Recently Cayman Islands start to lose more and more banks to other jurisdictions. Before Cayman Islands were famous for their offshore bank licenses, it was the most famous island in the Caribbean to attract huge companies and investors over the globe.
How did it work?
Being a tax heaven, Cayman attracted a large corporation that established an offshore subsidiary in the Cayman Islands and directed all sales through the subsidiary rather than through the parent company that was based in the United States. All profit was subjected to the tax laws of the Cayman Islands rather than laws of the United States.
Apparently, large corporations and billionaires around the world need to seek other alternatives, as it is no longer a good option for them. The Cayman Islands lost more than 70 banks in the last three years.
After financial crisis in 2008 there was new jurisdiction that implied more strict transparency laws that became a difficulity. Banks were required to disclose all of their information to the public authorities.
Another reason to leave Cayman Island and seek for another alternative is a new law about obtaining and maintaining bank-correspondent without which it is impossible to make any operations. Corresponding banks were forced to step up their due diligence measures on their clients and this became a main difficulty.
Because of some drug cartels being caught opening bank accounts in the country, the United States made it clear to Cayman Islands they need to enforce very strict transparency laws.
Increasing cost became one more reason for banks to terminate their businesses in the Cayman Island. The costs of stringent compliance have forced banks to hire 10 or 20 additional employees and the cost of compliance became very high as well.
Fidelity Bank announced its money service provider clients that it was going to leave the business of processing payments. Despite the fact the Cayman banks have not been completely cut off from the international payment system, problems with sending money have already resulted in a greater consolidation of services.
After all on February, 2020 The European Union has added the Cayman Islands to its tax havens blacklist saying that it does not have "appropriate measures" in place to prevent tax abuse, allowing firms to register there despite having minimal presence in the territory. A lobby group for the Cayman financial services industry said it is hopeful a reversal will happen in the "not too distant future". Additionally the Cayman Islands had also been asked to adapt its legislation on investment funds to bring the rules closer to EU standards.
What is going to happen to Cayman Islands in the nearest future? Feel free to share it in the comments below! If you have your question, please write it below, I would be glad to answer your questions or to introduce your project to my team at Astorts Group to be evaluated.
Alessandro Rocco Pietrocola is an entrepreneur and investor based in London and operating mainly in Europe, Asia and Oceania with main focus on UK, Baltic Countries, Russia, China, Hong Kong, Malaysia, Singapore, Middle East and New Zealand as area of interest! At the moment is the CEO of Astorts Group. He is an UK FCA (Financial Conduct Authority) Approved Person and is has great experience as director of regulated companies. He uses to dedicate part of his life to inspire others and help them achieve the most out of their life. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.