Ugland House is an office building in
George Town, Grand Cayman and is the headquarters of international law firm Maples and Calder.

The Cayman Islands has always been an open, free market, economy, and from the 1960's onwards, successfully invested its "historic capital" to the benefit of the financial services sector.

Cayman's anti-money laundering laws are recognized by the Financial Action Task Force as more compliant with international standards than those of the U.K. and by the International Monetary Fund for promoting
a "strong compliance culture.

 
  Cayman
and the
Regulators
 
Cayman's financial service industry has been thoroughly reviewed by various international bodies over the last few years. Indeed the US government has recently written a report about both Ugland House and Cayman: at the request of Congress its auditing agency, the United States Government Accountability Office ("GAO"), visited Cayman and spent time at Ugland House, where Maples and Calder had the opportunity to explain to them directly the nature of its business and the role of a registered office provider under Cayman law.

The GAO's report, dated July 2008, gave both Ugland House and Cayman a clean bill of health. It acknowledged that Cayman has a stable and internationally compliant legal and regulatory systems and that the Cayman government cooperates fully with US tax enforcement and other regulatory investigations.

As of March 2013, the Cayman Islands has signedĀ  a total of 31 bilateral Tax Information Exchange Agreements ("TIEA"), and has a further 4 agreements awaiting signature - including Spain, Greece, Indonesia and South Korea. Cayman has also enacted the tax information exchange provisions of the EU Savings Directive.

The countries with which Cayman has signed bilateral TIEAsĀ are:

Argentina France Netherlands
Aruba Germany New Zealand
Australia Greenland Norway
Brazil Guernsey Portugal
Canada Iceland Qatar
Czech Republic India St. Maartin
China Ireland South Africa
Curacao Italy Sweden
Denmark Japan United Kingdom
The Faroe Islands Mexico United States
Finland    

Below is additional information on the Cayman Islands banking and financial markets, regulations to promote information disclosure and transparency and policies to prevent money laundering and other illicit uses of the financial infrastructure.


Regulation
  • The Cayman Islands Monetary Authority ("CIMA") is the financial services regulator, responsible for prudential and anti-money laundering regulation of licensees and registrants.

  • CIMA is a full member of the International Organisation Securities Commission ("IOSCO"), the Offshore Group of Banking Supervisors ("OGBS"), the Offshore Group of Insurance Supervisors ("OGIS") and the Offshore Group of Collective Investment Scheme Supervisors, as well as a member of the OECD's Level Playing Field sub-committee.

  • CIMA adopts and applies the Basel Core principles (for banking), International Association of Insurance Supervisors ("IAIS") principles (for insurance), IOSCO principles (for securities and investment) and the Organisation for Economic Cooperation and Development ("OECD") principles for corporate governance. Cayman is a member of the Steering Group of the OECD Global Forum on Tax Transparency and Exchange of Information.

  • In reviews conducted in 2003 and 2007, the International Monetary Fund ("IMF") recognised that an "extensive program of legislative, rule and guideline development has introduced an increasingly effective system of regulation, both formalising earlier practices, and introducing enhanced procedures." (Source: CIMA website).The IMF is scheduled to conduct a review of the legislative and regulatory framework again at the end of 2012. (Source: CIMA website)

Banking
  • The Cayman Islands is recognised as one of the top 10 international financial centres in the world, with over 40 of the top 50 banks holding banking licences. As at December 2013, there were 213 licensed banks, with approximately two thirds being international bank branches. Branches and subsidiaries are regulated by CIMA on the basis of consolidated supervision in connection with the onshore home regulator. (Source: CIMA website)

  • Private banks number less than 20 and are required to establish a physical presence in the Cayman Islands, with a greater minimum net worth and capital adequacy ratio. (Source: CIMA website)

  • For all banking licensees CIMA typically adopts more stringent capital adequacy requirements than proposed under the Basel Core principles.

  • Reasons to establish a banking presence in the Cayman Islands include the provision of multi currency accounts (without exchange restrictions) with access to international markets, depositary sweep facilities and internal treasury functions, on a tax neutral basis.

Investment Funds
  • The Cayman Islands is recognised globally as the leading jurisdiction for the domicile of investment funds.

