Page 1

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

2017 | ISSUE 3


Fore

WOR D

The Cayman Islands has continued to push forward successfully as one of the world’s leading international financial services centres,while carefully navigating numerous regulatory developments and international challenges. Cayman Finance has had a very successful year on the international front with our CEO having represented the organisation at several key global events, most notably meetings in London around the 2016 Anti-Corruption Summit and JMC meetings.

financing of terrorism. At the industry level we have introduced a number of key innovations most notably the new LLC legislation and we are also looking forward to an enhanced regulatory framework for our legal sector which we anticipate will be finalised in 2017.

One of the key tenets of the success of this jurisdiction has been the partnership between the private and public sector. To that end I am pleased to confirm that during the year, Cayman Finance signed a new MOU with the Cayman Islands Government to further strengthen this During that trip, we worked hard long standing partnership. to educate important stakeholders including the onshore media, on the In the midst of one of the longest valuable role of the Cayman Islands in economic recoveries ever witnessed along the global financial system as well as with many global developments, the our endorsement, and strict adherence Cayman Islands financial services sector to, various global regulatory standards. remains a key choice for clients. Given the many and sometimes volatile global Brexit, AIFMD and correspondent changes, that is certainly something to banking challenges remain at the forefront be proud of. of our immediate international efforts to ensure that this jurisdiction continues Visit caymanfinance.ky to learn more to strike the right balance between about Cayman Finance initiatives and regulatory and commercial needs. our upcoming events. In 2017 the Cayman Islands will undergo its next round of mutual evaluation by the CFATF, a process which seeks to test our on-going implementation of various regulatory enhancements over the years. Through this evaluation the jurisdiction will be able to demonstrate that we have taken the necessary actions as part of our commitment to global standards on anti money laundering and combating the

ABOUT THE AUTHOR Ian Wight is the Chairman of Cayman Finance.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

1


IN GOOD COMPANY When you have a business address at Camana Bay, you join a global community of professional services firms with access to Class-A office environments, inviting outdoor spaces and a diverse array of amenities and experiences. Visit our website to learn more about why these best-in-class companies call Camana Bay home.

IRONSHORE PHARMACEUTICALS & DEVELOPMENT INC.

For leasing availability in the Caribbean’s only true mixed-use, master-planned community: BESSANIO DILBERT | 345.640.4000 | Leasing@drcl.ky

CAMANABAY.COM


TA B L E of CONTENTS 14INDUSTRY OVERVIEW

01 Foreword Cayman Finance Chairman, Ian Wight

08 Preface Minister of Financial Services, Commerce & Environment, Hon. Wayne Panton

10 Cayman Finance: Voice of the Financial Services Industry 13 Cayman Islands Financial Services 14 Overview of the Cayman Financial Services Industry

26LIMITED LIABILITIES COMPANIES LAW

Cayman Finance

18 Economic Overview Minister of Finance & Economic Development, Hon. Marco Archer

22 Cayman Islands Economy: A Snapshot 24 Policy Update Minister of Financial Services, Commerce & Environment, Hon. Wayne Panton

26 Cayman Islands Limited Liability Companies Law Richard Fear

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

3


34REGULATORY

UPDATE: CIMA

30 The Reform of Cayman’s Intellectual Property Laws 34 Regulatory Update: Cayman Islands Monetary Authority Cindy Scotland

38 Cayman Investment Funds in Europe Henry Smith

42 Perceptions, Reputations and Mainstream International Financial Centres Paul Byles

38CAYMAN INVESTMENT FUNDS IN EU

48 Cayman’s New Anti-Corruption Commission Lindsey Turnbull

52 From Strength to Strength: View from the Financial Services Division

54 United Kingdom Supports Cayman’s Enhanced Beneficial Ownership Platform David Bentley

56 “G20 Plus” Global Financial Agreements

58SHARING FINANCIAL

INFORMATION

58 Sharing Financial Information: The Cayman Story Worth Telling Dorothy Scott

62 The Cayman Islands: Building on Success At Home and Internationally Barbara Padega

4

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


74THE EVOLVING

CYBER THREAT LANDSCAPE

66 Brexit & the Overseas Territories Fiona Chandler

70 Cayman Confidential : Exploration of Evolving Regimes Simon Dickson & Rhiannon Williams

74 The Evolving Cyber Threat Landscape

Isabel Gumeyi, Assaad Sakha & Robert Stanier

78 CIIPA: The Changing Face of Accountancy Sheree Ebanks

92NEW ENVIRONMENT FOR HEDGE FUNDS

82 At a Glance: Trusts 85 Single Family Offices in the Cayman Islands Mark VanDevelde

88 At a Glance: Banking 90 At a Glance: Investment Funds 92 Growing Up: A New Environment for Hedge Funds

95CAYMAN FUNDS

Rupesh Daya

95 Cayman Funds: Transparent, Sophisticated and Tax Neutral Jack Inglis

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

5


98A DOMICILE OF CHOICE

98 A Domicile of Choice for Private Equity Fund Baron Jacob & Jeffrey Short

102 At a Glance: Insurance 104 CIMA Meets Regulatory Challenge in Insurance 108 Cayman Captive Forum: The Best Show in Town Conor Jennings

