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Cayman Islands Thriving In Spite Of OECD/FATF Crackdown

Robert Lee, Tax-news.com, London

27 October 2000

If new figures are anything to go by, the Cayman Islands is booming as an offshore financial sector despite the recent OECD and Financial Action Task Force (FATF) initiatives. Whilst the Caymans avoided the OECD blacklist published in June, the territory was named on the FATF's 15-nation list of offshore financial centres deemed uncooperative in the global battle against money laundering.

However, the government said in a statement this week that the Cayman Islands, the world's fifth largest financial centre behind New York, London, Tokyo and Hong Kong, recorded a 51 per cent increase in registered offshore companies in the past year, with a total of 57,900 registered offshore companies recorded at the end of September. In addition, 17 new banks were registered, making a total of 465 financial institutions registered to do business in the offshore tax haven.

Sources in the Caymans' banking industry say the FATF and OECD initiatives against tax havens have had only a marginal affect on the colony's banking business, but have affected some smaller trusts that deal with just a few clients.

Finance Minister George McCarthy, who has been at odds with the FATF and OECD initiatives for the past few years, said that the latest figures support the government's position that the Cayman Islands is a clean jurisdiction with supporting infrastructure and anti-money laundering legislation. He said: 'I believe these figures demonstrate the confidence in the Cayman Islands people have as a jurisdiction of choice for quality business.'

Cayman Islands Bankers Association president Eric Crutchley said the banking community had 'reacted positively to the legislation Cayman has introduced to strengthen regulation and international cooperation.'

The government also said that the Cayman Islands Stock Exchange is one of the fastest growing offshore exchanges in the world with current listings already valued at 84 percent more than last year's figure at this time. The finance minister said that there are now 386 listings on the exchange, up from 210 in 1999, and that it was recently given status as an "approved organisation" by the London Stock Exchange.

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