  • The Cayman Islands has well-established legislation and standards applicable to the fund industry, which is regularly amended to meet with industry and international regulatory standards.

  • As at December 2013, there were approximately 11,379 investment funds registered with CIMA. Many fund administrators (approximately 120) are also licensed or registered with CIMA. (Source: CIMA website)

  • 14,355 exempted limited partnerships are registered in the Cayman Islands, many of which were involved in major private equity funds formation and related transactions.

Anti-Money Laundering ("AML") and Combating of Terrorist Financing ("CFT")
  • The Cayman Islands have been a member of the 30-nation Caribbean Financial Action Task Force ("CFATF") since its inception in 1992. (Source: CFATF website)

  • Members of Cooperating and Supporting Nations of the CFATF include the United States, Canada, the United Kingdom, France, Mexico, Spain and the Netherlands. (Source: CFATF website)

  • The CFATF is an Associate Member of the inter-governmental AML/CFT body, the Financial Action Task Force ("FATF"), and conducts regular peer assessments of its members based on the FATF 40+9 Recommendations, as well as 19 CFATF Recommendations. (Source: CFATF website)

  • The Cayman Islands were reviewed by the CFATF in late 2007 and their report was issued in November 2007. The report recognised that the compliance culture in the Cayman Islands was well established and highly commendable.
    (Source: CFATF website)

  • Of over 150 jurisdictions assessed to date by the FATF and its affiliates, against the FATF Recommendations, the Cayman Islands ranks 7th equal, on the basis of calculating "compliant" and "largely compliant" ratings. (Source: FATF and affiliated websites)

  • The Cayman Islands has been at the forefront in the Caribbean and offshore environment generally, in relation to implementing appropriate AML legislation. The Proceeds of Crime Law, 2008, the Terrorism Law (2011 Revision) and the Money Laundering Regulations (2010 Revision) both reflect internationally accepted AML/CFT standards and they have been used as a model for other Caribbean nations.

  • AML/CFT procedures are mandatory for all licensees, registrants and entities conducting relevant financial business. Unlike other jurisdictions, this also applies to corporate service providers and trust companies.

Transparency and Disclosure of Information
  • Over the past 25 years, the Cayman Islands has invoked numerous statutory measures to cooperate with and assist foreign governments, authorities and courts with the provision of information held in the Cayman Islands. Such laws override any statutory or common law duties of confidentiality.

  • Requests for information in relation to criminal matters can be made under provisions of the Criminal Justice (International Cooperation) Law, Mutual Legal Assistance (United States of America) Law, Misuse of Drugs Law and Proceeds of Crime Law. (Source: Cayman Islands Government ("CIG") website)

  • The Cayman Islands is also a party to the Hague Convention 1970 on the taking of evidence abroad and can share information with other Hague Convention signatories, under the Evidence (Proceedings in Other Jurisdictions) Order. (Source: CIG website)

  • In relation to regulatory matters, CIMA has the ability to entertain requests for information from any recognised overseas regulatory authority and has entered into specific information sharing bilateral memoranda of understanding with 15 other major regulators, including the US Securities and Exchange Commission and the UK Financial Services Authority. The Cayman Islands is also actively involved in agreeing the cooperation arrangements with EU regulators contemplated by the EU Directive on Alternative Investment Fund Managers. (Source: CIMA website)

  • In relation to disclosure for tax matters, the Cayman Islands made a commitment to the OECD to adhere to their principles on exchange of tax information and transparency. (Source: CIG website)

  • The Cayman Islands signed a TIEA with the United States in 2001 and requests for information have been made and responded to under this regime. Further TIEAs have been agreed with 31 countries. (Source: CIG and Cayman TIA websites)

  • The Cayman Islands government has implemented the EU Savings Directive with equivalent legislation, which (through bi-lateral treaties with all EU states) provides for automatic information-sharing on interest income paid to EU citizens from Cayman accounts. (Source: CIG and Cayman TIA websites)

  • In 2005, the Tax Information Authority Law was introduced, which established the Tax Information Authority as the competent authority in the Cayman Islands for dealing with foreign tax information requests and tax reporting under bilateral arrangements and the EU Savings Directive equivalent legislation. (Source CIG and Cayman TIA websites)
 
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