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Cayman Islands: Offshore Business Sectors

Banking

This page was last updated on 28 June 2019.

Cayman banks must be licensed under the Banks and Trust Companies Law (2009 Revision). The Cayman Islands banking industry had 226 banks under the supervision of the Banking Supervision Division at the end of December 2012, of which 15 held Class A licences permitting local and offshore business activity, while the remainder hold Class B licences, permitting only offshore business - a local office is allowed, but only very limited transactions can be carried out with Cayman Islands residents. However, over 70 banks have closed in recent years.

Banks do not need to be incorporated locally: a foreign bank can register as a foreign company and then obtain a licence. For further details of licensing requirements and procedures and fees payable see Law of Offshore and Offshore Legal and Tax Regimes.

As of December 2012, total assets were reported at USD1.433 trillion, down from USD1.607 since the same period of the previous year.

A very wide range of services is offered: the 93,612 offshore companies registered in Cayman include many treasury management or investment management subsidiaries of multinationals taking advantage of the excellent banking environment and absence of taxation. Evidently, private banking is a major component of the industry: asset protection rather than tax avoidance as such is the driving force, so that the stability of Cayman alongside stringent banking secrecy and its sophisticated investment environment are very attractive to wealthy individuals, particularly those from the US.

Cayman Islands' banks are supervised by the Cayman Islands Monetary Authority (CIMA), which concentrates on banks for which Cayman is the home-country supervisor. CIMA recently extended its bank inspection programme to on-shore subsidiaries of Cayman banks.

In 2000, the Cayman Islands introduced additional due diligence procedures for banks when they were required to comply with fresh Know Your Customer regulations. The original deadline of 31 December 2002 for the provision of information about customers to the authorities was extended, and the new rules came into force in March 2004.

The due diligence rules require both new and long-standing account holders in the jurisdiction to provide proof of identity and physical address, in addition to an explanation of their banking activities. The rules have provoked criticism from some quarters, particularly from those who have banked in the Caymans for many years, who argue that they are intrusive and unnecessary.

 

 

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