The Cayman Islands seem determined to shake off the money laundering accusations levelled at them recently by the Financial Action Task Force (FATF) and last week's US advisories which warned American financial institutions to be wary of transactions with the Caymans and several other offshore jurisdictions. The Caymans do not have an easy task ahead - the US advisories were issued even after the Caymans sent a delegation to the US at the beginning of the month to discuss money laundering and issues raised by the FATF report - but are pressing ahead with change. In an attempt to get dropped from the FATF blacklist of money-laundering hotspots, the Caymans are considering new legislation to dramatically to curtail the secrecy bound up in the territory's US$600 billion banking business.
Legislators will consider four bills that would make it easier
for the Cayman Islands Monetary Authority to gain information
on bank deposits, obtain details about bank clients without a
court order and ease restrictions on sharing information with
investigators from other countries. Furthermore, one bill would
also make it a crime to fail to disclose knowledge or suspicion
of money laundering.
The move follows a declaration by the Bahamas (also on the FATF list and targeted by the US advisories) that they will amend their banking laws later this month. There seems to be a growing effort worldwide to curb money laundering and hot on the heels of the US advisories, Japan and Canada have issued similar ones to their respective financial institutions, and Germany has said that it will do so soon.
The one country which has not made any moves in that direction is the UK, possibly because of its colonial links to the Caymans. Charles Keseru, the Treasury's money laundering specialist, said 'We're still talking about it. We haven't made an announcement yet.'
The Caymans, like the rest of the offshore jurisdictions branded "money laundering havens", are in a difficult position. They are anxious to protect their offshore sector - any legislation removing or limiting banking secrecy might well drive genuine investors away - and yet they are faced with mounting international pressure. At the moment it seems that they are willing to conform with the requirements of the FATF, so perhaps salvaging their reputation and getting removed from the FATF blacklist override all other concerns, at least at present.
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