The Cayman Islands Financial Services Association celebrated its fifth anniversary in November as the global economy was headed directly into recession.
CIFSA Chairman Eduardo D’Angelo P. Silva recently spoke on how the association is always closely observing the international situation to ensure that Cayman stays ahead of the curve and is ready to meet any threats and take advantage of any opportunities.
‘Our greatest threat remains the misinformation being spread about the Cayman Islands financial services industry, exacerbated today by the desire for politicians to identify a villain, preferably a foreign one, for the recent crash in global financial markets,’ he said.
In an interview with the Washington Times, Mr Silva expounded on this issue.
‘This current global financial crisis clearly has the ‘Made in America’ stamp on it and has exposed the rather poor oversight regime in that jurisdiction.’
Some have tried to lay blame on the Cayman Islands for helping to facilitate the sale of mortgage products but these mortgages were originated by corporations whose managements and boards were supposed to ensure their companies acted prudently and ethically, and then given approval and credibility by the bond rating agencies who clearly did not understand the products they were classifying as high quality debt instruments.
‘The greed and mismanagement of risk did not take place in Cayman and it is rather unseemly for others to attempt to blame us for not uncovering and exposing their faulty business practices.
‘It is not the flow of leveraged assets that was the problem. It was the poor business practices of lenders, the executive, their board of directors, and the rating agencies combined with a US Government push to try and have every American own their own home regardless of their financial situation.’
CIFSA is focusing on its mandate to promote the jurisdiction as an international financial-services centre. Mr Silva noted the misinformation campaigns being waged overseas to divert attention away from the US and toward the Cayman Islands and outlined the way forward to counter those attacks on the reputation of the sector.
‘What we are doing is standing up and saying ‘This is who we are, this is why you need us, and this is how we benefit the global economy’.
‘We have to explain our function as an integral part of the global financial system. In doing so, we sometimes have to make strong statements denouncing the false, misleading, and harmful comments that some politicians, competitors and uninformed media make about our industry and our country. We are proactive in our efforts, but they are done in the spirit of cooperation and partnership. We are looking for friends, not enemies.’
CIFSA has worked to spread the message that Cayman as a jurisdiction far exceeds the minimum standards propounded and that the financial-services industry operates within a highly developed anti-money laundering and due diligence infrastructure.
Several independent reports, including one from the US government, were published last year attesting to the integrity and professionalism of the jurisdiction. Mr Silva emphasised that CIFSA not only welcomes but encourages these independent assessments, as the reports will only confirm what the association has been espousing all along – the exceptional quality of the Cayman Islands as an offshore jurisdiction.
‘We feel the best way to deal with these challenges is to allow the independent international standard-setting bodies to do their jobs and to provide them with the access and information they need to assess our regulation and compliance regime in Cayman.
‘CIFSA has actively promoted the results of these assessments to the world and demonstrated that we are not just meeting minimum standards but in fact far surpassing the standards of many on-shore jurisdictions that openly criticise us.’
As far as the current economic woes are viewed, Mr Silva cautioned: ‘Protectionism and severe new restrictions on the flow of capital are not the prudent responses to this global financial crisis. That could do far more harm than good.’