We are not overly concerned – and said so in yesterday’s editorial – about Minister of Financial Services Tara Rivers’s trip to represent Cayman at the annual Monaco Yacht Show this week. After all, Cayman is one of the world’s super-players in the super-yacht registry business, and waving the proverbial Cayman flag can do no harm and potentially some good.
On the other hand, we are far more curious about another of Ms. Rivers’s recent excursions – namely to Brussels – where she met with European Union officials to discuss (negotiate?) Cayman’s response to the EU’s never-ending demands on our financial services industry.
Readers will recall that by year’s end, the EU is expected to revise its “blacklist” of so-called non-cooperative tax jurisdictions – an arbitrary enumeration based more on political dogma than economic orthodoxy.
Ms. Rivers has made several visits to Brussels this year to discuss potential changes in Cayman law that would placate the Brussels bureaucrats, presumably to promote them to remove Cayman from its current spot on the EU’s purgatory “gray list.”
The EU’s attempt to coerce duly elected leaders of sovereign jurisdictions to enact policies not in their constituents’ best interests, but in the interests of a handful of European powers, violates the natural right of self-determination.
If Cayman, or other offshore jurisdictions, were to accede or capitulate to EU demands, they most likely would have to give ground on an artificial standard called “substantive presence,” which suggests more brick and mortar edifices and more staff on the ground in the jurisdiction.
While this might actually benefit the Cayman Islands from a real estate or employment perspective, it would, in fact, contribute little or nothing to the legitimacy of the transactions that take place here. The reality is that international investing and commerce, which constitute the vast majority of what takes place in the financial sector in these islands, do not require a huge physical presence.
Multiplying the complexity of Cayman’s current situation are two other upcoming deadlines dangling like dual swords of Damocles.
The first is a report from the Caribbean Financial Action Task Force expected early in 2019, which will evaluate Cayman’s compliance with the organization’s 40 recommendations for combatting terrorist financing and money laundering.
The second is the U.K.’s intention to force Cayman and other British Overseas Territories to establish public registers of beneficial ownership by 2020.
While Premier Alden McLaughlin has been suitably vocal – and bellicose – in his public statements regarding the public registers issue, his government has been mainly mute on the ongoing negotiations it is having with the European Union.
Given the importance of the outcome of these talks, it is both mystifying and troubling that they are taking place in secret and in silence.
Perhaps “a select few” know what, if anything, Premier McLaughlin, Ms. Rivers and others have conceded to the Europeans in order for Cayman to be removed from the gray list or avoid being added to the blacklist, but all of the rest of us – let’s just call this group “the people” – have no idea.
Without fail, every time a Cayman Islands government official finds his or her way to a microphone to defend our offshore financial services industry, their remarks are replete with references to openness and transparency.
We understand that not every detail of every ongoing negotiation can be shared with the wider world, but in this instance, even a modicum of openness and transparency with the public on a matter of such supreme importance to the Cayman commonweal is long overdue.