Premier Alden McLaughlin emphasized his government’s ongoing relationship with Cayman Finance and the financial services sector in defense of Cayman’s economic model in his budget speech on Oct. 27.
“We will continue our partnership with the financial services sector, including Cayman Finance, to not only improve and market our financial services products, but to also defend our financial services business as and when needed,” he said.
The recent announcement by offshore law firm Appleby about media inquiries based on an alleged hack at the firm, Mr. McLaughlin said, especially showed the need to engage at every opportunity with policymakers onshore.
“As recent press announcements regarding the hacking of databases of international financial services providers underscore, the challenges to financial service jurisdictions such as the Cayman Islands are grave,” he said.
Although Cayman had an excellent track record of international cooperation and had met, and at times exceeded, global standards in fighting money laundering, tax evasion, terrorism financing and other financial crime, the challenges would persist in the future.
“The latest threatened exposé by the international media is no doubt timed to influence the views of EU ministers with respect to the imminent list of uncooperative jurisdictions … which is due out at the start of December,” the premier noted. “This example provides the plainest evidence of why it is imperative that as a jurisdiction, the Cayman Islands seizes every opportunity to engage with those that shape policy internationally with respect to financial services matters.
“They need to hear the true story from us; they will not get it from the media.”
During meetings with EU officials, “everyone we met agreed that the Cayman Islands is highly compliant with OECD regulations,” Mr. McLaughlin said, “putting us in the league of countries such as Germany, Canada and the United Kingdom.”
However, Cayman’s economic model based on indirect, rather than direct, taxation remained misunderstood.
In the meetings, Premier McLaughlin said he and Minister of Financial Services Tara Rivers explained that Cayman does not have double tax treaties that allow for the shifting of tax liabilities and that businesses that operate in Cayman are fully aware they may have tax obligations in their home jurisdictions.
After its effort to inform EU finance ministers about Cayman’s compliance efforts – and before the EU’s impending announcement of jurisdictions it considers noncompliant with global tax good governance standards – the Cayman delegation “came away from these meetings with a full appreciation for the need for regular, ongoing engagement,” Mr. McLaughlin said.