Cayman Islands Financial Services

Insurance company United America Indemnity Ltd. has recently announced that it wants to shift its legal home from the offshore financial jurisdiction of Cayman Islands to Ireland.

The Cayman-based insurer is going to ask shareholder to approve the change of place of incorporation at an upcoming meeting.

As to reasons, the insurer says that Ireland offers a sophisticated regulatory environment as well as an extensive network of international treaties, among other reasons. Previously, the insurance company had been considering to move to Switzerland. However, it was finally decided to become a wholly-owned subsidiary of Irish company Global Indemnity PLC.

Earlier this month, Seagate Technology announced its plans to move its legal place of incorporation to Ireland from the Cayman Islands. The reason was the increased international scrutiny of offshore tax havens. It said that, according to proposed US legislation and regulatory measures, tax burden could be increased for companies incorporated in the Cayman Islands.

The representative of the Cayman Islands’ financial services industry, Cayman Finance, has welcomed the amendments that were proposed to immigration laws, announced by the jurisdiction’s Prime Minister McKeeva Bush. These were drafted to encourage foreign financial services companies to remain in Cayman.

This announcement was made to respond to changes to the Cayman regime in the recent budget that were necessary for tackling the jurisdiction’s budget deficit. There are concerns that the substantial hikes in company registration fees and annual charges may damage Cayman’s international competitiveness.

In a statement, Cayman Finance said that it “fully endorses the positive steps the government is taking to strengthen the Cayman economy and its financial services industry in these more challenging economic times.”

New guidelines have been published by Malta. These are guidelines for redomiciling offshore funds to the jurisdiction that were issued because of growing demand from providers for its services.

According to Malta Financial Services Authority (MFSA), the island’s financial regulator, the guidance provided “a simple, one-stop procedure to be followed by funds intending to redomicile to Malta.”

Malta said that one of the attractions for fund managers was that its regime allows to have external administrators and custodians, while other offshore jurisdictions require local service providers to be used. The number of non-Maltese fund managers licensed by the MFSA at the end of 2009 was 66, and 11 out of these had transferred from offshore centres including the Cayman Islands as well as Jersey, Guernsey, and Bermuda.

The government of the Cayman Islands has recently announced that it is planning to develop legislation with a view to regulate the way personal information is collected and processed by businesses and organizations.

This step will be taken in order to ensure that data privacy is maintained. Also, the new legislation will ensure that individuals are able to access their own personal information held by government entities and private sector groups. The accuracy of such data will be required.

A data protection working group has been appointed by the Cabinet and met in order to consider a framework for introducing such legislation.

According to David Archbold, Chairman from the Information and Communications Technology Authority (ICTA), this group is currently reviewing laws from other jurisdictions that might be relevant to the local situation as well as is developing policy recommendations. He said that “The law will impose requirements on ‘data controllers’ to handle personal information fairly and lawfully.” Also, he noted that “Personal data may only be collected, used, stored and accessed for specified purposes, and must always be adequately safeguarded. Data controllers will be accountable for complying with these principles and liable for breaches, such as unauthorized use or disclosure”.

The group will submit its recommendations to the Cabinet Secretary and Attorney General for an approach to the introduction of such legislation In early 2010. Also, a paper on key issues will be prtepared by the group for public consultation.

On December 2, 2009, the Cayman Islands Legislative Assembly passed the Money Services Amendment Bill, 2009. This bill amends fees payable by financial services businesses.

The effect of the amending legislation, coupled with associated Regulations that the Cabinet passed on December 1, will be to:
- increase the annual license fee payable by money services businesses to KYD 10 000 (USD 12 345);
- introduce an annual fee of KYD 1 000 for each additional subsidiary, branch, agency or representative office that a money services business operates;
- introduce a new transaction fee payable to the government, equal to 2% of the gross amount transferred overseas by a money services business on behalf of its customers, but this fee cannot exceed KYD 10 per transaction.

Financial Secretary Kenneth Jefferson commented that “the Money Services Law makes it clear that banks, building societies and cooperative societies do not fall within its ambit”. So, wire transfers, drafts and overnight funds in the banking system are not subject to the new transaction fee.

When published in the Gazette, the bill will become law.

The Cayman Islands have adopted the 2009 Constitution, which began a new chapter in the way the jurisdiction is governed. The new Constitution is said to bring more balanced governance in the shape of increased consultation and accountability in the running of Cayman.

After an extensive period of discussion and negotiations, as well as the 1st local Referendum, the new Cayman Islands Constitution was approved by Her Majesty Queen Elizabeth II. The 2009 Constitution entered into force on November 6, 2009.

Information on the constitutional changes is available on a modernized official website.