The offshore future is bright

“Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” Sir Winston Churchill, speech in November 1942

During a recent STEP Caribbean conference in Grand Cayman, Tim Ridley, past chairman of the Cayman Islands Monetary Authority, listed the attributes that will make or break international financial centers in the coming years: adequate infrastructure, stable political and economic environment, welcoming immigration policies, strong legal and judicial systems, tax neutrality and quality of professional services.

Mr. Ridley was presenting a general comment to professionals of several offshore centers as a guidance for positioning their respective jurisdictions in a world which is being shaped by wider disclosure and exchange of information, as well as pressure from onshore governments and multinational bodies to address profit shifting and tax base erosion.

The focus already is and will become more relevant on substance, meaning doing business and making decisions locally in the offshore center. This presents a major challenge as well as huge opportunity for offshore centers to move up from their previous model of name plates and shell companies into a new world of substance and efficiency in provision of professional services.

The Cayman Islands has already achieved great progress in attracting and creating conditions for professionals and their families to relocate and enjoy fulfilling lives in our country.

Directors and ultimate beneficial owners are the next target and Cayman is in great position to attract them as well.

The Kimpton Seafire, Cayman International School and Camana Bay: Cayman’s infrastructure is receiving major improvements with new roads, expansions at the port and airport and, eventually, a permanent solution for waste management. But what really makes a place attractive for high-net-worth families and their financial advisors is not only the “hard infrastructure” but also the places where they go to relax, enjoy and, why not, learn and get educated. Having first-class hotels and restaurants, shopping and leisure communities and sports and learning centers is playing an essential role in making Cayman desirable to live in, not just to visit from time to time.

Location, location, location: we live in an interconnected world but geography still matters. The reason is not so much related to physical distance (nowadays rendered less important by all the electronic means of communication), but “time distance,” as being able to have all partners of a deal participating in the same meeting or a conference call makes for better decision making. Cayman’s location is convenient to all markets in North, Central and South America, as well as Central and Western Europe. With an associated office in Hong Kong or Singapore, any structure based in Cayman can cover the whole world and provide professional services in any time zone.

Sitting at the grown-ups table: the Cayman Islands government and the private sector made a conscious decision to face the difficulties instead of burying their heads in the sand and wait or hope for the problems to disappear. Cayman representatives have been part of every relevant committee, discussion, conference or working group managing, at a minimum, to understand the issues and how they could affect our industry but more often than not, being able to contribute to make new regulatory requirements proportional, consistent and not overly burdensome. This ability of shaping the discussion and to find the more efficient solutions for the success of the global economy is a hallmark of Cayman’s international presence and why it is frequently said that Cayman “punches above its weight.”

Diversified and strong industries: Cayman is the world’s capital of the offshore investment funds with around 90 percent of all hedge funds being registered here; the second largest jurisdiction for captive insurance, an industry that provides global support to areas as diverse as agriculture, tourism, protection against natural disasters and infrastructure investment and development; our maritime registry is widely recognized as first class and preferred by professionals and customers who trust our laws and court system; almost every airplane financing deal signed around the world involves professionals and entities based in Cayman, for the same legal and professional reasons; this list could go on and on, demonstrating the wide range and attractiveness of our jurisdiction.

Welcoming business environment: As I write this article I am returning from a week of business meetings in Amsterdam, where the pressure of BEPS and the calls for local substance are also being felt and forcing the industry and government to re-examine their priorities and work to preserve their place in the international financial world by adjusting their business model. Although the Netherlands has one of the most successful economies in Europe, Dutch regulators and the legal and financial industries are busy re-examining and re-evaluating their laws and regulations to keep their structures and entities relevant and applicable to the new requirements of the financial industry. As much as the Cayman Islands has been a voice for sanity and moderation in discussions related to financial regulation, the lesson to be learned is that complacency is your worst enemy and that we in Cayman should also be constantly questioning what we should do better tomorrow.

Borrowing the great words of Churchill when rallying his nation around the mission of resisting a long-term war, this is not the end of the business model for a well-established and reputable offshore financial center like the Cayman Islands, not even the beginning of the end, but it could be the end of its “fledging humble beginnings” and the opportunity to consolidate its graduation into a new world where local decision making, strong operations and substance will be the norm and it will not matter if a business is located onshore or offshore as long as it is in the right jurisdiction. And Cayman will be right.

Eduardo D’Angelo P Silva has been president of the Cayman Islands Bankers Association and Chairman of Cayman Finance. He is presently a director of JP Integra Group, a provider of private wealth solutions.

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Eduardo Silva

Eduardo is an experienced banking and finance professional with over 30 years’ experience of providing financial and corporate governance services to a wide variety of commercial, private wealth and investment fund clients.
  Eduardo is the managing director of JP Management Services Limited and is a director of JP Integra Trust Company (Cayman) Limited which together provide corporate governance and trust administration services to private wealth and commercial clients. He is a senior figure in the Cayman Islands financial services sector and has served as president of the Cayman Islands Bankers Association, trustee of the Cayman Islands Private Sector Trust, chairman of Cayman Finance, Honorary Consul of Brazil and Trustee and Chairman of the Chamber Pension Fund, the largest pension fund in the Cayman Islands.
Eduardo started his banking career with Banco Itaú and Banco Crefisul in Brazil, before accumulating extensive experience in international banking and finance business as managing director of the offshore banking arm of Sul America de Seguros Group, a leading financial and insurance group in Brazil and Latin America. He has been based in the Cayman Islands since 1994 and has been a frequent speaker at conferences in Cayman and overseas, on topics related to compliance, regulation and development of the offshore financial industry.
Eduardo has a Bachelor’s Degree in Electrical Engineering and a Master of Business Administration. He is a Notary Public, holds the Accredited Director designation with the Institute of Chartered Secretaries and Administrators (Ottawa, Canada) and is a member of the Executive Committee of the Cayman Islands Directors Association.

Eduardo D’Angelo P Silva
Chairman
EDPS Consulting
P. O. Box 31093
Grand Cayman KY1-1205
Cayman Islands
 

D: +1 (345) 745-2583 | M: +1 (345) 916-1417
T: +1 (345) 943 2252 | F: +1 (345) 946 2252
Brazil +55 (11) 3197-2168
www.jpintegra.com

E: edps@jpintegra.com
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Skype: edps.cayman
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JP Integra Group

JP Integra Group provides a unique offering of financial, fiduciary, transaction, fund and trust administration, consultation and legal expertise to enable clients to structure and manage complex international capital holdings, foreign exchange, broking and investment projects.Governor’s Square, PO Box 10176, 23 Lime Tree Bay Ave, Grand Cayman, KY1-1002.