Ridley points out that recent reports compiled by these
organisations found that Cayman often meets, and exceeds, international standards on money laundering, terrorism financing, corruption and cross-border assistance in law enforcement and regulatory and tax information exchange.
On the latter point, the Cayman authorities have been keen to draw
attention to the many tax information exchange agreements (TIEAs) that the jurisdiction has in place, allowing for the free exchange of tax information in instances such as criminal investigations.
Richard Coles, chairman of Cayman Finance, said that he was
frustrated that Cayman still faced accusations of secrecy, when the jurisdiction had so many current TIEA agreements.
“We have never had so many tax treaties with other jurisdictions,”
he said. “Including a recent agreement with China, Cayman now has 27 TIEAs in place.”
Nevertheless, those with an axe to grind about offshore jurisdictions,
such as campaigner Richard Murphy from Tax Research UK, criticise TIEA agreements, saying that they are still not rigorous enough.
“Cayman’s legal framework makes information about owners available, accounting regulations are not too bad, and the competent authority has real power to access the information that it needs.”
However, the results of the report were immediately called into question by the former chairman of the Cayman Islands Monetary Authority and a former senior partner of Maples and Calder, Tim Ridley, who raised concerns over whether the TJN had formulated its report in a suitably objective manner.
“Unfortunately the Tax Justice Network likes to act as prosecutor, judge and jury and sets the questions to come up with the answers it first thought of,” he says.
The report scores many of the world’s major financial centres badly
in terms of what the TJN’s defines as ‘transparency’. Consequently, rather than being compared to a pre-existing precedent, the scores given in the report appear to be more a reflection of an ideal thought up by those collating it.
Additionally, the TJN’s jurisdiction report includes references to what
the author purports to be Cayman’s ‘history’ as an ‘offshore pirate sanctuary’ several hundreds of years ago. This could suggest that the authors of the report may not have approached their analysis in a completely objective manner.
In Ridley’s opinion, this lack of objectivity means that the TJN’s reports cannot be taken seriously by responsible interests, especially in comparison to reports compiled by international agencies which, increasingly, tend to look on Cayman more favourably.
“The TJN’s highly subjective reports are a world away from the very
detailed, lengthy reports issued by international standard-setters such as the International Monetary Fund (IMF), the Financial Action Task Force (FATF), the International Organization of Securities Commissions (IOSCO) and the Organisation for Economic Cooperation and Development (OECD),” he says.
16 CAYMAN FUNDS | 2012
Anthony B. Webster, a lawyer who has worked at Maples and Calder’s Hong Kong office since 2001, and who has 11 years’ experience of dealing with the Cayman Islands, disagrees. He believes that TIEAs are valuable, as demonstrated by the reaction of governments and financial regulators.
“Cayman’s first TIEA was signed with the US in 2001 and
conforms to the model developed by the OECD Global Forum on Taxation,” he said.
“It has been endorsed by the G8 and G20 countries as reflecting
‘high standards of transparency and exchange of information for tax purposes’.”
Webster also points to comments made by the then-US Treasury
secretary, Paul O’Neill, who commended the Cayman Islands for “emphatically demonstrating that those who seek to engage in tax evasion or other financial crimes are not welcome within its jurisdiction”.
“The following year, Treasury officials were reporting to the Senate
that the agreement would be ‘an invaluable source of information to the IRS’,” said Webster.
“In light of such endorsements, it is simply not accurate to say these agreements are of little value.”
Pascal Saint-Amans, secretary of the Global Forum for Transparency
and the Exchange of Information, and director of the Centre for Tax Policy and Administration at the OECD, agrees. He believes that, when compared to the situation back at the dawn of the financial crisis when no countries had agreed to implement TIEAs, the current situation marks a huge step forward.
“Back in 2008 and early 2009, most of the financial centres around
the world had not yet committed to implementing these standards,” he says. “At the time, these standards were very controversial, because it meant a big change in ending bank and trust, which are covered under financial vehicles, secrecy.”
In terms of the OECD’s view of Cayman itself, in 2010 the organisation’s Peer Review Global Forum on Transparency and Exchange of Information identified that Cayman has “a well-developed legal and regulatory framework” and that “in respect of access to information, the competent authority of the Cayman Islands is invested with broad powers to gather relevant information”.
Then, last year, a report by the OECD found that changes introduced by the Cayman Islands demonstrated “its commitment to implementing the international standards for transparency and exchange of information”.
“Cayman is very supportive of the tax transparency agenda,” says Saint-Amans. “They have been reviewed by the global forum,
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80