110 A Year in Review: Cayman Finance

108CAYMAN CAPTIVE FORUM

116 Cayman Finance Board Members 120 Cayman Finance Member Firms 124 Cayman Islands Financial Services Industry Partners 126 Useful Resources 129 List of Advertisers

6

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


Credits

Produced by Tower on behalf of Cayman Finance and the Ministry of Financial Services, Commerce and Environment. Cayman Finance Fidelity Financial Centre Unit 20, 1 Gecko Link West Bay Road PO Box 11048 Grand Cayman, KY1-1007 Cayman Islands 1 (345) 623-6725 caymanfinance.ky enquiries@caymanfinance.ky

CONTRI BUTI NG WRITERS Ministry of Financial Services,

Hon. Marco Archer

Baron Jacob

Robert Stanier

David Bentley

Conor Jennings

Lindsey Turnbull

Paul Byles

Barbara Padega

Mark VanDevelde

Fiona Chandler

Hon. Wayne Panton

Ian Wight

Rupesh Daya

Assaad Sakha

Rhiannon Williams

Grand Cayman, KY1-9000

Simon Dickson

Cindy Scotland

Cayman Islands

Sheree Ebanks

Dorothy Scott

Richard Fear

Jude Scott

Isabel Gumeyi

Jeffrey Short

Jack Inglis

Henry Smith

Commerce and Environment Cayman Islands Government Administration Building Suite 126, 133 Elgin Avenue

1 (345) 945-5819 caymanfinance.gov.ky financepr@gov.ky

Tower Fidelity Financial Centre

ACKNOWLEDGM ENTS

Unit 20, 1 Gecko Link West Bay Road

Cayman Finance would like to thank the following organisations for their

PO Box 11048

contribution to this publication:

Grand Cayman, KY1-1007 Cayman Islands 1 (345) 623 6700 tower.com.ky

Alternative Investment Management Association (AIMA) Cayman Islands Bankers’ Association (CIBA) Insurance Managers Association of Cayman (IMAC) Society of Trust and Estate Practitioners (STEP)

info@tower.com.ky

All rights reserved. No part of this publication may be reproduced in any form of advertising without permission in writing from Cayman Finance. No responsibility for loss occasioned to any person acting or refraining from acting as a result of material in this publication can be accepted. The views and opinions of the writers of articles in this supplement are those of the authors and do not necessarily represent the views and opinions of any organisation that they are employed by, or otherwise associated with.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

7


PREFACE

From the Minister of Financial Services, Commerce & Environment, Hon. Wayne Panton

I

n today’s world of international finance, being slow to market is not an option. Ignoring global regulatory developments - not an option. Neither is believing that past accomplishments guarantee future success.

This is why, although we carefully form our particular Ministerial views, we are absolutely willing to hear the views of others. Moreover, we certainly are willing to amend our position when warranted.

If any jurisdiction is taking these truths to heart, it’s the Cayman Islands. Decades of in-depth discussions, analysis, and collegiality with persons who either do business with, compete, decry, support, regulate, or guide the path of global developments have broadened our perspectives and in so doing, helped Cayman to succeed.

Our approach is based on three key principles: integrity, commitment and vision. This Ministry recognises the role of our financial services industry for our local economy; and we recognise the good that it creates around the world.

Since May 2013, when this administration took office and I was given the responsibility of Minister for Financial Services, the Cayman Islands Government has increased our engagement with stakeholder groups both globally and locally. Rather than shying away from difficult conversations, whether at the UK’s Anti-Corruption Summit in May; the European Parliament’s TAXE2 Committee Hearing in April; local industry regarding funding levels; or speaking with NGOs and media, my ministry recognises the value of respectful, open-minded dialogue.

8

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Nearly five decades ago, when our country’s elected representatives passed the first piece of legislation that became the catalyst to our industry, there was not necessarily the assurance that our intention to improve our local economy would work. But it has and to our pride, it also has benefited other countries. It has provided pensions in California; scholarship endowments in Massachusetts; and jobs in the UK. It has helped to fund infrastructure projects in Asia, Africa and Latin America; and in so doing, it has generated income. To the question, ‘Why Cayman?’, this is the answer.


