I agree with a recent editorial in this newspaper that the prospect of the Anti-corruption Bill becoming enacted into law here ‘gives the rest of the world another example of how the Cayman Islands intends to do things the right way.’
But will another law, which will stand alongside a list of other commendable ones over the last 20 years – bodies of legislation that demonstrate the extent to which Cayman has toed international financial regulatory lines – be enough to right the wrong views of the Cayman Islands?
A few months ago a senior officer from another offshore financial centre told me that that country was adhering strictly to Investment Fund Regulations in attracting funds.
‘As far as we know, this is not the case in Cayman and they have taken the true businessman’s approach. That is, while there are the necessary laws and regulations in Cayman, the application of these regulations may not be as consistent and as strict as they are here,’ she said.
When I followed through with a request for examples to substantiate this criticism of Cayman, the officer had none and only said that this was generally known to be the case; no facts that she could recall – just tufts of stories told to her over many years.
Your editorial proposed that the 1993 movie, The Firm and the more recent Haven, are some reasons the bad stereotypes about Cayman persist.
As impossible it may be to attack ghosts of our past, snuff out myths, or quash misinformation beamed through by Hollywood fantasts, action must be taken to have such statements retracted, when they are set down in public forums.
We are now at the point where we can fully recognise the difference between the mere repetitions of messages from a movie vs. views that are being burnished by competing forces – groups that have much to gain from a tarnished Cayman image in the investment fund world.
As much as I look forward to the new law, I struggle to be hopeful about its ability to help wipe out erroneous foreign views of the financial environment here in Cayman – unless we make a greater effort to bring persons to book for misinformation.
There is proof that we have been ‘(doing) things the right way’ for some time now with respect to openness of our financial activities.
Our 1970 Confidential Relationships (Preservation) Law has gateway provisions often used to assist foreign courts and allow foreign governments, regulatory authorities and prosecution authorities to seek the aid of the Cayman court in providing important information through applications to the Grand Court.
The Government, at an early stage, adopted the Basle Committee recommendations on banking regulations and supervisory practice and so Cayman had early customer identification procedures, compliance legislation, good record keeping and staff training.
In 1986 the Cayman Islands introduced the first English speaking Mutual Legal Assistance Treaty with the USA. This became a model for future treaties between the US and countries all over the world.
The Proceeds of Criminal Conduct Law was introduced in 1996, well before even the USA had enacted similar anti-money laundering laws.
In the late 1990s, Richard Small, the then general counsel to the Federal Reserve, remarked that the Cayman Islands was far ahead of the US in its AML and Know Your Customer laws and regulations.
In 2000 the Cayman Islands was the first Caribbean jurisdiction to voluntarily open itself to inspection by the Caribbean Financial Action Taskforce.
Cayman was also among the first jurisdictions to commit to mutually agreed arrangements for assisting the Organization for Economic Cooperation and Development in tax matters following the 11 September attacks on the USA.
Cayman also signed a Tax Information Exchange Agreement with the US in 2000, which remains in force.
Cayman is a member of Egmont – the association with which probably all countries with anti-money laundering units, make every effort to secure membership, Mr. Kipling Douglas of Cayman’s Financial Reporting Authority said recently while attending closed-door, top-secret-agenda 28 May to 1 June meetings, for over 100 of the world’s highest ranked financial intelligence executives – lawyers, financiers, police officers and others – in Bermuda.
He explained that Egmont membership is difficult. Each country applicant has to be checked thoroughly – that is, its anti-money laundering and anti-terrorists laws, its police force, banks and commercial institutions and a host of things, he added.
The IMF, World Bank, Financial Action Task Force and other bodies repeat this check on countries every three years, he said.
These are some examples of how Cayman has played its part in being a responsible member of the international financial community.
Let us hope that against such an impressive (and growing) framework, we will be able to compel more erroneous commentators to recant or substantiate their statements.
Suzanne Livingston
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