along with 58 other countries. Cayman was among the first group of countries to be assessed and the report was published in September 2010.
“This report is pretty positive, showing that Cayman’s legal framework makes information about owners available, that accounting regulations are not too bad, and that the competent authority has real power to access the information that it needs. And, of course, they are also developing a network of TIEAs.
“So in terms of legal and regulatory frameworks, the Cayman
Islands rank quite highly. We are also carrying out another assessment, Phase Two, which will look at the practical implementation of standards and the quality of information exchanged. This will be the real test.
“Cayman has also opted to be part of the automatic tax information
exchange, which is part of the European Savings Directive. This all means that in terms of transparency, the Cayman Islands are actually pretty good.”
Webster also makes the point that it is Cayman’s good record on transparency—rather than secrecy—that makes it so attractive to businesses.
“Secrecy has never been the key motivator for reputable business coming to the Cayman Islands,” he said. “The presence—not the absence—of a robust and healthy compliance culture, with transparent laws and regulations and reliable legal and business infrastructure, are what have built the Cayman Islands’ success as an institutionally-focused, specialised financial centre.”
18 CAYMAN FUNDS | 2012
Webster points out that Cayman has been proactively and consistently engaging with other countries for many years now.
“The US government and the Cayman Islands entered into a mutual
legal assistance treaty (MLAT) as long ago as 1986, which entered into force under US law in 1990,” he said. “The MLAT enables activities such as searches and seizures, immobilisation of assets, forfeiture and restitution, transfer of accused persons, and general criminal information exchange, including in relation to specified tax matters.
“Extradition from the Cayman Islands to the US is enabled under the
UK’s United States of America Extradition Order of 1976 (as amended in 1986). Since the MLAT went into effect and through the end of 2007, the US Department of Justice told the US Government Accountability Office that the US government has made more than 200 requests for information regarding criminal cases to the Cayman Islands.”
In the future, Webster believes that the authorities in Cayman will be keen to keep up their good work.
“I think these sorts of hard facts demonstrate the degree of commitment to transparency and the culture of cooperation by Cayman institutions and law enforcement bodies,” he says.
“In 2003, the IMF conducted an on-site assessment of the regulatory and anti-money laundering regime in the Cayman Islands, and in its 2005 report concluded that the Cayman Islands had ‘an increasingly effective system of regulation’ and that ‘the overall compliance culture within Cayman is very strong, including the compliance culture relating to anti-money laundering obligations’. This position was reinforced by the IMF in their follow-up review and report issued in 2009.”
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