Consultation on financial sector bills ‘a charade’

| 14/10/2020 | 55 Comments
Cayman News Service
Johann Moxam

(CNS): The financial services community is raising concerns that continuing changes to laws governing the sector are making Cayman less competitive. Industry experts are also accusing government of “a charade” and not fully engaging with them about the impact. Government has recently released a swathe of bills aimed at increasing oversight of records held by service providers on their clients, which the industry says go to far.

The ministry’s Department of Financial Services has circulated at least eight bills for consultation among industry stakeholders. But correspondence between members of industry associations shows that there is an emerging consensus that government is only listening to a small number of dominant players while ignoring the detrimental impact on the wider sector.

While industry members remain uncomfortable going on record about their concerns, Johann Moxam, Partner at Lainston International Management, a corporate service firm, has broken the silence and called out public misconception that the laws passed in relation to the financial sector are supported by the majority of stakeholders.

“The concept of the private sector consultation process is extremely limited to a handful of stakeholders that help drive financial sector initiatives,” Moxam told CNS in response to inquiries about the circulation of the proposed legislation.

“They can be described as not being Cayman-focused as they are part of global brands in law and accounting, operating in clusters and with offices and resources around the world. This is done deliberately as the system is designed to operate on a quid pro quo basis with the political directorate and large operators in industry,” he said, as he accused government of placing potential political donations above proper consultation.

“What is the point of seeking private sector input and suggestions from industry associations if those concerns, suggestions and alternatives do not make it into the final product, including the relevant bills, guidance notes and regulations?” he asked, as he described the government’s consultation as “a charade” and “a tick the box exercise”.

He said this allows the political directorate to claim they consulted the industry but fails to address the major issues at stake.

“They really only concern themselves with certain players looking out for their specific interests,” Moxam alleged. “Cayman is currently off the EU Blacklist, yet legislation is being drafted and they are seeking to pass laws that will continue to place our sector at a competitive disadvantage, making it more expensive and cumbersome to do business in comparison to our competitors.”

Moxam believes the Cayman Islands needs to be open for business and not capitulating to and helping external agencies to decrease the size and value of the jurisdiction’s financial services industry.

The latest swathe of changes to at least eight laws focus on the need for corporate service providers to keep accounts for their offshore clients. Financial service firms, banks, lawyers and other relevant providers would need to submit an annual return in the form of a declaration to the Registrar of Companies at the start of each year stating whether or not they are keeping proper books for the companies and other entities registered at their offices.

While it appears the amendments are motivated by international pressure for the Cayman Islands to comply with ever-tighter demands relating to transparency and oversight, some off-shore experts are questioning the wisdom of this step, given that Cayman has been removed from the EU list and is meeting all current regulatory standards.

Speaking in the Legislative Assembly on Wednesday, Financial Services Minister Tara Rivers said that her ministry continues to offer significant support to the financial sector, and in the face of COVID-19 has gone above and beyond to help keep business moving. She said the government engages extensively with the sector and has continued with a broad and successful consultation process regarding new legislation even throughout the pandemic.

See proposed draft bills in the CNS Library


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Category: Business, Financial Services

Comments (55)

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  1. Anonymous says:

    Industry better keep their mouth shut or CIG will stop issuing you every permit you apply for.

    • D.S says:

      CAYMAN BANKS ARE RUN BY THE ELITE CABAL
      they look down on poor customers with less financial means and take advantage if the poor because banks have a blank cheque to do as they please.For far vtoo long Cayman,banks have done what they want with customers even seem harsh penalty against customers in default of loans or mortgages. The court system need to stop ruling in favor of banks who are predator lending violators.Banks need to be forced to Refund all MONIES they have taken from poor home owners whose foreclosed homes banks have unfairly sold for a price that is over and beyond the loan or mortgage balance owed. LOCALS are getting the worst end of the stick.
      Banks should be forced by law to pay out to homeowner losers the full amount of the excess MONIES collected over the balance of mortgage owed.Thats only fair, but not happening,Time to make it right.Local homes are foreclosed and sold to expat for pennies on the dollar.This govt MUST FIX THIS discrimination, bias and prejudice dealing Cayman banking systems.

      • Anonymous says:

        Remind us all, what was the sole responsibility of the homeowner in this scenario?

        Make the payments, on time. That was the contract signed.

        Once you default, you lose your entitlement to protest what is done next with the property.

        Next…

        • Anonymous says:

          Yeah, but it should be sold for fair market price and any amount over the loan and costs should be paid back to the borrower..

    • Anonymous says:

      LOL. How funny!

    • Anonymous says:

      We wont need work permits if clients start registering their entities in cheaper and less expensive jurisdictions. Telling people setting up exempt companies that they have to maintain a full set off accounting records here just in case someone else wants to look at them, and they have to have staff here to maintain a certain amount of economic activity in the jurisdiction (or pay people here to do the work for them) is going to go down like a lead balloon when there are so many other offshore financial centres that don’t have these requirements and are way cheaper to operate through.

