Cayman Finance represents the
financial service industry in the Cayman Islands.
I appreciate that you are no doubt
currently engaged in what is a very complex reconciliation process. Nevertheless,
I felt it appropriate to write because I have the impression from your recent
comments that there may exist a misunderstanding about the nature of the
transparency which exists in relation to the Cayman Islands hedge funds
industry and the manner in which Cayman Islands hedge funds operate.
The Cayman Islands has full IOSCO
membership and therefore full regulator to regulator disclosure with regard to
regulated funds with all IOSCO jurisdiction based regulators. There are in
addition numerous regulator to regulator MOU’s most of which preceded the IOSCO
arrangements but in principal, we expect all Cayman Islands regulated funds to
operate on the basis of full transparency.
Under the European Union Saving
Directive, which Cayman signed in 2003, and unlike a number of European Union
based jurisdictions, the Cayman Islands opted for full pro-active tax reporting
for all European Union residents with the relevant treasury department of each
of the 27 European Union members. It is therefore unnecessary to go further but
in fact the Cayman Islands has gone further and has also entered into the OECD
form TIEA’s with a number of European Union jurisdictions and further such
agreements are in negotiation.
A Cayman Islands hedge fund may
have fund managers investing its assets in a number of onshore jurisdictions
but no Cayman Islands hedge fund can therefore invest otherwise in accordance
with the laws and regulations that are of application to each such fund manager
in its jurisdiction of residence and operation.
Subject to the Cayman Islands’
licensing process, no objection exists to the European Union based financial
institution establishing operations and undertaking trading activity from
within the Cayman Islands;
The anti-money laundering
legislation of the Cayman Islands is evaluated by the International Monetary
Fund and by the Financial Action Task Force and is found to be superior to that
of most EU jurisdictions when evaluated in relation to the Vienna principles.
The Cayman Islands financial
services industry operates to access and pool funds from the international
capital markets and directs those funds into investment opportunities in G20
Whilst in terms of AUM the favoured
locations for investment managers of Cayman funds are the United States and
Asia, the Cayman Islands industry would welcome any opportunity to establish
with you a regime that would enable European Union based fund managers to
continue to benefit from investment by Cayman Islands investment vehicles.
If it would be helpful to you to
provide further information based on the technical reviews of the International
Monetary Fund or the Financial Action Task Force, or indeed the United States
General Accountability Office which verify the foregoing statements, I would be
happy to do so.
Anthony Travers, Chairman, Cayman Finance