Back to Main Story: Competition, innovation and best practice in offshore financial centers
The Cayman Islands have suffered significant reputational damage over the past few years with publicity around aggressive tax planning schemes and threats from several larger countries to try to limit the activities of the islands. Despite this damage, we see a positive outlook for the Cayman Islands.
Grand Cayman is viewed as strong in wealth management, asset management as well as fund administration and professional services. The main challenges continue to come from larger nations and the OECD pressurizing the offshore jurisdictions to reduce secrecy and tighten up on loopholes that allow money-laundering.
The negative publicity has resulted in a negative reputation for the center. In the GFCI model, one way to look at reputation is to examine the difference between the average assessment given to a center and its overall rating (the average assessment adjusted to reflect the instrumental factors). If a center has a higher average assessment than the GFCI 13 rating, this indicates that respondents’ perceptions of a center are more favorable than the quantitative measures alone would suggest. This may be due to strong marketing or general awareness.
The table below shows that all offshore centers have a negative reputational advantage –a ‘reputational disadvantage.’ The table also indicates that Jersey and Guernsey (both of which have been very actively promoting their centers), along with Hamilton, Bermuda, (a reinsurance center that does not compete with the offshore centers) are suffering a less significant reputational disadvantage:
|GFCI 15 |
|British Virgin Islands||631||654||-23|
|Isle of Man||603||642||-39|
Like other offshore centers Cayman needs to increase transparency and continue to demonstrate commitment to meeting international standards, in addition to developing skill levels and specializations. Most significantly Cayman should promote the positive elements of offshore centers. The Cayman Islands performs many worthwhile functions in the global financial system. The center provides significant benefits for its clients and the onshore counterparts. As such Cayman has a compelling story to tell – and it should tell it confidently.