Cayman Islands Financial Services

Corporate and finance law and associated fiduciary services provider Ogier Partners has recently been awarded as the Top Offshore Law Firm. This is the 2nd consecutive year when Ogier receives the Top Offshore Law Firm Award from the Alpha Hedge Fund Service Provider Survey.

Alpha Awards tabulated this year’s results from responses of more than 1 000 hedge fund firms, which manage an estimated USD 1.4 trillion in assets. The votes of hedge fund managers were collected by Alpha magazine. Hedge fund managers rated the quality of service by their providers of legal, administration, prime brokerage and audit services. The service elements were divided into broad categories with more specific sub-units. The importance of each service attribute, forming the basis of the calculation was also rated by the respondents.

In accordance with the result, Ogier was put at the top of the list in the “Overall” category.

Also, Ogier placed 1st in 2 new rankings for 2007. These were “Small Firm Favourites” (managers with less than USD 1 billion in assets) and “Big Firm Favourites” (hedge fund firms with assets USD 1 billion or more). Ogier got top assessments in the subsidiary categories of client service, document preparation and fund formation, hedge fund expertise and regulatory, and compliance.

Peter Cockhill, Ogier Partner, said that this award is the result of the expertise and hard work of Ogier’s attorneys and support staff who have managed to prove for the 2nd time that they are the best in the business.

In 2006, The Lawyer named Ogier “the offshore giant across 9 jurisdictions”. Ogier in the Cayman Islands is a full-service firm specializing in international finance and corporate law and an authorized listing agent for the Cayman Islands Stock Exchange (CSX) . Its wholly owned affiliate company, Ogier Fiduciary Services (Cayman) Limited provides tailored fiduciary and administrative services in the areas of investment funds, trusts, structured finance vehicles, companies and partnerships. It holds a Trust Licence and a Mutual Funds Administrator’s Licence issued by the Cayman Islands Monetary Authority (CIMA) .

According to the Cayman Islands Financial Services Association (CIFSA), the Cayman Islands Stock Exchange (CSX), which in June celebrated its 10th anniversary, has made a major contribution to the Cayman financial services industry.

CIFSA suggests that the 1st decade of achievements of the Cayman Islands Stock Exchange is a great contribution to the strength of the financial sector in the Cayman Islands. CIFSA director Eduardo Silva said that “the growth of the Cayman Islands Stock Exchange over the past decade has underpinned the growth across the financial services sector, increasing the attractiveness of the various industry segments to international clients, while ensuring that participating investors can rely on the jurisdiction meeting the highest standards of compliance”.

He also added that the development of hedge funds and structured finance in the Cayman market was a result of the quality of the listing services and growing international reputation of the CSX.

The CSX was initially established to provide a listing facility for the mutual funds and specialist debt products in the Cayman Islands, however, now it covers a great variety of complicated vehicles and structures including Eurobonds, depository receipts, derivative warrants, preferred shares and international equity. Currently there are more than 1 400 listings on the Exchange.

The growth in listings was stimulated by the international recognitions received by the CSX.

Particularly, in March 2004 the UK’s Inland Revenue named the CSX as a “Recognised Stock Exchange”, which made it more commercially attractive to UK investors. Also, in 2003, the CSX was also admitted as an affiliate member of the International Organisation of Securities Commissions (IOSCO). In 2001, the Cayman Islands Stock Exchange became the 1st (and is still the only) offshore exchange that joined the Intermarket Surveillance Group dealing with information sharing and enhancing market surveillance. In 1999, the CSX became the 1st offshore stock exchange registered with the London Stock Exchange.

According to the Global Financial Centres Index (GFCI), the Cayman Islands is the 16th most competitive financial centre in the world.

The City of London Corporation is the municipal body of London’s financial district that made the study evaluating the competitiveness of 46 major financial centres located all over the world.

To assess the competitiveness of financial centres, the study evaluated many criteria that included regulation, corruption levels, the flexibility of the labour market, ease of doing business, the cost and availability of office space and development of human capital. It also took account of the results of an online survey of financial practitioners all over the world.

Each financial centre was given a score out of 1 000. London was ranked 1st, and its score was 765, while Cayman scored 604.

Cayman has been ranked 16th, which is behind such traditional onshore centres as London, New York and Hong Kong, however, it is ahead of such offshore competitors as Bermuda, the Channel Islands and Dubai.

According to the City of London study, Cayman is the 16th highest-ranking financial centre, however, it is also the 11th leading country in the world as far as some financial centres placed in the table ahead of Cayman are from the same country (US and Swiss cities).

The chairman of the Cayman Islands Monetary Authority (CIMA),Timothy Ridley, said that the report’s overall findings are really excellent for a country with a population of only 55 000 people.

The Cayman Islands Chamber of Commerce (CICC) based in Grand Cayman is considered to be the ultimate resource for business, investment and financial services in the Cayman Islands. It was established to promote and protect business, commerce, trade, agriculture, industries, manufactures and public welfare of Cayman and in Cayman.

CICC is a private organization, not a government agency, funded primarily by member dues. CICC is a member-driven organization having a large affiliation with local businesses and individuals. Its programs, projects, events and products are aimed at delivering strategic solutions to them.

It is worth mentioning that CICC is the largest and most influential business organization in Cayman. It has more than 600 members; 85% of them are small businesses and about 25% are employees.

Networking opportunities, community involvement, political advocacy, image enhancement, information access, numerous discounts and additional local exposure are the benefits of CICC membership.

CICC website provides lots of information on Cayman islands’ financial services, investing in Cayman, employment opportunities, CICC member programs, visiting Cayman and many other issues.

The Indonesia’s anti-money laundering watchdog has signed the cooperation agreement with the Cayman Islands as well as South Africa.

