Cayman Banks May Close Some Accounts, Report Suggests

by Philip Morton, Investors Offshore.com

15 April 2003

According to reports, around 5% of Caymanian account holders have so far failed to provide the jurisdiction's banks with the due diligence documentation required under the updated Proceeds of Criminal Conduct Law, raising the question of what to do with accounts which are still not properly documented after the June 30 deadline.

The Cayman Net News service suggested on Monday that two possible courses of action are being considered for 'delinquent' accounts - the closing of the account and mailing of its contents in the form of a bank draft to the account holder, or the freezing of the account until the necessary documentation is provided.

Account holders, who represent a mix of Caymanians, expat residents, and overseas citizens, have reportedly been generally compliant with the new rules, albeit reluctantly, and have provided banks with the required due diligence documentation - a passport or driving license, proof of their physical address, and an outline of their banking activities.

Reaction to the new requirements has been mixed, according to the Cayman Net News. Tim Godber, President of the Cayman Islands Bankers Association admitted that he was bemused by objections, telling the local newspaper that:

'I really don't understand why people think the request is onerous. Account holders who might have obtained their funds illegally would be putting us at risk, so I think it only fair that we are allowed (to) ascertain for certain the identity of our account holders, and other important information about how they will use the account.'

However, local attorney-at law, Michael Alberga argued that: 'Privacy is the key to democracy, it's what separates democracy from other forms of government. Why should people who have lived and banked here all their lives have to provide more information about themselves?'

He went on to suggest that:

'The legislation was developed mainly by bureaucrats who have never been in private enterprise. They failed to take into consideration relevant input from private sector individuals from various parts of the world, and they also failed to do a cost-benefit analysis.'

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