    • Arthur Bogle says:

      Informative article. More people been to be aware of this problem and lobby their representative.

  2. Anonymous says:

    Thanks for telling it like it is. Hopefully no repurcissions.

    Cayman as an international “financial hub” is being destroyed by regulatory over reach, bureaucracy and laws/regs/SOGs that are not fit for purpose and which serve to drag all international entities down to be treateed like they were in the bottom 2% of entities worldwide (who are not even in the Cayman Islands in the first place).

    The powers that be are afraid of their own shadow and will not say “no” to what is not fit for purpose and prefer to just slavishly adopt what they are told to. No back bone.

    International entities will leave eventually – just look at the global financial competitive index and how far the Cayman Islands have fallen.

    Try and deal with COVID 19 with no Financial Services Industry to keep the economy going.

  3. Anonymous says:

    Thanks johan
    This nonsense had to be called . Well done
    With tourism gone and the ppm + 2 law firms determined to bow and accept everything OECD and EU council is throwing – cayman is doomed.
    The 2 law firms and the audit firms want everything registered and regulated to earn short term fees at the expense of the larger industry’s wellbeing.
    Well done johan again!

  4. Anonymous says:

    Cayman should implement similar standards of transparency and supervision as are imposed in EU and US states like Malta and Delaware, and not one bit more.

  5. Marchant says:

    It really doesn’t matter what Johann says. The world is changing by the minute and they are trying to end corruption everywhere but in their own backyards. The US is the biggest offshore jurisdiction and answer to nobody any they set the goal posts and makes all the rules. Look at FATCA, it is a one-way street but the world has had to adopt those policies. On this track Cayman will be dead as a financial center. The risks of dealing here outweighs the rewards.
    CIMA will not protect the clients XXXX

    Cayman has official become a joke of a financial jurisdiction
    Who is going to invest in Cayman if the judge there are going to let thieves like XXXX steal client funds?? I will never invest a dime there! It is no better than Belize as far as I’m concerned.

    • Anonymous says:

      Doesn’t FATCA apply only to US entities? Don’t deal with Americans if you have a problem them. Best of luck.

      • Anonymous says:

        Or transact in US dollars, as every US wire has to be routed through a US intermediary bank. Think you will find the reach of FATCA is considerably greater than just the US.

        • SSM345 says:

          Only concerned with US Specified Persons i.e. entity or Individuals in Cayman investment vehicles or banks; nothing more. AnD EVEN THEN MOST us entities have a FATCA exemption granted by their very own US Treasury.

          That’s why there is the OECD’s CRS with another only 100+ jurisdictions under its ambit.

        • Anonymous says:

          Hey 6:34 – let me shed some light on your ignorance: “FATCA requires certain U.S. taxpayers who hold foreign financial assets with an aggregate value of more than the reporting threshold (at least $50,000) to report information about those assets on Form 8938, which must be attached to the taxpayer’s annual income tax return.”

          Please comment on what you know. FATCA is for us entities…

    • James R says:

      Marchant, marchant ? Did we treat you so badly during your tenor here. Did you eat turtle meat, lobster and concha d rice and beans.? Well if you didn’t that’s your problem more for we. Anyway you need to forget your roofs with the Bush empire and leave us alone.?we don’t want don’t need your investment and be careful you don’t get sued for your scandalous comments.

  6. Anonymous says:

    Mr. Moxam seems to be the only person in the financial services community with the courage to speak up.

    Where is everyone else?

    • Anonymous says:

      Afraid to be retaliated against. Can’t blame them. I can just see it, speak up today and tomorrow you’ll receive a laundry list of violations and get your license revoked.

    • Anonymous says:

      Keeping their heads down so their employees’ permit renewals don’t suddenly start being refused or questioned.

    • Anonymous says:

      U don’t know the man? what the question is “Why”?

      • Johann Moxam says:

        Dear Anonymous

        I have been clear in stating my position and concerns. There is no agenda or ulterior motives as you have implied. If you want to better understand the issues and are willing to remove your cloak of anonymity. I am willing to help you understand the issues and share my perspective face to face. I can be contacted on 9260984 to schedule our meeting.

        As a business owner in the industry I see and feel the consequences of the decisions that are made. I wish everybody success in their endeavors but the system should not be geared to focus on or primarily benefit a select few players. We all pay the same fees to CIG, carry risks and should have all of our concerns acknowledged and addressed as many persons I have spoken to in the industry share similar concerns to what I have publicly expressed.

        Cayman is currently no longer on the EU “black list” and CIG should be congratulated for addressing that issue.

        However, legislation is still being drafted and the current administration are seeking to pass more laws that will continue to place the financial services sector at a competitive disadvantage whilst making it more expensive and complicated to do business in comparison to our competitors. The question that is to be answered is WHY? What are they not telling us that demands this proposed course of action?

        I hope that helps to clarify things.

