More bills rolled out to help offshore sector
(CNS): The Tax Information Authority (Amendment) Bill, 2020 is one of another bundle legislation that will be before the Legislative Assembly later this month in order to tackle the ongoing challenges faced by Cayman’s offshore industry. The tax bill seeks to strengthen the compliance, enforcement and cooperation functions of the Tax Information Authority and help Cayman’s compliance with international standards regarding the exchange of information for tax purposes.
Although Cayman continues to retain a Largely Compliant rating from the OECD and is in good standing with its Forum on Harmful Tax Practices (FHTP), international peer reviews are ongoing and Cayman is seeking to stay ahead of any new demands.
Another five bills have also been gazetted, including another amendment to the Trade and Business Law to deal with more new requirements for Designated Non-Financial Businesses and Professions (DNFBP) and to create a new licence category for dealers in precious metals and stones.
In preparation for the next LA meeting, the Ministry of Financial Services is inviting public comments on the bills.
The public can submit their feedback to dfslegislation@gov.ky.
See here for more information on the Ministry’s current initiatives.
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Category: Business, Financial Services, Laws, Politics
These are some of the most interesting and enlightening comments I have read in CNS for some time.
Initially, I was going to say the CIG should go all out to capture the Offshore Business that is teetering on destruction in Hong Kong. However I now wonder if there is the ability to do so, with the unprepared government in place at this time. Of course, with the way naturalization laws are written (and certainty of them never changing), Cayman is not in the position to attract a significant part of the Hong Kong Financial Services Industry.
How sad for the Cayman Islands. A change to attract a lucrative, green business the government is blowing it.
A change to attract a lucrative, green business the government is blowing it.
Should read:
A chance to attract a lucrative, green business the government is blowing it.
Can we the Cayman Public please all pray that President Trump gets reelected. Having a Republican as President seems to benefit us in the Cayman Islands more. President Trump has put through a lot of deregulation and reversed a number of harmful things (to the Cayman Islands) that the previous President did.
US and Cayman seems to have been booming since President Trump was elected – am I right?
I remain,
Mo$e$ – Trump Wannabe
Wat
You know Cayman is not in America, right? And that Trump actually hasn’t done anything other than talk barely coherent nonsense and chase his own tail.
Here are the problems with the offshore sector:
– Alden and Tara are incompetent
– Maples and Walkers are advising the government to bow to EU/ OECD
– The Audit firm lobby led by EY is killing Cayman’s smaller mangers
– Cayman is being choked by regulation – business will leave anyway , why not say no to EU/ OECD?
The OECD and FATF have sufficient influence to recommend the barring of “non compliant” Cayman Islands entities and firms from the international payments and settlements systems. The entire planet would love the Cayman Islands to be the representative example of what will happen to other non-compliants. Then we’re truly $&@#ed. They have their hand hovering over the button already, and our leaders continue to waddle.
Not possible. A significant fraction of the institutional trading on the world’s stock exchanges flows through accounts held by Cayman investment funds. 80% of the companies listed on the main board of The Hong Kong Stock Exchange are Cayman companies. If you freeze them out of the banking system it’s financial armageddon. The OECD and FATF would likely also get a big middle finger from Asia, the US and the Middle East.
A move like that would be more likely to bring about the end of the international payments and settlement systems (which are clunky, overpriced, slow and old fashioned) than to put an end to Cayman as a financial jurisdiction.
If they wanted to pull that lever they would be more likely to do it to a smaller jurisdiction like the Cook Islands or a country already on the grey list like the Bahamas.
0% risk of that happening.
and what makes you think that clients will continue to seek out Cayman entities as we show the EU the middle finger and carry on hoping to win a game of Chicken as peoples’ future hang in the balance? Despite what we may say to ourselves and clients, do you really think the Cayman product is that distinctive that it can withstand the stench of association with a blacklist? Do you really think the institutional players won’t relocate en masse if we don’t make it off the list in October? You definitely have had a bit too much cool aid if you believe that. Think I read recently that the Singapore Govt was offering to pay the first $100k of org costs in hopes of attracting funds to relocate there. At some point the alternatives start to look pretty appealing
Cayman is susceptible to competitive pressures, no doubt about that. We are out in front now because our product is trusted. That can easily change and it will change if we aren’t careful. But the EU blacklisting is currently a non-factor. About 4% of our business comes from there and most of it is still coming. The US, UK, Asia and the middle-east see the EU as a bullying socialist dinosaur and understand that the blacklisting was at least partly political and strategic. The only tangible impact is that some institutional EU investors have voluntarily decided to hold off making new allocations to Cayman funds. That has diverted a tiny fraction of a fraction of a percent of investment.
Now, if we were to remain on the blacklist after October that would be more serious and show that the EU was more than posturing. It might boost some of our competitors (i.e. Lux and Malta which the EU will never turn on) and divert more capital away from Cayman structures but it wouldn’t put us out of business. It might be a nail in the coffin, but it wouldn’t be the end.
