EDITORIAL – Cayman’s upcoming brutal battle on beneficial ownership

“[Donald] Trump said he’s not afraid that people will find out he’s not as rich as he says. ‘Tax returns don’t show that,’ he said. ‘They would show, do I use Cayman Islands stuff? And the answer is no, I can tell you right now. Am I ensconced in some of the crazy countries where you keep money and avoid taxes? The answer is no, I don’t do that.’”

– “The Mogul and the Babe,” Maureen Dowd, The New York Times

Love him or loath him, Donald Trump has a singular gift for encapsulating strains of the American zeitgeist in TV-ready sound bites. And, according to Mr. Trump, “the Cayman Islands” is shorthand for “a crazy country where you keep money and avoid taxes.”

That’s the reputational hurdle our leaders must overcome when negotiating with U.K. and European officials on serious subjects such as the sharing of beneficial ownership information. When it comes to declaring what Cayman’s position is, and what exactly we have committed to do (or not), our leaders would do well to emulate Mr. Trump – in terms of being straightforward and plainspoken.

In regard to Cayman’s stance on financial services transparency, there is no room for lack of clarity.

And yet, confusion is precisely what ensued in the wake of the Anti-Corruption Summit in London last week. The Compass, as did many other international media outlets (including The Economist and The Guardian), and also the U.K. Prime Minister’s Office, reported – apparently erroneously – that Cayman had agreed to the automatic exchange of beneficial ownership information along with major European countries and international financial centers.

Rather, it appears that Cayman wishes to continue playing a game of “wait and see” on beneficial ownership – meaning that Cayman will wait until other jurisdictions, including the U.S., embrace greater transparency, and then we’ll see what happens after that.

In the meantime, Cayman officials want to adhere to our current agreement with the U.K., where Cayman will develop a “centralized platform” of beneficial ownership data, which will be shared when requested by foreign law enforcement and tax authorities.

However, on this crucial issue, we cannot abide by a muddy, murky, or ambiguous approach to our communications.

Our leaders must provide absolute clarity to the people of Cayman, as well as to officials in the U.K. and elsewhere, as to where Cayman stands on beneficial ownership information, particularly if it’s “us against the world.”

We would encourage the delegates to the Anti-Corruption Summit to convene a press conference post haste, in order to explain exactly what Cayman’s commitments and intentions are.

Premier Alden McLaughlin said Cayman deserves a “seat at the table to be part of the development of any new global standards.”

The way we see it, one key point of the global standards appears to have been developed already – i.e., automatic exchange of information.

Our understanding is that Cayman’s position is twofold:

  1. Cayman will not swerve from our current agreement with the U.K. (information upon request, not automatic) until a “global standard” has been adopted by all major jurisdictions, including the U.S.
  2. That “global standard” should resemble Cayman’s current approach (information upon request, not automatic).

In essence, Cayman is arguing that we are correct, and nearly everybody else is incorrect. However, it should not be discounted that although our position may be “lonely,” it may also be just.

Nevertheless, considering Cayman’s status as a British Overseas Territory and U.K. Prime Minister David Cameron’s supporting vigorously the “automatic exchange” of information, we should not underestimate the challenge we face – or overestimate our ability to dictate our own destiny.

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  1. Sometimes when I listen to people make comments about Donald Trump here in Cayman , making lame comments about the man who has done nothing wrong to anyone here. Most of those persons if you ask them what is the name of the Governor of the Cayman Islands, or when were we discovered by Christopher Columbus, or name the National Anthem; they can’t tell you. Uhm, why my people perish so. I wish there was one paragraph where I could begin to comment on this article; However I will leave this to the experts to comment on, and don’t worry we have them here just watching the outside world too. I just love this place, drama surrounds us every day. It is useless of any outsider US or other thinking that we are just going to roll over and play dead. What they say “small axe can fall a big tree”

  2. Two issues here: corruption vs tax evasion.

    Here’s a quiz.

    Situation 1. Arab defense minister is paid $10 million bribe by US arms manufacturer. He spends the proceeds on buying a New York or London penthouse.

    Situation 2. Dentist is occasionally paid in cash for filling teeth. He puts the money in a secret bank account and does not pay taxes on it.

    Question : Which of these two people does the US and UK government want to prosecute?

    If you said the dentist you would be right. While the Wests’ governments pay lip service to stamping out corruption what they really care about is generating more tax revenue to squander.

    They now wage war through the media on legitimate businesses that reduce their tax burden legally.

    All so they can,for example, give free health care and education to illegal immigrants.

    It’s all about money.

  3. Norman said it all, there’s states in the US such as Delaware that have tax rules not much different then Cayman yet the US gov doesn’t speak on them. They are only concerned about what their neighbor is doing and finding better ways to fill their coffers so the can continue their welfare state control over the majority of the population without having to pay for it. Just like the insurance thing they put it on the table but want the working class to pay for it

  4. Norman is, indeed correct. It’s all about the money.

    Donald Trump would not need to come to the Cayman Islands to hide money if he chose to do so. He could do that right in his own back yard. My personal opinion of Mr. Trump is such that he would rather fight it out in court than cheat on taxes and silently pay fewer taxes.

    However, it should be pointed out that the US is the biggest tax havens in the world. Perhaps not for US citizens and corporations, but for foreigners. However, for its own citizens and corporations there are some goodies awailable to help shelter taxes. The New York Times reported that a single building in Wilmington Delaware was the legal address of over 285,000 separate businesses. About 65 percent of Fortune 500 companies are incorporated in Delaware. According to the Sunlight Foundation, “With over one million (1,000,000) corporations in Delaware, there are more corporations than residents.” The New York Times says incorporating in Delaware “has enabled corporations to reduce the taxes paid to other states by an estimated $9.5 billion.” But it also happens to be one of the easiest places in the world to set up an anonymous company, making it a great place to establish an LLC to do business that you don’t want anyone to know about or you don’t want to be easily connected to. In addition, seldom talked about is a little know vehicle called the “Illinois Land Trust” which hides the identity of true owners of real estate in that jurisdiction. Florida, a US tax haven (it has no State income tax, like most US States do) lures companies and individuals to the Sunshine State with those policies, thus depriving competing States the tax revenue they enjoyed for decades. Nevada is also known as a tax shelter state and lures business there with their policies. I could go on an on and on, to be sure.

    The goal of the Beneficial Owner legislation simply is to ensure the US and other major counties squeeze every drop of taxes they can for their citizens while providing convenient loopholes to the well connected elete members of society.

  5. I would like to see the USA retract their Tax borders from our little island. When I see the USA create a registry where they lead the way on this beneficial ownership argument. Then we can follow their lead until then the leaders of the day should stand your ground. Taxation was only put into law all those years ago, so that the Government could collect money freely from it’s citizens without challenge. They put a price on freedom in the US, don’t let it happen here.