Cayman
Islands Executive Summary
The Cayman Islands are an English-speaking
Dependent Territory of the United Kingdom,
located in the Caribbean between Cuba
and Central America. There are two international
airports, one in George Town, Grand Cayman
and the other in Cayman Brac. Aabout nine
major airlines fly to Cayman and there
are daily flights to Miami and weekly
flights to major North American and European
cities.
Cayman
is politically stable; under the 1972
constitution, the Governor represents
the Queen and assigns portfolio responsibilities
to five elected Ministers of Government,
although the constitutional relationship
between the Cayman Islands and the UK
is undergoing change. There are no taxes
in the Cayman Islands: Government revenue
comes from customs duties, stamp duty
and annual fees levied on corporations.
The population of 46,600 is of mixed British
and Jamaican stock, with more than 70
nationalities present in the work-force.
The economy is highly dependent on tourism,
with financial services also important.
Cayman
is the largest offshore banking centre
in the world with 350 banks and deposits
worth about US$1.7 trillion. It is the
second largest captive insurance base
after Bermuda, with assets worth $20 bn.
The Cayman Islands trust sector is thought
to manage more than $500 bn. Mutual funds
are a growing sector, especially since
the opening of the Cayman Islands Stock
Exchange in 1997. The Cayman Islands have
emerged as a predominant registration
base for hedge funds; CDO and other securitization
instruments have also taken a firm hold.
The
Caymanian dollar is fixed against the
US dollar at CI$1.00 to US$1.20. There
is no exchange control. Cayman is an expensive
jurisdiction with an established commercial
infrastructure in place and a flexible
approach to regulation, within its strong
desire to maintain respectability.
The
Cayman Islands have quite a good reputation
in the Western hemisphere, but in Europe
have tended to exemplify 'tax havens',
largely perhaps as a media stereotype
rather than as a matter of objective reality.
The truth is that Cayman has tried hard
with a large number of statutes to keep
up with the international pressure for
offshore centres to keep themselves clean,
even accepting in 2001 the need to allow
investigation of fiscal wrong-doing, at
least when criminality is in evidence
both internationally and in Cayman itself.
The prevailing attitude in Cayman however
is still to protect confidentiality in
the absence of demonstrated criminality.
Although
the Cayman Islands was briefly included
on the FATF list of jurisdictions with
inadequate defences against money laundering,
in 2001 the Cayman Islands was praised
by the FATF for its substantial efforts
to conform to forty recommendations set
out by the FATF in a code of good practice
governing money laundering, including
the issuance of money laundering regulations
and amendments to the Monetary Authority
Law and the Proceeds of Criminal Conduct
Law. Amendments have also been made to
the Banks and Trust Companies Law and
the Companies Management Law; and compulsory
licensing for financial firms was introduced
in late 2002.
It
remains to be seen what impact will be
felt in the Cayman Islands from the Savings
Tax Directive after it went 'live' in
July, 2005.
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