Sidebar:Hong Kong office established
The Cayman Islands government – through the work of the financial services section of the Ministry of Finance – made solid progress on a number of fronts during the last half of 2010.
The financial services section of the Ministry of Finance – among which includes the Financial Services Secretariat, the Department of Commerce and Investment, General Registry and the Government’s London, Dubai and Hong Kong offices – have adopted an “integrated approach” to help ensure global coverage of policy needs in support of Cayman’s financial services sector.
This approach recognises the growing intersection among Cayman’s financial services industry with the country’s economic development strategy as well as the need for a coordinated overseas presence for the Cayman Islands.
This approach has also been identified as a way to realise efficiencies and promote collaboration among the various teams involved, while maintaining broad oversight of the myriad of domestic and international policy priorities associated with ensuring Cayman’s financial services sector remains healthy and stable in the long term.
Update on OECD and participation in the Global Forum
A significant area in this regard is international cooperation across the areas of law enforcement, regulation and tax information, which the Cayman Islands government has placed at the top of its policy agenda.
In the area of tax transparency, the OECD’s Global Forum on Transparency and Exchange of Information – in which the Cayman Islands has asserted a leadership role through its involvement in the Steering Committee and Peer Review Group – marked a milestone at the most recent Global Forum meeting in Singapore in September 2010 when the initial assessments under the Peer Review Programme were approved.
The Cayman Islands was one of eight countries – and among the first in the world – to be assessed under the Peer Review Programme. The assessors identified, “… a well developed legal and regulatory framework” and the report explicably also identified areas that could benefit from some improvements. The assessors also reported that, “in respect of access to information, the competent authority of the Cayman Islands is invested with broad powers to gather relevant information.”
The Cayman Islands work with the Global Forum continues to be significant based on three core areas: Cayman will be assessed as part of the second phase of the Peer Review Programme throughout 2011; the government will be implementing recommendations from the first phase of the Peer Review, and; policy specialists from the Ministry of Finance will be undertaking assessments of Global Forum member countries as part of Cayman’s involvement in the Peer Review Group.
These activities are over and above the Cayman Islands government’s tax information exchange agreement negotiating programme, under which a number of negotiations are in progress. The Cayman Islands currently has 20 tax information exchange agreements and expects to add as many as 10 more in the coming 12 to 18 months.
Assuming a leadership role in global financial crime prevention
On a parallel track, progress was made in November 2010 in the area of the Cayman Islands commitment to fighting global financial crime.
The Cayman Islands hosted the Caribbean Financial Action Task Force (CFATF) Plenary and Ministerial Meeting where the country officially assumed chairmanship of the CFATF for the coming year, under the leadership of the Attorney General, the Honourable Samuel Bulgin QC.
The Chairmanship involves setting the CFATF’s work programme and coordinating efforts between member countries to enforce the Paris-based Financial Action Task Force (FATF) anti money laundering and countering terrorist financing standards (AML/CFT), known internationally as the FATF 40+9.
The work and focus of the CFATF is of particular relevance given the global environment. As many countries around the world begin to slowly emerge from the most recent economic crisis, and others not as affected are seizing opportunities to advance their fast-growing economies, the role of transparency and international standards in fighting financial crime take on a new level of importance.
Continuous work on Cayman’s legal and regulatory framework
Building the international capabilities in Hong Kong and other markets to drive investor interest is underscored by efforts on the domestic front to ensure policies, legislation and regulations are congruent with the ‘investor-friendly’ position often associated with doing business in the Cayman Islands.
To this end, the Department of Commerce and Investment is making recommendations on the level of fiscal incentives to be granted to inward investment projects depending on the expected economic benefits of the proposed venture. Proposals are being considered on a case-by-case basis and examples of such incentives include:
– Reduction or waiver of several areas including:
- business licences and fees
- stamp duty on office rental space for a specified period
- import duty on materials for tourism development.
– Incentives specific to the financial services sector including:
- expedited turnaround for processing all work permits
- access to two consecutive three to five-year work permits for accredited professional staff potentially enabling them to live and work in Cayman for up to nine years
- Key Employee designation for senior staff
- Expedited processing periods for time sensitive applications to Cayman Islands Monetary Authority
– Sister Islands incentives including:
- Up to 75 per cent reduction on work permit fees for staff located in the Sister Islands
- 50 per cent reduction on Trade & Business Licence fees for businesses located in the Sister Islands
- 100 per cent concessions on building materials
Granting a Certificate of Direct Investment to individuals who have a substantial business track record and will establish a substantial business presence in any licensed, employment-generating business or businesses in the Cayman Islands.
This certificate allows the holder to reside in the Cayman Island permanently with their families and to work in the business or businesses in which they have invested for up to 25 years. It is renewable or extendable at the end of this period.
In conjunction with the activities of the DCI, the Ministry of Finance also has a variety of legislative upgrades in various stages of development to help ensure Cayman remains at the forefront of industry practices in the various sectors of the financial services industry in which it operates. Some of the key amendments include:
Proposed amendments to the Monetary Authority Law which will provide the Cayman Islands Monetary Authority (CIMA) greater enforcement powers, evolving CIMA into a more independent regulating body and consolidating supervisory roles.
Amendments passed to the Insurance Law, which are scheduled to come into effect in early 2011, aim to stimulate Cayman’s reinsurance sector and continue to ensure that the Cayman Islands is a major player in the captive industry.
Future amendments to Mutual Funds Law, which are under consideration and which would create an additional licensing category for Mutual Fund Administrators to signal to international markets that the jurisdiction is a premier destination for fund administration business, as a compliment to our global leadership position in fund domiciliation.
As 2011 gets underway, the Cayman Islands government anticipates continuing its brisk pace of activity across the areas of international cooperation in tax, regulation and financial crime; continued work in building a solid overseas presence, and; working with domestic stakeholders on a programme of legislative amendments that will help continue to keep the Cayman Islands at the forefront of the global financial services industry.