EDITORIAL – Offshore under microscope again, with no end in sight

“They don’t even try to pretend anymore. Cayman is expected to operate at higher standards and have a greater scrutiny of the business that comes here than some other jurisdictions. It’s a result of our success and the volume of financial services business that comes through the jurisdiction.”
– Premier Alden McLaughlin

Brace yourselves: Another external “analysis” of Cayman’s offshore industry is coming, and the news is not expected to be good. Quelle surprise.

Premier Alden McLaughlin told the Compass that the government expects a report on the Caribbean Financial Action Task Force’s recent review of Cayman’s anti-money laundering and counter-terrorist financing systems next month and anticipates a few black marks.

This is despite the fact that the Cayman Islands government, as is its custom, adopted and has implemented most of the safeguards and hoop-jumping required to placate the task force – for now, at least. The shifting moods and concerns of the self-proclaimed world police of global finance never seem to be satisfied for long, no matter how much our political leaders bend and contort to their latest whims.

Mr. McLaughlin advised that the group’s current dissatisfaction was not with the rules and regulations themselves, but in their execution. Likely demerits include a mountain of uncompleted reports of suspicious activity piling up at the Financial Reporting Authority. Mr. McLaughlin told the Compass he already has formed a committee to devise plans of action to address the perceived deficiencies. He added that the expected report will include a new concept, that of “risk and context,” which will explicitly hold Cayman to a higher standard than other jurisdictions. As he said, “They don’t even try to pretend anymore.”

So how much longer will government insist on fighting this war on our enemies’ turf?

It is abundantly clear that the CFATF and like-minded gaggles of bureaucrats at the Organisation for Economic Co-operation and Development, in the European Union (and increasingly, those who ought to know better, such as the Netherlands and the U.K. Parliament) will never be satisfied. Simply put, the game is rigged.

Each acquiescence to their shifting list of demands leaves them hungrier for power and control over our islands’ economic model, and with it our very existence. This is a war on Cayman that has been designed for us to fail. Readers need only refer to our Page One story about the recently published guidance for Cayman-registered companies to demonstrate “adequate” economic substance to fully understand how far in the weeds this has gone.

We are not talking about manufacturing or any other bricks-and-mortar entity. What is “adequate” presence for a company that does business internationally or primarily on paper? To attempt to answer is to miss the point.

Blacklists, gray lists, ever-changing standards – all are designed specifically to make it more difficult to do business in places like Cayman. Never mind the fact that our financial services industry is professional, transparent (where appropriate) and plays a pivotal role facilitating international trade, international mergers and acquisitions, opening access to capital and ensuring the wheels of the global economy continue to turn.

There is, of course, a personal and practical reason to push back against these global bullies (if, indeed, it is not already too late). If government continues to adopt stifling regulation to feed an insatiable enemy, soon there will be nothing left to give.

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  1. The EU will not be happy until the Cayman Islands has a 20% or more Corporation Tax, 40% or more Income Tax along with Inheritance, Capital Gains and all other taxes.

    Unfortunately we have no real power to fight back against these bullies trying to drive us out of existence. The UK will surely throw us under the bus to get a small advantage in Brexit negotiations.

    And Lord help us if that neo-Commie Jeremy Corbyn is ever elected Prime Minister. He’ll probably want to nuke us!