And this is why my ministry and this government have made further commitments to our industry. During our administration we have increased funding for my ministry and our industry regulator, thereby giving them additional resources to develop policies and legislation that are market effective and also adherent to globally practiced regulatory standards. We also increased funding to industry, for joint marketing purposes.

remains our commitment for the future. As a leading international financial centre, we are thankful for the fact that, although the world of international finance moves rapidly, our success has been the result of prudent Government action; the compliance and professionalism of our experienced industry; and the steady hand of the Cayman Islands Monetary Authority as our financial services regulator.

Collaboratively, then, we in Cayman’s financial services have a shared, multifaceted objective. We want to ensure financial stability for our country and for our people – which every country aspires to do. We want to do so in a manner that supports good global regulation – a position that is evidenced by our long history of participating in international initiatives. Furthermore, we want to continue developing marketable products and services.

We hope that this publication will demonstrate why the Cayman Islands continue to be recognised as a leading premier financial hub and the clear choice for clients around the world.

We haven’t achieved these goals by accident. Because Cayman is dedicated to maintaining a successful financial services industry for people in our Islands and beyond our borders, we continue to enhance our regime in line with globally recognised standards. Importantly, this

Hon. Wayne Panton

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

9


CAYMAN FINANCE Voice of the Financial Services Industry

O

riginally known as the Cayman Islands Financial Services Association, Cayman Finance was established in 2003, with the vision of a broader organisation representing the country’s financial services industry. The Cayman Islands is a premier global financial hub, efficiently connecting law-abiding users and providers of investment capital and financing around the world. Cayman Finance plays a vital role within our financial services industry, charged with protecting and upholding the reputation of the industry, both at home and overseas. As well as contributing to the debate about the role of International Financial Centres, Cayman Finance corrects

10

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

misinformed perceptions that fail to appreciate how IFCs operate and contribute to the global economy.The Cayman Islands is a strong partner in combating global financial crime and possesses a highly respected legal framework and a robust legal system which underpins the laws. Through cooperation and engagement with domestic and international political leaders, regulators, organisations and media, Cayman Finance plays a pivotal role in the defence of our jurisdiction by promoting the integrity and transparency of Cayman’s financial services through legislative and regulatory enactment and encouraging the sustainable growth of the industry through innovation, excellence and balance.


Cayman Finance is funded primarily through the membership of firms within the Cayman Islands financial services sector and currently represents over 57% of the professional accountants and 56% of the lawyers in Cayman. It also receives support from the Cayman Islands Government as part of a working partnership with the Ministry of Financial Services, based on the 2013 Memorandum of Understanding (MOU), indicating the desire for a more unified approach to promote and safeguard our industry in the international arena. With input from all major financial associations in Cayman and consultations with the Government, the financial industry

speaks with a single cohesive voice ensuring the jurisdiction remains at the forefront of international business. Jude Scott has been at the helm as Cayman Finance’s CEO since December 2014. Mr Scott has served the financial services industry in Cayman for over 25 years, spending much of his career as an Audit Partner at Ernst & Young, where he specialised in auditing investment funds, banks and insurance companies. After retiring from the firm in 2008, he took the role of Global Chief Executive Officer of Maples and Calder, playing an active part in the strategic growth and development of the firm.

Clockwise from Top: Cayman Finance hosts annual Members Briefing meeting to update members and industry partners of the year’s activities, Minister of Financial Services, Wayne Panton and Cayman Finance CEO, Jude Scott at the signing of new Memorandum of Understanding between Cayman Finance and the Cayman Islands Government, Cayman Finance CEO, Jude Scott; Minister of Financial Services, Wayne Panton and Her Excellency The Governor, Helen Kilpatrick at the Cayman Finance Members Briefing. Right: Premier of the Cayman Islands, Alden McLaughlin; Minister of Financial Services, Wayne Panton; Cayman Finance CEO, Jude Scott and Cayman Finance Chairman, Ian Wight at the Cayman Finance Members Briefing.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

11


#BetterQuestions ey.com/betterworkingworld

The better the question. The better the answer. The better the world works.

Š 2016 EYGM Limited. All Rights Reserved. ED 0517.

Will digital help us do less or be more?


