Cayman Islands Financial Services

At the annual Cayman Captive Forum in the beginning of December, the Leader of Government Business in Cayman, Kurt Tibbetts, told delegates that the Cayman Islands’ offshore finance industry holds a strong position despite the global financial turmoil. He also said that the government continues to be committed to growth in the captive insurance sector.

The annual conference was held on December 2-4. Tibbetts said that this year’s conference was particularly significant taking into consideration global events.

Tibbetts said, “We see as our duty to uphold what a recent US Government Accountability Office report on the Cayman Islands described as a ‘…reputation for stability and compliance with international standards, business friendly regulatory environment and prominence as an international financial centre.” He noted the commitment to ensuring that Cayman’s captive insurance industry remains successful. According to Tibbetts, the Cayman Islands has more than 770 captives domiciled writing USD 7.6 billion of premiums and with over USD 35 billion of assets under management.

At to the government’s fiscal policy, it is designed to keep the Cayman Islands “business-friendly and economically stable”, despite the stresses exerted by the state of the global economy.

Richard Dodd, the Chief Executive Officer of Cable & Wireless in the Caribbean, has recently announced that the company with principal operations in the Channel Islands, the Caribbean, Panama, Macau, and Monaco plans to invest more than USD 400 million in Caribbean telecommunications development over the next 3 years.

The announcement followed positive company results published in May 2008. The results revealed that revenues for Cable & Wireless International had increased by 6% year on year to GBP 1.2 billion.

According to Dodd, Cable & Wireless is repositioning itself for an era of competition, it “intends to be around long into the future to bring the customers the superior brand of telecommunications products and services that has helped to put the Caribbean ahead of many countries in telecommunications infrastructure”.

The Cayman Islands Financial Services Association (CIFSA) has responded to a recent report by the Public Accounts Committee (PAC) of the United Kingdom’s House of Commons. It has sought corrections regarding a “misrepresentation” of the standards of regulation within the UK’s Overseas Territories that was mentionedf in a statement of the report.

According to the PAC report, the financial regulation standards in most of the Territories were not as good as the standards that exist in the UK Crown Dependencies such as Jersey and the Isle of Man.

To respond to the statements, Eduardo Silva, Chairman of CIFSA, compared the 2 groups of UK Territories.

He said that, in general, CIFSA welcomes discussing offshore centres as it improves the level of information on the important role of such offshore jurisdictions as the Cayman Islands. However, he commented that on occasions like this it is equally important to correct any misrepresentations, “particularly those may impact international perceptions of the standards of regulation in the Cayman Islands”.

Chairman of CIFSA indicated that Jersey officially recognises anti-money laundering (AML) practices of the Cayman Islands as equivalent to its own, which means that the Jersey Financial Services Commission’s (JFSC) AML/CFT requirements are satisfied if a customer has met customer identification procedures in Cayman. The JFSC has said that Jersey’s financial institutions can rely on the “know-your customer” and “due diligence” procedures of the institutions in the Cayman Islands as being as robust as the laws that must be observed in Jersey.

Chairman of CIFSA also stated that, according to the most recent CFATF report, the Cayman Islands financial services industry has a strong anti-money laundering and counter terrorist financing compliance culture.

A bid is being completed by project managers to establish a local professional chapter in the Cayman Islands. The chapter is expected to make Cayman attractive for investors and businesses.

Project management, which suggests planning and managing resources to achieve a plan, has become a recognised profession since the US-based Project Management Institute (PMI) that has 260 000 members and 251 chapters worldwide was established about 40 years ago.

President of the Cayman Islands Project Management Association, Patrick Cimolini, and a group of project managers are applying for establishing the Cayman chapter of PMI. They hope that it will be set up by the middle of 2008.

According to Cimolini, it might offer people more confidence in investing in Cayman and doing business there. The Cayman Islands already can boast of good professionalism in the legal, accounting and engineering areas, and project management will add up to an image of professionalism of Cayman.

It should be noted that Cayman’s project managers are now on the 3rd step of a 5-step process to become chartered.

Currently, the venture-capitalist group that works with the Cayman Islands Investment Bureau, the Cayman Angel Investor Network (CAIN), has approved just one business proposal seeking investment.

The 12-member group was founded 2 years ago in order to aid Caymanian entrepreneurs. The group represents various sectors and provides an alternative source of funding to entrepreneurial ventures that operating in Cayman.