What will kill us is the gradual build up of friction in our financial services industry. It takes longer and longer to set up a company, you spend longer and longer filing out forms and having documents notarised and certified. Businesses can’t open bank accounts and when they do they can’t move money in and out. There is constant reporting – BOR, FATCA, CRS, economic substance, and more and more regulation. As a professional it takes ever longer to onboard new clients and get to the actual paying work, and there more is non-paying work that has to be done (i.e. lawyers looking for evidence of past crimes, accountants having to examine regulatory compliance). Eventually the engine seizes up to the point it can barely move, and congratulations you are now an onshore jurisdiction. That’s where we are headed right now.
It’s not just business that will leave. A lot of lawyers and accountants are already walking away from the jurisdiction because they are so frustrated with the endless changes and all the red tape. These regulations are slowly killing the goose that lays the golden eggs and that is no accident – that is exactly what the EU wants. It won’t stop until Cayman is a ghost town or we fight back against the bullies. Unfortunately fighting back requires some sophisticated strategic thinking and some courage and, as you say, Tara Rivers is not even competent let alone up to that task.
My thoughts:
– Alden and Tara – agreed.
– Maples and Walkers – I’d say they are actually protecting their own interests and that they are ultimately agnostic as to which jurisdiction the work is done in as they have a presence wherever is needed (this was an actual comment from an attorney at one of these firms) – they are not batting for Cayman as a jurisdiction first, it is Maples and Walkers first. This is not the same for the mid-tier and smaller law firms. These two firms are currently causing a real threat that we will not be off the EU blacklist in October, which will be devastating to Cayman.
– Audit firm lobby – don’t understand that point about ‘smaller managers’ – you mean raising the costs of doing business in Cayman? What would you rather have – the expanded local oversight which has been so successful for hedge funds for many years and which the EU has accepted as a model, with perhaps some smaller asset managers thinking its not cost effective to be in Cayman anymore, or the wholesale risk of the entire industry upping root somewhere else – I refer you to my thoughts on Maples and Walkers above.
– Agreed on regulatory suffocation – the politicians need to be more savvy and grow some spherical objects – I refer to my agreeing with your first point re Alden and Tara.
Thanks for your well reasoned input on my initial four points.
My reference to the ‘audit lobby’ and smaller managers was relating to the cost of doing business as you correctly guessed.
My contention is that an audit for private funds is valid by all means . Most PE funds already have an investor imposed audit requirement . Why a Cayman audit sign off specifically?
The average Cayman CSP ( corporate services provider) has monetised AML, MLRO, BO , FATCA, CRS and ES services. Why another $10k for a Cayman audit sign off when the onshore auditor has already issued an audit is my point.
On the point of Maples / Walkers I agree they are agnostic about their physical location and are happy to pick up shop from Cayman and relocate to a location in EU or Asia. Those two Cayman firms should be doing some activism though – this is where it all started for them and if they are unable or unwilling to be activists then they shouldn’t be charting the course of the good ship Cayman. Alden/ Tara are being led astray .
One other thing for sure is that the minister who claims to be doing the protecting will not be taking any fashion shopping trip jollies any time soon.
Few people know that MLA actually stands for “Millions in Lavish Allowances”. I do wonder how the poor things are coping without their per diems, hotel and taxi allowances, first class airfares and self-reported expense claims. It must be hard to survive on a few measly tens of thousands a month plus full pension.
Is this the longest Tara has spent in the country since she was elected?
I don’t think I have ever read a more nonsensical headline. I have yet to see a piece of legislation come out of CIG that has “helped” the offshore sector. The offshore sector continues to adapt and survive despite the complete lack of support from CIG and their complete willingness to bow at the feet of the EU, OECD, FATF, pick your acronym.
True, though if we continue to dither on the tackling of systemic government corruption, drug trafficking, related money laundering, and remain on the naughty lists, there will be no financial industry. They already have a hand on the lever, backed by decades of zeitgeist and uncontested propaganda. The money, which is already custodied internationally, simply conveys from the outgoing banned/noncompliant Cayman Islands entities into the new jurisdiction entities’ name as a book keeping journal entry. It’s that precarious. Additionally, the government continues to neglect it’s own transparency and supervisory functions in response to published critiques repeated by OECD/FATF/CFATF and others. The regulatory/police record shows there are still no white collar criminal or politician arrests or charges for almost anything (save for a coincidental unrelated beating). Until papered over a month or two ago, there were over a dozen cyber currency exchanges converting and swapping between dozens of coins in the Cayman Islands without any AML requirements, or regulator supervision. Our Financial Minister a year ago thought it best to take a “wait and see” approach as we hosted a Billion plus dollar Initial Coin fraud with known felons. Then we had planeloads of hidden cash and gold from Venezuela caught and released…let’s not underestimate the pot we’re in and the state of boil right now.
Agreed but just to paraphrase, that bump in the rug is starting to look very ominous.
With the exception of the Foundation Companies Law, I agree completely!
A more appropriate title could be “More bills rolled out to help advance EU ideals in relation to offshore sector”.