The cooperation of Indonesia with the Cayman is very strategic as far as Cayman is one of the world’s major financial centres. The cooperation agreements with the Cayman Islands’ Financial Reporting Authority includes the exchange of financial intelligence related to money laundering and terrorist financing.

Indonesia’s Centre for Financial Transaction Reporting and Analysis (PPATK) established October 2003 to help fight money laundering has already entered similar agreements with 17 financial intelligence agencies. The cooperation agreements provide for exchanging financial intelligence and helping to fight the terrorist financing. It is also worth mentioning that after a year of being monitored by the FATF, in February 2006, Indonesia was removed from the list of non-cooperative countries of the inter-governmental FATF.

It is a well-known fact that financial services are a main stay of Cayman economy. Many of the attributes that develop the financial industry of the Cayman Islands like banking and mutual funds have stimulated the growth and successful work of the captive insurance industry.

Industry practitioners offer are the services they are competitive in and they have good knowledge of global businesses which they apply to Cayman’s financial services. Therefore the jurisdiction is firmly established as the domicile of choice for companies looking for a formal self-insurance programme providing actuarial risk coverage and maximum profit retention.

About 700 captive insurance companies are registered in the Cayman Islands. Most of them are captives related to healthcare.

The Cayman Islands is an active member of the Offshore Group of Insurance Supervisors affiliated with the International Association of Insurance Supervisors (IAIS), the organization that sets out fundamental principles for effective insurance supervision as well as helps to develop insurance standards.

The Cayman Islands Financial Services Association (CIFSA) formed in 2003 comprises individual companies and key associations which include the Cayman Islands Society of Professional Accountants (CISPA), the Cayman Islands Compliance Association, the Cayman Islands Fund Administrators Association, the Cayman Islands Bankers Association, the Insurance Managers Association, the Society of Trust and Estate Practitioners (STEP),  the Cayman Islands Company Managers Association, Cayman National Bank, Appleby Hunter Bailhache, Butterfield Bank, Julius Baer Bank, CIBC, Deloitte, Ogier, Walkers, HSBC, KPMG,  PricewaterhouseCoopers, Royal Bank of Canada, Scotia Bank & Trust and Sul America International Bank.

Cayman Islands is an international financial centre supported by a number of professionals offering a wide variety of services. The mission of CIFSA is to communicate the integrity and quality of financial services industry in Cayman Islands. The CIFSA is an association to represent a jutisdiction committed to maintaining the highest integrity and operative standards evidenced by Cayman’s adherence to international regulatory requirements.

The Cayman Islands is a famous and well-respected jurisdiction for trust services. Numerous trust companies in Cayman are well-established and experienced. The trust law of the Cayman Islands provides great asset protection features.

Trust Management has been a wide-spread activity in Cayman for more than 30 years. Currently, trust assets there equal or even exceed banking assets.

Originally, mostly wealthy individuals from the major common law countries used the trust in the Cayman Islands, however, nowadays it is considered to be a major technique of asset protection all over the world. Over the years, the Cayman Islands has extended and adapted its trust laws to accommodate the market interested not only in tax avoidance, but also in the efficient management of assets in a wider sense.

As it becomes increasingly complicated to invest and preserve wealth, the trust has become especially important as a means to provide financial security for people’s families after death.

The country can boast of experienced professional advisers on trust matters. Individuals can offer trust services without registration there, however, companies providing trust services, foreign or Cayman-resident are to be licensed under the Banks and Trust Companies Law 1995. After the Monetary Authority has accepted an application, the Governor issues the license.

World-class trust services available from a variety of service providers are regulated under the Banks and Trust Companies Law (2003 Revision).

A licensed trust company can be either restricted or unrestricted. Restricted companies are more strictly controlled, but less capital is required for them.

As to private trustee companies which have recently become popular, in this type, the trust remains uncluttered by control arrangements exercised by the private trustee company. The private trustee company, in its turn, can be administered by a licensed trust company. This form is convenient for the larger type of family trusts with multiple beneficiaries and objects.

The Cayman Islands Monetary Authority (CIMA) is the primary financial services regulator enhancing the economic wealth and reputation of Cayman by means of fostering a thriving, growing, developing, competitive and internationally recognised financial services industry through a stable currency and appropriate, cost-effective and efficient supervision. The CIMA was established under The Monetary Authority Law in 1996 to merge the former Currency Board with Financial Services Supervision Department.

The four principal functions of the CIMA are monetary, regulatory, cooperative and advisory. The monetary function is all about the issue and redemption of the currency and notes of the Cayman Islands and the management of currency reserves. The regulatory function means regulating and supervising financial services, monitoring compliance with money laundering regulations, issuing a regulatory handbook on policies and procedures as well as rules, statements of principle and guidance. The cooperative function of the CIMA is providing assistance to overseas regulatory authorities, which includes the execution of memoranda of understanding to assist with consolidated supervision. The advisory function deals with offering advice on monetary, regulatory and cooperative matters to the Government.

The Cayman Islands Monetary Authority consists of 10 divisions. These are operations, currency, banking supervision, insurance supervision, investments & securities, policy & development, fiduciary services, compliance, legal and managing director’s office.

As the Cayman Islands remains an overseas territory of the UK, its foreign relations are to a great extent managed from the UK. However, the Cayman Government often discusses and resolves important issues with foreign governments on its own without the UK intervening.

In the past, the Cayman Islands’ relationships were with the UK and Jamaica were most important for the country, however, in recent years, Cayman relies more so on the USA.

Being an overseas territory of the United Kingdom, the Cayman Islands has no representation in the United Nations as well as in most other international organizations. Still, the country does participate in some international organizations. The Cayman Islands is a full member of the Central Development Bank, a sub-bureau of Interpol, International Olympic Committee and FIFA, and an associate member of Caricom and UNESCO.