In a keynote speech earlier this week to the Campbells Cayman Fund Focus Conference, which had the theme 'Stress Testing Cayman Funds', Scotland observed that it is time for jurisdiction's fund industry "to do some introspection" given the internal and external pressures facing the industry, such as the sub-prime mortgage meltdown, high profile fund collapses, and the credit crisis.

Although she stated that the Cayman Islands remains the leading centre for fund registrations - as at 31st December 2007, there were 8,751 funds registered by CIMA in the Cayman Islands, with an additional 119 licenced funds and 543 administered funds for a total of about 9,400 funds - the CIMA chief argued that: "There are always areas that can be enhanced."

"The Cayman funds industry - in fact the entire financial industry as it is now so highly interrelated - must seriously examine itself to identify what it can do from within to strengthen itself against shocks such as are currently being experiences worldwide," she told the conference.

In particular, the industry now has a valuable opportunity to demonstrate leadership in the area of self-regulation, Scotland noted.

"The time has come for you to exercise your capacity for innovation to develop and adopt your own industry best standards; standards that are relevant to this jurisdiction. We cannot wait for this to be imposed on us from outside, and you as members of the industry should not wait for it to be imposed on you," she commented.

One area in which Scotland is keen to see development is that of fund administration, which would allow more Cayman-based funds can be serviced locally. "This is an area whose potential timing is now," she observed. "It would certainly diversify and strengthen Cayman's involvement in the international fund market and thus give us more leverage."

On the regulatory front, Scotland suggested that the Cayman Islands remains up to international scrutiny, despite the fact that the jurisdiction is often used as a "punchbag" by politicians from high-tax countries, who accuse the Cayman Islands of secrecy, lax regulation, facilitation of tax evasion and money laundering. She noted that the Caribbean Financial Action Task Force (CFATF) assessed the jurisdiction as having a "strong compliance culture", meeting 38 of the 40+9 anti-money laundering recommendations, well above the average of 26 for FATF member countries. She added that Cayman will soon undergo an assessment from the International Monetary Fund, while CIMA will be re-submitting an application for membership of IOSCO.

However, despite these pressures, Scotland noted that the Cayman Islands maintains a strong position as an international financial centre. In addition to being ahead of the pack as a fund centre, it is also the second-largest offshore captive insurance domicile, with 765 captives licensed as at 31st December 2007, she revealed.

While the number of banks licenced at the end of 2007 was slightly down on the previous year at 281, in June 2007, the Bank of International Settlements ranked the Cayman Islands as the fifth largest banking centre in the world in terms of liabilities, and sixth in terms of total assets.

Scotland additionally revealed that the trust centre is holding its own, with 235 licences as at 31st December 2007, and growing interest is being shown in restricted trust licences by industry.