CAIN has reviewed many proposals, however, most of them have lacked the qualifications required by CAIN.

According to CAIN chairman Winston Connolly, the Cayman Angel Investor Network expects to see more proposals using technology like the Internet or taking advantage of Cayman’s tax-free status, or expanding on such services as independent directorships and corporate administration.

In accordance with a report from China Daily, companies in the Cayman Islands are among the largest foreign investors into China in the 1st 8 months of the year. Cayman’s investment into China accounted for USD 1.51 billion.

Top-10 provided by the report looks the following way:
1.Hong Kong – USD 14.1 billion;
2.the British Virgin Islands – USD 9.91 billion;
3.the Republic of Korea – USD 2.46 billion;
4.Japan – USD 2.25 billion;
5.Singapore – USD 1.64 billion;
6.the United States – USD 1.63 billion;
7.the Cayman Islands – USD 1.51 billion;
8.the Samoan Islands – USD 1.12 billion;
9.Taiwan – USD 952 million;
10.Mauritius – USD 753 million.

The total foreign investments into China accounted for USD 41.95 billion. The 10 above-mentioned countries accounted for 86.55% of all foreign investment into China in the 8 months of 2007.

To conclude, the largest investors into China are some of the most successful offshore financial centres such as the including the Cayman Islands, Hong Kong and the British Virgin Islands.

The Cayman Islands is ranked 7th in the list of top investors in China.

According to the recent report, during the 1st 8 months of 2007 overseas investors set up 24 848 new enterprises in China. This number is down 5.26% year-on-year, however, the actual investment value rose 12.79% from a year earlier to USD 41.95 billion. In August 2007, the Chinese government approved 3 150 foreign ventures nationwide. While the number of investors is down 8.83% from 2006, the value of the investments rose 11.87%, with a total of USD 5.02 billion.

From January 1 to August 31, the top 10 countries and regions accounted for 86.55% of the total investment by value in China. The top investor is Hong Kong, which accounted for USD 14.1 billion. It is followed by the BVI, which accounted for USD 9.91 billion, and the Republic of Korea, which accounted for USD 2.46 billion. Japan contributed USD 2.25 billion, Singapore – USD 1.64 billion) and the US – USD 1.63 billion. The Cayman Islands takes the 7th place as its contribution accounted for USD 1.51 billion.

According to Dr. Dax Basdeo, Executive Director of the Cayman Islands Investment Bureau (CIIB), today as many women as men are starting new and innovative businesses, and the Investment Bureau recognizes the important contributions made and being made by women in business in Cayman Islands.

As March was Honouring Women Month, on March 23, 2007, the CIIB was glad host an event aimed at further inspiring women entrepreneurs through the stories of success of others. The Bureau’s “Inspiring Women Entrepreneurs” event was co-sponsored by the Women’s Resource Center. Some of the leading and most successful business women of Cayman were talking about their challenges and victories in business ownership at the event. Discussion contributors and specialists represented various fields, including finance, marketing, real estate, accounting legal and human resources. It is also worth mentioning that men were also encouraged to attend the event, which was free.

A multimedia and communications company Ktone, has become the first one to raise capital from the Cayman Angel Investors Network (CAIN).

Ktone was launched last year to offer people a new and innovative service – the possibility to keep a constant connection to the latest happenings in the Cayman Islands through their cell phones, free of charge.

The investment by 6 members of CAIN came only 6 weeks after a presentation made by Neil de Vere, Ktone managing director, to the network.

2 CAIN members will become directors in Ktone, enabling them to direct how their investment is spent more closely. One of them will be the managing director of CML Offshore Recruitment, McIntosh. According to him, the angel investors did not intend to sell their stake in Ktone for several years. In accordance with a contracted provision, Ktone can buy back the shares from the investors at a set point and at a set price down the line. McIntosh said that the CAIN members’ investment in Ktone represents a “significant minority share” in the company.

The new funds have already helped Ktone – it secured a new contract to supply multimedia displays for Owen Roberts International Airport. Also, with the help of the capital the Ktone Group will split into 3 entities, and one of them will offer telecommunications services to the majority of the Caribbean by means of a partnership with Cable & Wireless. The other major area for Ktone’s activities due to new funding is marketing.

De Vere said that CAIN and the Cayman Islands Investment Bureau have offered great assistance by providing a structured process to establish access to capital and not to delay the opportunities to expand due to a short-term lack of funds.