Sidebar
CITA and DOT
Financial sector by the numbers
Grand Cayman’s major attractions
The Cayman Islands is synonymous with buccaneering to many people across the globe.
Caymanians even had the honour of being the subjects of one of Prince Philip’s more memorable gaffes, when he asked a local businessman in 1994 if most Caymanians were indeed descended from pirates.
While Cayman’s relationship with real-life pirates ended several centuries ago, the jurisdiction is still dealing with its reputation for being a haven, in two senses of the word: a place where people hide their treasures (albeit in trusts not chests), and also an exotic location where visitors can get away from the rest of the world.
Although Cayman’s financial industry leaders unabashedly advertise the offshore territory as somewhere to keep assets in a ‘tax-neutral’ environment, they also maintain that Cayman’s financial sector is transparent, secure and compliant with international regulations.
Likewise, leaders of Cayman’s tourism industry don’t mind playing up the romantic aspects of the territory’s legendary pirate heritage, but they also want to project an image of Cayman as being safe, family friendly and naturally beautiful.
Safe and compliant haven
“I am happy to report that the Cayman Islands continue to be the premier jurisdiction of choice for fund domiciliation,” said Yolanda McCoy, head of the Investments and Securities Division, Cayman Islands Monetary Authority, during Cayman Fund Focus 2011 in November.
During her presentation, McCoy showed that Cayman is far and away the leading jurisdiction in the hedge fund industry. The number of registered hedge funds in Cayman has grown from around 3,000 in the year 2000 to nearly 10,000 in 2010.
Other jurisdictions, such as the Bahamas, Bermuda, British Virgin Islands and Jersey, have demonstrated much less growth in that time period. The only territory with more than 2,000 registered hedge funds is BVI.
“However, the numbers must not make any of us in the room here today believe that we can become complacent. To the contrary, the regulatory landscape has changed globally and as a sound international financial service centre and a market leader in the funds space, Cayman must take the lead in making sound regulatory enhancements to adapt to that new landscape. The status quo is not a viable option,” she said.
Toward that end, McCoy presented some key recommendations and initiatives of CIMA: Master funds registration, giving CIMA power to refuse registration; a new Mutual Fund Administrator’s licence category; reforming the Mutual Fund Law and Securities Investment Business Law; and corporate governance for hedge funds.
In her presentation, McCoy referred to ramifications of the US Dodd-Frank Wall Street Reform and Consumer Protection Act, and also to the Grand Court of the Cayman Islands precedent-setting decision against directors of Weavering Macro Fixed Income Fund.
In December, Premier McKeeva Bush presented a bill to amend the Mutual Funds Law to include the registration of master funds. Under a master/feeder fund structure, investors invest into the feeder fund, which then invests into the master fund. Any assets are typically acquired, held and traded at the master fund level.
While feeder funds were already regulated by law and required to register with CIMA, such provisions did not exist for master funds.
Bush said thousands of investment funds were not regulated by CIMA. He said a significant portion of those were master funds, although the exact number is unknown. Mr. Bush said a US$2,500 registration fee for each master fund would apply to between 3,000 to 4,000 newly registered funds each year, potentially bringing the government $7 million per year in revenue.
In addition to new legislation, the Cayman government has been actively signing Tax Information Exchange agreements with other jurisdictions, agreeing to exchange information for tax purposes.
The agreements spring from the OECD and are geared to promote international cooperation in tax matters through exchange of information. Cayman’s first such agreement was signed with the US in 2001. To date, Cayman has agreements with 27 other jurisdictions.
More than meets the eyepatch
The annual Pirates Week Festival drew thousands of people – locals and visitors alike – for merriment throughout all three Islands in November. Of course, much emphasis was placed on costumed swashbuckling and pretend marauding. However, an even more integral part of Cayman’s National Festival is the Heritage Days celebrating local customs unique to each corner of Cayman.
Highlighting Caymanian history and traditions is also a centrepiece of the Caymankind tourism effort launched by the Department of Tourism in 2011.
In January 2011, Mr. Bush revealed the new branding initiative shortly before its launch in the US. “Caymankind… refers, not just to the three islands of Cayman, but to the entire Cayman experience.
Caymankind encompasses everything that makes the Cayman Islands unique – from the friendliness of our people and our rich cultural heritage to our cosmopolitan style, stunning natural beauty and warm welcome, which we extend to those who visit our shores,” he said.
Since then, Caymankind is spreading beyond the US market and is being pushed to local residents. Acting Director of Tourism Shomari Scott even said there were hopes to tie work permits – inside and outside of the tourism industry – to the PRIDE programme, a training initiative with the idea of educating workers on how to deal professionally with visitors.
Mr. Scott also discussed having an education programme about Cayman for all foreign workers.
In December, government officials and well-wishers officially launched the Caymankind song, featuring Caymanian musicians, recorded at Hopscotch Studios and produced by Cayman Music and Entertainment Association President Jean-Eric Smith.
Related Videos
