Cayman Islands Financial Services

On May 2, Greenlight Capital Re Ltd. announced that it will promote Bart Hedges, the current President and Chief Underwriting Officer of Greenlight Re, to Chief Executive Officer effective August 15, 2011. Greenlight Re is a multi-line property and casualty reinsurance company with headquarters in the Cayman Islands.

Hedges will succeed Greenlight Re current CEO Len Goldberg, who is planning to retire, and will also serve on the Board of Greenlight Re.

Greenlight Re is an AM Best ‘A-’ (Excellent) rated specialist property and casualty reinsurance company based in the Cayman Islands that provides a variety of custom-tailored reinsurance solutions to the insurance, risk retention group, captive and financial marketplaces.

As a result of a consultation process, the Cayman Islands is to amend its Companies Law in order to enhance the competitiveness of its financial services industry.

When tabling the Companies Law (Amendment) Bill, 2011, McKeeva Bush, Cayman Premier and Finance Minister, highlighted that the expected benefits the jurisdiction’s local industry is to reap and noted that new opportunities for growth are predicted.

The Bill’s drafting was participated in by the Ministry of Finance, the Registrar of Companies, and the Cayman Islands Monetary Authority (CIMA).

Provisions of the Companies Law include the following:
- amendments to the Cayman Island’s merger provisions;
- updates to foreign company provisions;
- special resolutions permitting different thresholds for different matters;
- changes to treasury shares, share redemption and repurchase, and paperless share transfer;
- permitting company names in a foreign script;
- segregated Portfolio Companies (portfolio names, director’s liability, segregation of assets and termination of SPCs).

Bush said that the process by which these amendments were prepared reveals the government’s renewed partnership with the private sector, ”which has been instrumental in soliciting the views of industry and providing input into the drafting process”. He noted: “These amendments are the end result of an extensive consultation process, aimed at addressing client and market-driven issues that have arisen in practice. It is expected to increase the attractiveness of the Cayman Islands as a domicile for corporate entities and maintain our competitive edge”.

The Cayman Islands’ temporary 1-year pension contribution suspension is to end, which is to affect private sector both employers and employees, as well as self-employed individuals.

In April, 2010, this measure was introduced with an amendment to the National Pensions Law. The measure was to provide a temporary 1-year suspension of pension contributions and a temporary 2-year suspension period for non-nationals. According to the government of the Cayman Islands, it was implemented in response to the global economic recession. It was aimed at easing people’s financial burdens and stimulating the economy.

Recently, the Cayman government has issued a reminder that, as of April 26, Caymanians from their first day of employment are pensionable immediately, required to participate in a pension plan and pay pension contributions.

Rolston Anglin, the minister responsible for pensions, commented: “These contributions are extremely important to continue each employee’s long-term savings for retirement. It’s a critical part of their retirement planning”.

Cayman Finance, a private-sector membership-based organisation that promotes Cayman’s financial services industry through public relations, public affairs and marketing initiatives has announced that Richard Coles has been voted in as its incoming chairman.

Coles is former Attorney General for the Cayman Islands with an impressive resume. He is currently an independent director for hedge funds, structured finance vehicles and investment and financial sector companies and had built a successful law firm in England before he moved to the Cayman Islands. So, he should be a good leader for Cayman Finance, which is the voice of Cayman’s financial services industry.

At an annual general meeting of Cayman Finance held on April 13, 2011, Coles was talking about his commitment and his capabilities to further develop Cayman Finance’s relationship with the Cayman Government.

Also, a new board was elected. The directors of Cayman Finance are Peter Cockhill (Ogier), Nick Freeland (PWC), Gonzalo Jalles (HSBC), Mark Lewis (Walkers), Roy McTaggart (KPMG), Conor O’Dea (Butterfield), David Roberts (Cayman Management), Daniel Scott (Ernst & Young), Henry Smith (Maples and Calder), Ian Wight (Deloitte).

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On March 21, A Tax Information Exchange Agreement (TIEA) that is designed to strengthen the commercial relationship between the Cayman Islands and India was signed by the 2 countries.

This is the 22nd agreement signed by the Cayman Islands. Premier McKeeva Bush said that the government of the Cayman Islands has a strong working relationship with Indian government, so the jurisdiction looks forward to implementing the terms of this TIEA.

On behalf of India, the document was signed by High Commissioner to the Bahamas, the Cayman Islands and Jamaica Mohinder S. Grover. He commented that both the Cayman Islands and India are members of the OECD Global Forum Global Forum on Transparency and Exchange of Information for Tax Purposes, therefore it is important to ensure the effective implementation of the international standards of transparency and exchange of information for tax purposes.

George McCarthy of the Cayman Islands International Tax Cooperation Team said that the TIEA “will provide a common ground upon which the Cayman Islands and India can exercise mutual cooperation and focus on increasing investment funds business in the Cayman Islands”.