CAYMAN ISLANDS FINANCIAL SERVICES

Investment Funds & Asset Management

Capital Markets

Reinsurance

Trusts

CIM A

nce ina F an m y a

al Services, Pub , Leg s e lic vic r Ac Se

g tin un co

Fid uc ia ry

ry of Financial Serv nist i ice M s

C

C

lients are at the centre of the Cayman Islands financial services industry. They are at the core of everything we do, and this approach has been central to our success as a leading international financial centre. Our industry is led by first rate service providers within our investment funds and asset management, banking, insurance, reinsurance, capital markets and trust sectors and world class fiduciary, legal and accounting service providers across the industry. The combined efforts of Cayman Finance, the government and the Cayman Islands Monetary Authority ensure that the financial products and services are consistently delivered to meet or exceed our international clients’ expectations through innovation, excellence and balance.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

13


OVERVIEW

Of the Cayman Financial Services Industry

T

he Cayman Islands has long been regarded as the world’s premier global financial hub through client-centric market leadership in prominent financial sectors, and long-standing relationships with sophisticated international clients.

the global financial economy, the Cayman Islands constantly looks to evolve,anticipate and meet the ever changing needs of its global clients. Integral to the international financial economy, Cayman provides significant benefits to countries around the world and to the smooth operation of global capital markets. In particular, Cayman benefits onshore jurisdictions by facilitating more competitive international trade and enabling effective inward investment to help grow their economies.

The Cayman Islands financial services industry plays an important role in the global financial market by efficiently connecting law abiding users and providers of investment capital and financing around the world - benefitting developed and developing countries. The Cayman Islands provides an efficient and effective, neutral platform to allow In the face of constant change and pressure international investment into economies on the global regulatory landscape, the that need that investment, while at Cayman Islands financial services industry the same time giving pension funds has continued to enhance its reputation as and other international institutional a leading international financial centre. The investors the opportunity to invest in a jurisdiction’s success has been cemented diversified portfolio of securities. This by its ability to strike the right balance inward investment from Cayman helps between effective oversight and minimising stimulate economic activity, create much unnecessary impediments to legitimate needed jobs and generate taxable revenue business. Recognising its importance in in those countries.

14

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


AWARD WINNING JURISDICTION In 2015 Cayman’s financial services industry was the recipient of a number of prestigious international awards. The Banker Magazine ranked the Cayman Islands, Top Specialized Financial Centre, for the eighth consecutive year, in 2016. We were voted Best Hedge Fund Services Jurisdiction in the 2015 Hedgeweek Global Awards, and at the 2015 US Captive Services Awards, the Cayman Islands was awarded the top prize in the 2015 Offshore Captive Domicile category. These prestigious industry awards reflect the recognition from our clients, peers and the industry, of our high quality and experienced service providers, innovative capabilities and legislative and regulatory balance. OUR INDUSTRY The Cayman Islands is consistently recognised for its client centric focus and for delivering excellence in service. Clients are at the centre of the Cayman Islands financial services industry. They are at the core of everything we do, and this approach has been central to our success

as a leading international financial centre. Our industry is led by first rate service providers within our investment funds and asset management, banking, insurance, capital markets, and trust sectors and world class fiduciary, legal and accounting service providers across the industry.The combined efforts of Industry represented by Cayman Finance, Government and the Cayman Islands Monetary Authority ensure that the financial products and services are consistently delivered to meet or exceed our international clients’ expectations through excellence, innovation and balance. WHY CAYMAN? There are many factors that determine Cayman’s world class reputation as a leading international financial centre, among these our strengths include: The quality and experience of our professional service providers One of the most influential factors in the Cayman Islands success is the presence of service providers that are among the best in the world in the areas of legal, accounting, advisory, management, administration and fiduciary services.

Our appropriate legislative and regulatory framework Striking the right balance in regulation remains one of our greatest advantages as a jurisdiction. We have a reputation for being able to respond quickly with legislation to meet client needs. We have a demonstrably strong track record for thinking globally and acting locally in response to international financial services initiatives. The country’s financial services industry is very well regulated and the Cayman Islands subscribes to various international regulatory standards. Indeed, several independent reviews of the country’s financial services industry by the CFATF, IMF and OECD Global Forum on Taxation demonstrate that it has a level of regulation that meets or exceeds that of most of the major OECD economies. Our success in the financial services arena would not have been possible without strict adherence to global standards in the areas of financial regulation and cross border cooperation. The Cayman Islands Monetary Authority (CIMA) is represented in various global bodies such

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

15


as the Group of International Financial Centre Supervisors (GIFCS), Caribbean Group of Banking Supervisors (CGBS); International Association of Insurance Supervisors (IAIS); and International Organisation of Securities Commissions (IOSCO); among others. Leading the way in tax transparency and cross border cooperation The Cayman Islands is a strong partner in combatting global financial crime. Leading the way for tax transparency and information exchange, the Cayman Islands has consistently maintained its practices to meet robust, balanced and globally implemented standards for regulation and cross border cooperation. The Cayman Islands government, its regulator, the Cayman Islands Monetary Authority and private industry, have worked continuously with overseas governments and international authorities to ensure Cayman is trusted as a well regulated, cooperative and transparent jurisdiction.

