Cayman Islands Financial Services

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.

The FATF or the Financial Action Task Force on Money Laundering is an inter-governmental body founded in 1989 to develop and promote national and international policies concerning money laundering and terrorist financing. It is based at the Organization for Economic and Co-operative Development (OECD) headquarters in Paris.

The Financial Action Task Force on Money Laundering currently includes 33 members – 31 countries and territories and 2 regional organizations. Also, the FATF actively co-operates with many international and regional bodies that deal with combating money laundering and terrorist financing.

Previously, the FATF had the list of countries and territories not co-operating with its standards that besides Nigeria, the Bahamas, Egypt, Cook Islands, Dominica, Russia and Ukraine included also Cayman Islands. Currently, Cayman Islands are no longer on the list, so it is not considered as not following the FATF standards and recommendations any more. Nowadays, Cayman is known as having in place a regulatory regime which surpasses many of the top international financial centres in the area of the world in anti-money laundering area.

The Cayman Islands has no double tax agreements with other countries as it has no other taxes than customs duties and stamp duty.

However, the Cayman Islands has entered into a mutual legal assistance treaty with the United States. This treaty is specifically about fiscal matters. In 2002, the country also signed a Tax Information Exchange Agreement with the USA.

In 2004, the Cayman Islands had to accept information sharing under the EU’s Savings Tax Directive. After that, the United Kingdom intended to discuss a tax treaty between the UK and the Cayman Islands. The UK government is giving a high priority to the issue of signing a Cayman tax treaty.

The Paymaster General, Dawn Primarolo, MP, has recently announced the details of the UK’s treaty negotiating priorities for the year to 31 March 2007. Among other priorities, he highlighted UK’s intention to progress negotiations with the Cayman Islands.

The Cayman Stock Exchange (CSX) was opened in 1997. After 2 years, in 1999, it was included into the London Stock Exchange’s list of approved organizations. So, this is the first offshore exchange to achieve this designation.

In October 2000, KPMG, one of the leading providers of Audit, Tax and Advisory services, declared in its independent review that the Cayman Stock Exchange met international standards in its activity.

The CSX allows the listing of specialist debt, derivative warrants, depositary receipts, mutual funds and eurobonds. It also provides a facility for domestic companies that meet the requirements to list trade. For companies trading on another recognized exchange CSX has a secondary listing facility.

The CSX cooperates with Bloomberg Financial Markets, which providing global financial information, to develop an electronic listing and trading service and news wire service. Bloomberg and CSX display a buying and selling price any time.

Nowadays, the leading financial institutions in the world are listed their products on the Cayman Stock Exchange known as the major market player providing investors with the appropriate regulation and comfort they in investment decision-making.

Investing in the Cayman Islands is a profitable venture – no matter, whether you invest in land or real estate, mutual funds or business partnership.

Investing in the Cayman Islands has many advantages that businessmen from all over the world find crucial. It goes without saying that the 1^st advantage is the absence of local taxes – there is no income tax, non resident tax, capital gains or other similar taxes in this country.

Many people invest in Cayman because of its stability and security. This is a country with a strong and dynamic economy and a stable government.

Other factors that affect the investors’ choice are privacy and investment freedom. No reporting of income or ownership to government agencies and no restrictions on investment purchases are applied to those who invest in the Cayman Islands.

The Cayman Islands Investment Bureau (CIIB) () is an institution that provides customized information, investment marketing materials and services to businesses and potential investors in the Cayman Islands. The CIIB staff provide consultation, liaison and coordination services to help investors successfully proceed with their ventures.

Cayman government is protecting the country’s status of a reputable international financial centre by means of strict examination procedures for new licenses and precise supervision of existing licensees.

The government requirements include also an audit caried out by approved local auditors.

The Banking Division in the Cayman Islands is responsible for processing applications for bank and bank & trust company licenses, and for making recommendations to the Governor in Council for the issuing or not issuing a license. The banking division deals with both off-site and on-site supervision of the banking institutions.

The government appoints a professional Inspector of Financial Services. The Inspector leads a banking supervision team charged with examination of all applications for licenses, issuing recommendations to the Governor in Council to approve bank licenses and monitoring the business of a licensed banks.

The Cayman Islands offers a wide variety of banking products for both residents and non-residents.

Deposit, savings and checking accounts are available to clients at many banks with competitive interest rates that are offered in all major currencies. Time deposits are especially popular in Cayman, although interest rates correspond to prevailing international rates.

Other banking services are letters of credit, foreign exchange, safe custody, guarantees, mortgages and commercial loans.

Internet banking is available online at any moment.

The advantages of opening a bank account in the Cayman Islands are as follows:

- no capital gains tax, Corporation Tax, property tax, withholding tax, payroll tax or income tax payable by employees;

- no exchange control, freedom of transfer of funds in and out of Cayman in any currency, freedom to open and maintain accounts in any currency;

- no reserve asset requirements;

- competitiveness in the Euro currency markets;

- statutory confidentiality of client information.

Not all the banks in the Cayman Islands are dealing with moving billions in business operations around the world. Most banks also provide opportunities for investors on a smaller scale to take advantage of tax-free climate ensuring privacy for all reputable transactions. Many overseas investors take this opportunity and are satisfied with the results.

All over the world the Cayman Islands is considered as a sophisticated, efficient, diverse and thriving offshore financial centre. This financial services jurisdiction maintains its banking industry as a cornerstone of its success.

The Cayman Islands is famous for its stability, commercial strength, innovative legislation, Government support as well as the absence of corporate, income, capital gains, payroll and withholding taxes on domestic or foreign entities.

Currently, the banking system of the Cayman Islands consists over 389 banking companies that include 43 of the world’s largest 50 banks and the Basle Committee on Banking Supervision which is a regulatory body.

Around 30 banks hold the Category “A” licenses allowing them to carry on business with both residents and non-residents, while the remaining banks hold Category “B” licenses and are mostly restricted to offshore transactions with non-residents. Banks licensed in the country represent more than 60 countries.

The Cayman Islands is an active member state of the Basle Committee’s Offshore Group of Bank Supervisors.

The jurisdiction maintains an anti-money laundering regime extending to the proceeds of all serious crime defined as a so-called ‘gateway’ legislation.

By the way, the banking industry is one of the largest employers in the country, which ensures an experienced work force able to meet the market needs.