Cayman Islands Financial Services

The Cayman Chamber of Commerce is calling for policy changes in the financial services industry. The Cayman Government says that it is moving on several fronts and promises further steps aimed at addressing a slowing economy.

On January 28, Chamber President Eddie Thompson spoke to the Chamber of Commerce’s “Legislative Luncheon” at the Marriott Beach Resort. Thompson said that national elections on May 20 were likely to turn on the economy. Also, he offered several prescriptions for improvements. He said that it is needed to re-evaluate all business systems in the Government and “improve the processing times at customs, immigration, planning, Registrar of Companies and all boards that interact with customers”.

According to him, “There is a need to establish a policy framework to attract foreign direct investment and put in place the systems to support this policy to attract a higher level of investors for our tourism, financial services and development sectors”.

He suggested that “a small business strategy is also needed in order to ensure that Caymanians are benefiting from the investment that is being attracted to our shores”.

The audience listening to Thompson included Leader of Government Business, Hon Kurt Tibbetts; Minister for Education, Hon Alden McLaughlin; House Speaker Hon Edna Moyle; MLAs Lucille Seymour, Osbourne Bodden, Alfonso Wright and Cline Glidden; Chief Secretary Hon George McCarthy and Acting Commissioner of Police James Smith.

A delegation from the Cayman Islands will be in the United Kingdom for a week from February 2. The delegation was sent for final discussions with a team led by UK Minister for Overseas Territories Gillian Merron. It is expected that the meeting of the Cayman delegation with British representatives will yield a final draft constitution for the jurisdiction.

The new ?onstitution will determine the political relationship of the Cayman islands with the UK as well as prescribe how government and its institutions will function in order to better serve the people.

According to leader of Government Business Hon Kurt Tibbetts, while government must await the next draft and the outcome of the final round, “there is broad agreement on all the key features of the proposed constitution.” The Cayman government will take many issues to the United Kingdom (among them the need for Cayman to have a Bill of Rights which balances the UK’s need to ensure overseas territories).

The Ministry of Health and Human Services is starting encouraging all Cayman residents to take a new outlook and focus on their well-being in 2009. As a result, the Ministry has organized a “Celebration of Wellness Week” a that will be held from January 19 till January 23. This week is intended to remind the public to reflect and act on the various dimensions of well-being.

The Celebration of Wellness Week is focused on the following aspects of wellness: January 20 - physical well-being, January 21 - social well-being, January 22 - emotional/mental well-being, and January 23 - spiritual well-being and the National Day of Healing and Unity.

Attorney General Samuel Bulgin, commented on legislative achievements in 2009 at the opening of the Grand Court for the 2009 session. He said that the government enacted many laws in order to tackle corruption and money laundering.

Bulgin was pleased to report that the Legislative Drafting Department had a very active year. With the cooperation and involvement of the legal profession representatives, associations and the general public, many important legislative issues were progressed. He expressed his gratitude for the assistance of those who participated in the consultation process.

Bulgin particularly emphasized the passing of the Anti Corruption Law as it gives effect in Cayman to the UN Convention against Corruption and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. According to this law, an Anti Corruption Commission will be established and new offences such as frauds on government, “influence peddling” and secret commissions will be created.

Also, in 2008 the revised Proceeds of Criminal Conduct Law was adopted to replace the 2007 version. The new version of this legislation consolidates and harmonizes different money laundering and confiscation regimes.

Other legislative proposals that have been drafted by the government to be implemented in 2009 will include (1) the criminalisation of discrimination in connection with employment and the provision of goods; and (2) introducing legislation in respect of miscellaneous financial matters, with a view to securing the position of the Cayman Islands as a top offshore investment jurisdiction.

Earlier, the Cayman Government proposed to re-develop the George Town port with a view to separate cruise and cargo facilities and install cruise berths. However, the community had mixed feelings about that. Nevertheless, the government is pressing ahead with the project.

On January 8, 2009, the government announced that the 1st phase of public consultation regarding the Environmental Impact Assessment will start next week. The government said that the recommendations on financial modeling options for a public-private partnership will also be ready shortly.

The Leader of Government Business Kurt Tibbetts said that plans with the port project and that environmental assessment were moving ahead. According to him, estimates for the cruise project range from USD 109 to USD 117 million which depends on the design option, and a further USD 71 million for the port facility.

However, the project will not be financed entirely by government. The financial modeling options for the project are being devised by KPMG. Also, in July 2008, the Cayman government entered into an Memorandum of Understanding with investors Atlantic Star that may become the full or limited partner in the port’s development.

The Cayman Islands Monetary Authority (CIMA) has made an announcement that the Cayman funds industry remains largely not affected by a recent event that has sent further unwelcome ripples around the global financial system – the collapse of hedge funds controlled by Bernard L. Madoff.

According to CIMA’s statement, it has been following the developments connected with charges of massive investment fraud brought in the United States against investment broker and former Nasdaq Stock Exchange Chairman Bernard Madoff. After checking its records and database, the Authority claimed that it has found no evidence that Mr Bernard Madoff or any his company is providing direct services to any Cayman-regulated fund. Investigating the Cayman Companies Registry found that no Madoff-related entity was incorporated in the jurisdiction.

Still, the Cayman Islands Monetary Authority suggests that there could be a number of Cayman-regulated funds and other institutions that have made investments into the Madoff funds and which could be impacted.

CIMA will cooperate with the Securities and Exchange Commission (SEC) – the main United States’ financial regulator, to investigate Madoff and his funds.

Currently, Madoff is under house arrest in the USA after being charged of running the largest Ponzi scheme in history. The fraud could run as much as USD 50 billion.