        Regards

        Johann Moxam

        • Anonymous says:

          Listen brother Moxam, just because you are not consulted doesn’t mean there is wide enough consultation. We know you want to play with the big boys Breda , so as others have pointed out in the last, stand for election and win then we will see your true ilk. Ya shoulders kinda
          broad ya can take licks. Oh as to your motivation we know the tiffnetween you and the Prenier from some time ago. Let it go bredren and focus ya hear.
          Best

          James R
          6375749

  7. Anonymous says:

    When the entire political regime is buoyed by so much BS, flushing the toilet a few more times into the sewer doesn’t change anything. Most don’t even notice anymore.

  8. Anonymous says:

    Finally someone has the courage to say what the majority of industry thinks and talks about in private!

    • Anonymous says:

      Thank you Johann

    • Corporate Retiree says:

      Seconded! And for the wider public, the industry HAS been corresponding its concerns which have been met with brazen autonomy from the Ministry.

      I’m not sure Minister Rivers even has the slightest clue about financial services. She spent the first part of her term getting her hair done and taking foreign trips to Hong Kong, Brussels and Cannes and then seems to have fallen out of favour and off the cliff for the rest of her term until we ended up on the blacklist at which point the engine got cranked up again to mitigate the damage.

      To reitterate Moxam’s point, the finance industry IS the main pillar of our economy and the collective need to be given appropriate consideration by any administration as only by their continued success will the government salaries get paid.

      Inaction has far reaching consequences.

  9. Anonymous says:

    “Financial Services Minister Tara Rivers said that her ministry continues to offer significant support to the financial sector, and in the face of COVID-19 has gone above and beyond to help keep business moving. She said the government engages extensively with the sector and has continued with a broad and successful consultation process regarding new legislation even throughout the pandemic”.

    I am sorry, but I believe Minister Rivers is just blowing smoke!

  10. Anonymous says:

    Thank you Mr. Moxam

    • Anonymous says:

      Keep up the great work of calling it like it is and showing real leadership qualities.
      The country needs more people like John Moxom moving the country forward before government make even bigger mistakes and all is lost

  11. Anonymous says:

    What Johan Moxam has said is factual. I support his views 100%. I am an expat applying for PR and could never use my name to support his comments it would be suicide

    • Anonymous says:

      Why do you apply for PR then? The days of Cayman glory are gone.

      The wise have taken their pensions already then sold their condos despite having PR status.

  12. Anonymous says:

    This is the type of honest and practical leadership that Cayman needs in financial services and other areas. Mr. Moxam is clearly stating the reality of what many of us in industry feel. Thank you for being brave enough to speak to this issue.

  13. Anonymous says:

    Reminds me of McKeeva falsely claiming in the LA that there had been public consultation on the reduction of strata votes from 100% to 75%.

    “Consultation” with the realtors, perhaps. No-one else.

    Untruths in the LA. My, my. Whatever next?

    • Anonymous says:

      “McKeeva falsely claiming”…why are you surprised ?

    • Anonymous says:

      There are strong arguments that that legislation adversely affected strata owners’ property and therefore their human rights, and is therefore invalid.

      One day it’ll land in court and the whole murky story and back-room deals will be exposed to daylight.

    • Anonymous says:

      Actually this was a total scandal. Before the law was changed, the vote of 100% of owners was needed for a development to be sold. That was the position since strata titles were originally introduced; everyone understood it and bought apartments on that understanding.

      But then the realtors started agitating for that percentage to be reduced because they were missing out on juicy commissions from new developments and complaining that just one owner could hold the rest to ransom by refusing to play ball. (Of COURSE they could, you fools; the whole strata concept was based on the idea that your property is your own, to do with what you like, and not to be pulled out from beneath you. It was designed to safeguard individual owners against developers forcing them out).

      Bush, listening to his fellow realtors alone and without a thought for the rights of owners (including his beloved “overseas investors”), then unilaterally changed the vote to 75%, claiming that full consultation had taken place when it hadn’t.

      I’d love to see that law challenged in the courts. It was legislative armed robbery of helpless owners. Thank you for raising it.

  14. Anonymous says:

    Well said Mr. Moxam what this government is doing is ridiculous.

  15. Anonymous says:

    I don’t know what Moxam’s worried about. If you have the right connections none of these laws are ever going to be enforced anyway. It’s just window dressing.

  16. Anonymous says:

    Off the blacklist yet they still push through update after update making Cayman more cumbersome & expensive.

    When will enough be enough??

    • Anonymous says:

      The worst thing about it is all these moves aren’t really convincing anybody things are changing. So we’re off the ‘blacklist’? Doesn’t mean that these islands are not under constant scrutiny by various US and EU regulatory bodies looking for excuses to kick us. Quite honestly it would be better for CIG simply to say, ‘To heck with it, this is how we do business and if you don’t like it **** you!’ There’s more than enough Chinese and Arab money stashed away here to cover us, who cares about the rest of them?

    • Anonymous says:

      When will enough be enough? NEVER! Not with the leaders we have!

    • Anonymous says:

      Never

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