforced.
So in Cayman you have all the bankers checking the bone fides of everyone that has an account here. Then you have all the company management organisations doing the same thing. Then you have law firms checking the bone fides as well. Then, the real estate agents, etc, etc. double, triple checking essentially the same thing….
I can set up an account in Delaware (and other locale’s) online in about 30 minutes with little background check or real risk evaluation. Oh, and I can take credit card payments for my “global business” as well…..
So, yeah, that seems like Cayman should really be set out as the poster child for the black list…
Come on United States, and the rest of the world…. If you are going to set some rules, at least live up to them yourself….
(Do I need to mention that no one actually verifies the information in the UK company registry? we do that here.)
Don’t blame the US. You have a EU problem.
While all those wanting secrecy run along to the US. If the EU ‘problem’ continues, all eyes on Delaware. By far the biggest tax haven in the world. As a matter of fact, not fiction.
Problem is AML does not enforce the laws.
That’s where all the money laundering action is : REAL ESTATE. Just talk to the bigger real estate agents.
Restaurants, empty store fronts…
And Restaurants! Geez check the monopoly in EE. To start.
What has this got to do with the Private Funds law?
Agreed 12:54!! Why do you think they keep building those high end condos that only a rare Caymanian can afford.
And all those condos on SMB that stand paid for but empty…
Don’t take my word for that, just go for a beach walk and look for yourself.
Idiots like that and of course the actions of our political ambassadors. SMH.
Vote No
Oh no it doesn’t.
The gig is up.
There is no “damage”.
The whole thing is a scam.
Money people are money people and usually work together unless the greed gets totally out of hand, BCCI anyone?
The offshore sector is just a load of bollocks, just like our judiciary, just like our politicians, just like our press and most definitely our police, and soon to be our local military.
Please don’t bother knocking on my door with your stupid census garbage.
You know everything about me anyway.
Actually, only Google and the like know what your kink is. Those law firms, which are tiny in the global scheme of things, are just filling a niche in the global state of affairs. The ‘evil’ that is done here is so much less than what is going on elsewhere that declarations of hypocrisy are probably more suitable.
A nothing burger.
But at least Anthony, Suckoo and Julie have managed to soak up a bunch of parliamentary time on making sure we are not corrupted by two people loving each other. So all is well. God will take care of us.
Oh stop it. They can’t stand each other, you did not know that?
They are probably secretly hoping that the whole thing just goes away.
Too much pressure for people to handle. Leave them alone.
So why did Cayman miss the deadline? Anyone know? Any accountability?
FOI plz someone. Let us see if we can find this out?
CIG will want to apportion blame to audit firms like E&Y, that purportedly insisted there be local audit sign off…thus delaying legislation but locking in millions in easy fees. Ultimately the urgency was clear, and Cabinet did not push hard enough, even with an extension.
Rubbish, the alternative was legislation enacting almost AIFMD like requirements with CIMA totally incapable of being able to control matters, leading to significantly increased costs above the existing proven regulatory model which would ultimately have driven more business away from the island to our competitors.
I do agree that the delay ultimately lies at the Government door, no excuse for missing the deadline.
That and the G.. D… dock is really, really, important……..
It’s not a secret. The deadline for Cayman was published online on the EU’s website. There was a final warning and caution sent in November 2019, noting the consequences. Tara flew to Hollywood.
Aldin flew to Monaco.
Tara flew to Monaco.
Both Alden and Tara should have flown to Brussels first.
Can someone ask the Minister of Financial Services.
Government dropped the ball and simply missed submitting the necessary legislation on time #facepalm. You really can’t make this stuff up
Its the elephant in the room no one is talking about !!!!!!!!
Yes, but our politicians seem to make it up as they go. I guess in Cayman a political “party” is just an excuse for having a good time at the public’s expense.
That is the million dollar question ? It was reported earlier that the Premier didn’t even know we were being blacklisted by the EU ???!!!!! and other members of Government focus on stopping television broadcasters from using the Cayman Islands negatively in advertisements rather than ensuring that proper laws are in place on time to prevent international embarrassment in the financial industry. The dam reason for the blacklisting ( government incompetence) is even more embarrassing than the actual blacklisting itself. sigh sigh
CNS: It’s only fair to repeat the premier’s Facebook post on @TheRealAldenMcLaughlin in response to the CMR article referenced here. Quote:
Misleading news story
Today my office reached out to Cayman Marl Road requesting that they amend a story on their website. Please see below:
We reference the story you have posted on your website Cayman Marl Road “Premier denies knowledge that Cayman blacklisted despite media reports.”
1. The Premier is on island.
2. Media reports (not official EU-to-Cayman communication) indicate that EU Ambassadors have made a recommendation that EU Ministers of Finance blacklist Cayman.
3. The EU Ministers of Finance have not made a decision to blacklist; their decision will be announced on 18 February.
The problem with the headline is that the Premier has not denied knowledge that Cayman is blacklisted. What the statement said was that no official notice had been received of any blacklisting and only what is reported in the press.
Please see link for statement here http://bit.ly/2UJd4hj
Oh please, Sandra and Alden work together creating division in society amongst gullible fools.
Sandra, your gig is up. Tired of your sensationalistic crap drawing innocents into being polarized.
There is something about you that does not ring true. Next.
Whether Alden was aware or not still does not take away from the fact that the Cayman Islands missed the deadline !!! . Why was this the case ? Who is ultimately responsible for the shortcomings ? The total lack of concern as to what this could have done to us a financial center is simply unacceptable . Government elected officials are being paid high salaries and from where I am watching we the people are not getting our monies worth
Too busy wasting LA time bashing same sex marriage.
Procrastination. Why bother, it will take care of itself? Overconfidence with the Wining and Dining, showing off as big spenders, not as big minds.
Wining and Dining was enough, wasn’t it?
Much finger-pointing at others and not much accountability is the usual process.