Financial Secretary: Engaging the world

The Cayman Islands’ reputation as a solid financial centre has taken a bit of a bashing lately, but strident efforts have been and continue to be made to convince global players that financial activity in the Cayman Islands is well-regulated and above board.

Sidebar Information:
QUICK FACTS: Tax Information; Law Enforcement Cooperation

The Cayman Islands’ approach to the development of the financial services sector recognises that an appropriate regulatory and international cooperation environment is not an impediment to, but rather a key driver of, commercial success.

Unfortunately, the focus of the global economic crisis has resulted in various initiatives driven by larger, more politically powerful countries, including legislative proposals before the US Congress targeting the use of offshore financial centres by US firms, as well as international efforts, such as the recent G20 summit, focused on targeting so-called offshore tax havens.

Direct, proactive and consistent outreach over the past few years in the US, UK and EU has continued with the goal of underpinning our market position and mitigating potential adverse impacts on the Cayman Islands’ financial services industry.

The Cayman Islands Government continues to target decision-makers in Washington DC, London, and Brussels to build awareness of the stability, quality and integrity of the country’s financial services industry.

US Public Affairs

A Cayman Islands delegation, led by the Leader of Government Business Kurt Tibbetts, visited Washington DC, in March 2009 with the objective of ensuring that the new US government administration gains a better understanding of Cayman’s financial services sector.

A Cayman Islands delegation, led by the Leader of Government Business Kurt Tibbetts, visited Washington DC, in March 2009 with the objective of ensuring that the new US government administration gains a better understanding of Cayman’s financial services sector.

The delegation drew attention to a history of cooperation between the two countries and reiterated the benefits of further developing the partnership, particularly in the face of a challenging global economic environment.

The visit also provided an opportunity to discuss the US position on key global issues including regulatory reforms, transparency and innovation.

An important message delivered was the contribution that jurisdictions such as the Cayman Islands make to the world economy, facilitating capital flows between countries – a particularly important point as the US Congress looks for ways to stimulate economic growth.

Since the Mutual Legal Assistance Treaty with the US arrived in 1986, the governments have cooperated in 243 requests for assistance, resulting in successful law enforcement actions.

Assets seized under such actions have been shared by the US and the Cayman Islands under an asset-sharing agreement as well as returned to the US for restitution to victims of fraud and other crimes.

Outreach and dialogue with US opinion formers continues to take shape and the offshore financial services sector is in the frame of these discussions.

UK and EU Public Affairs

Equally important in the context of global political developments are efforts to develop stakeholder relations furthered through meetings with UK government representatives.

Equally important in the context of global political developments are efforts to develop stakeholder relations furthered through meetings with UK government representatives.

Meetings have also been held with Lord Myners, the UK’s Financial Services Secretary and Michael Foot, head of the independent review into British Offshore Financial Centres, who visited the Cayman Islands in March 2009.

A Cayman delegation, led by the country’s leader, discussed perspectives on matters that included Cayman’s strong compliance record.

On the European front, efforts were organised in early 2009 to coordinate meetings with the European commission, European parliament and other EU opinion formers. These meetings, held in Brussels, sought to inform officials of the most recent developments in the Cayman Islands financial services sector and ensure open lines of communication.

On the international front, there have been several policy developments that require programmes targeting domestic and international audiences. Among them were recent announcements and events supporting tax information arrangements resulting from bilateral negotiations and unilateral amendments in 2008 to the Tax Information Authority Law, not requiring a bilateral treaty.

These initiatives have underlined the country’s commitment to international cooperation on tax, as the Cayman Islands has 20 tax information arrangements with Austria, Belgium, the Czech Republic, Denmark, Germany, Greenland, the Faroe Islands, Ireland, Finland, Iceland, Japan, Luxembourg, Netherlands, Norway, Slovakia, South Africa, Sweden, Switzerland, the UK and the US.

The Cayman Islands Monetary Authority has signed a Memorandum of Understanding with Brazil’s Comissão de Valores Mobiliários on securities matters. This development is expected to facilitate Cayman’s participation in the Brazilian funds market and improve Cayman’s relations with the emerging market economy.

While not a prerequisite for cooperation, CIMA has 15 memoranda of understanding and other information exchange agreements with financial regulators in Brazil, Bermuda, Canada, the Isle of Man, Jamaica, Jersey, Malta, Panama, the UK and the US. CIMA also has a multilateral memorandum with eight Caribbean regulators. All the agreements can be viewed in the Regulatory Framework/International Agreements section of CIMA’s website.

Since 2000, CIMA has handled more than 990 requests for assistance from overseas regulatory authorities.

Domestically, maintaining open channels of communication is a priority and the televised weekly post-Cabinet media briefings seek to inform the media and the public of Government initiatives and developments. During these discussions, domestic media have an opportunity to liaise with ministers, which proves valuable in developing local media relations.

International media are supported through the news bureau function of the Portfolio of Finance’s Public Relations Unit, which has hosted foreign journalists over the past several years.

A recent Economic Impact Study revealed that financial services generated CI$1.2b in GDP in 2007, representing 55 per cent of the Cayman economy.

When downstream impacts are included, financial services generated employment of 12,603 – representing 36 per cent of all employment in the country. The health of Cayman’s economy is directly linked to the health of its financial services industry. Therefore, Government is vigilant in protecting Cayman as a global financial centre in the face of growing competition and challenges.

A 2003 assessment by the International Monetary Fund found the Cayman Islands to have a generally sound framework in place for the provision of mutual assistance though domestic law and international treaties and arrangements.

Relating to international cooperation elements of the international standards for banking (Basel), securities and insurance, the assessment reports a high level of compliance.

The IMF assessment may be accessed from www.imf.org.

The Cayman Islands economy has withstood periods of global economic challenges in the past. With thoughtful planning and leadership from members of Government and the private sector, Cayman will emerge from the global crisis in a strong position.

Maintaining stakeholder relations with overseas counterparts remains a priority of the Cayman Islands Government and efforts to build new relations seek to strengthen the stability, quality and integrity of the jurisdiction’s well-established financial services sector.

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US Capitol Dome in Washington, DC