A number of Caribbean jurisdictions have been assailed by the United States for their alleged continued facilitation of money laundering and financial crimes.

In the 2nd part of the 2011 International Narcotics Control Strategy Report (INCSR), the State Department was particularly concerned about efforts made by several offshore jurisdictions in addressing these crimes. One of the jurisdictions under concerns was the Cayman Islands.

The report said that most money laundering in the Cayman Islands is primarily related to fraud and drug trafficking. The State Department suggests that, due to its status as a zero-tax regime, the Cayman Islands is considered attractive to those who intend to evade taxes in their home jurisdiction.

The report said: “While the country has increased both its regulatory and law enforcement staffing, the number of prosecutions and convictions is extremely low, given the vast scale of the country’s financial sector”. It also stated that only 6 successful prosecutions for money laundering and only 1 in the last 4 years have taken place.

According to the INCSR, the lack of penalties for failing to report information on ownership and identity undermines the effectiveness of the obligations. “This is a problem in particular for an estimated 3,000 unregulated mutual funds resident in the Cayman Islands”. The report added that there are no requirements for companies, trusts and partnerships to retain records for at least 5 years.

The 2nd part of the 2011 International Narcotics Control Strategy Report urged the Cayman Islands to continue computerising various registrations, particularly those for mutual funds, as it is necessary to pay more attention to the risks and proper supervision of non-profit organisations.

The report also expressed such concerns about not enough control of money laundering and financial crime in Belize, the BVI, the Bahamas, and Antigua and Barbuda.

A new Memorandum of Understanding (MOU) has been signed by the Cayman Islands with the jurisdiction’s neighbour Turks and Caicos Islands.

The agreement was signed on February 25 to formalize cooperation between the 2 Caribbean authorities, which had been informally occurring otherwise. The document provides for the exchange of information and investigative assistance between the Cayman Islands Monetary Authority (CIMA) and the Turks and Caicos Financial Services Commission (TCI FSC).

The MOU outlines the types of assistance that can be requested and given by CIMA and the TCI FSC including providing, confirming or verifying information; obtaining specified information and documents from other parties; discussing issues of mutual interest; arranging and/or conducting inspections of financial services providers; and permitting representatives of the requesting authority to participate in enquiries by or on behalf of the requested authority.

On behalf of the Turks and Caicos Islands, the MOU was signed by TCI FSC Managing Director, Mr. Kevin Higgins, who welcomed the development: “The FSC looks forward to working more closely with one of the premier regulatory agencies in the Caribbean.”

CIMA’s Managing Director Cindy Scotland said: “We are pleased to formalize methodologies of cooperation that has existed between CIMA and the Turks and Caicos Islands. We see this MOU as reinforcing our strong international cooperation regime and further demonstrating our commitment in this area.”

This Memorandum of Understanding is the 19th signed by the Cayman Islands Monetary Authority (CIMA).

The Chief Executive Officer of Barclays Robert Diamond has told UK parliamentarians that the bank does not evade taxes. He suggested examining the bank’s offshore operations.

Diamond told a Treasury Committee hearing at the House of Commons in London that Barclays does not evade taxes and is complying with legislation. He answere questions from parliamentarians who alleged that the bank had more than 300 companies operating in the Cayman Islands, the Channel Islands and other tax havens.

To replace the outgoing Chairman Anthony Travers, Cayman Finance has appointed an Interim Chairman Roy McTaggart. The decision has immediate effect.

Anthony Travers recently resignated after serving 2 years as Chairman.

Roy McTaggart is the Managing Partner at KPMG Cayman and has over 25 years’ experience in providing assurance services to the hedge fund, captive insurance and offshore banking industries. He acts as the Risk Management Partner with the responsibility for the professional risk management process for the Cayman and BVI offices. McTaggart is a member of the Florida and American Institutes of Certified Public Accountants; council member of the Cayman Islands Society of Professional Accountants; and a member of the Financial Services Council, an advisory group to the Cayman Islands government.

McTaggart welcomed his appointment, saying: “I am pleased to accept this role which will provide continuity of service whilst a permanent appointment is made. We are working with the Financial Services Commission and with the Cayman Islands Monetary Authority to help ensure that there is an articulate and sophisticated understanding of Cayman’s positive role in international finance.”

In an interview with Cayman’s local television, the chair of Cayman Finance Anthony Travers has called the author of a new book on tax havens called Treasure Islands: Tax Havens and the Men Who Stole the World, Nicholas Shaxson, an imbecile.

Cayman Finance chair criticized the author claiming that his work demonstrates no more than a primitive understanding of offshore finance. Also, Travers supposed that Shaxson’s position came from the politics of envy and said that Shaxson does not understand what is going on in the Cayman Islands.

Cayman Finance chair noted: “There are simply jurisdictions where it would be more sensible to perpetuate your fraud or money laundering than the Cayman Islands”, while the book contain the information that the Cayman Islands is a tax haven or a magnet for illicit transactions.