The Cayman Islands cooperates with many cross border initiatives to assist in the fight against tax evasion. These include being a signatory to the European Savings Directive, US and UK FATCA and the OECD’s Common Reporting Standards.

Our innovative approach to developing products and services that benefit the global market We have a strong innovative approach that sees client feedback turned swiftly into legislative changes and new products, such as the recent Limited Liability Companies legislation that The commitment of Cayman will create a multitude of options at Islands government and the the fund level for holding investments, Cayman Islands Monetary Authority among other uses. (CIMA) As an industry, the relationship between Neutral Platform Cayman Finance, the Cayman Islands The Cayman Islands enables parties from government and CIMA, the country’s around the world who are domiciled in financial services regulator, has been a countries that may have differing laws, hallmark of the jurisdiction’s success regulations, tax structures and customs as it has allowed us to respond to benefit from doing business with each swiftly to changes in the marketplace. other using Cayman as an efficient and Working together, Cayman Finance, effective global financial hub. the Cayman Islands government and CIMA provide insight into Cayman’s There are no direct taxes (income, current endeavors, as well as into the property or corporate) in the Cayman future services that will increase our Islands. This has been the case for the commercial appeal and our reputation country’s entire modern history. The as a well regulated jurisdiction. absence of any direct taxes provides a tax neutral domicile, which is an added benefit to many clients. Clients in turn are responsible for complying with their tax regimes in their home country in accordance with the respective rules.

Stability The Cayman Islands is a British overseas territory that has maintained a very stable economic and political climate throughout its history. The country has its own democratically elected Parliament, which has consistently maintained responsibility for domestic affairs including fiscal matters. Cayman also operates its own judicial system, including a separate division within the Grand Court to deal with commercial disputes, which is based on English common law principles. The Cayman Islands Government prudently manages its affairs and operates with a budget surplus.

16

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


INDUSTRY OVERVIEW The Cayman Islands is the leading jurisdiction for international hedge funds, the second largest domicile in the world for captives, the number one domicile for healthcare captives and a leading jurisdiction for banking, trusts, capital markets and fiduciary services. Funds The Cayman Islands is home to over 11,000 regulated investment funds, many thousands of private equity funds, with the world’s top managers using Cayman Islands vehicles in their structures. As the leading domicile for hedge funds, statistics show Managers in the United States manage approximately 74% of net assets from Cayman domiciled regulated funds.Cayman provides a cost effective, neutral platform to allow international investment to be made into economies that need that investment, while at the same time giving pension funds and other international institutional investors an opportunity to invest in a diversified portfolio of securities. This inward investment from Cayman will ultimately help stimulate economic activity, create much needed jobs and generate taxable revenue in those countries.

known for their responsive, inclusive and collaborative approach to developing and supporting new client driven products, including captives, ILS and Hedge Fund and PE backed re/insurance companies.

requirements. Our clients continue to demand a jurisdiction that will operate efficiently to meet their needs, not only in respect to traditional operating companies, financing needs, ownership continuity and private wealth structures Cayman Islands registered but also a growing focus on philanthropy companies and charitable efforts, as well as research At the end of the second quarter of and development. 2016, the number of active companies on the Cayman Islands company Positioned for growth register exceeded 100,000 for the first Overall, Cayman’s financial services time in its history. 101,430 companies industry is strong and firmly were listed as active, 3 percent more positioned for growth. With the than a year earlier and 2.6 percent more industry’s representative body, than at the end of 2015. Cayman Finance, working closely with the Government, the Regulator While other jurisdictions may have been and other key stakeholders, the challenged by situations such as the jurisdiction will continue to thrive Panama Papers disclosure, the strength commercially while simultaneously of our company register, along with the maintaining its leadership role in overall growth we’re seeing across the global regulatory standards. industry, demonstrates the confidence our clients have in the Cayman Islands. International banking Cayman has a well-established, robust, banking regime supported by world class anti-money laundering regulation and appropriate and effective cross border cooperation. ABOUT THE AUTHOR

Insurance and reinsurance As the world’s second largest captive insurance company domicile and the leading jurisdiction for healthcare captives, Cayman is also a leader in the Insurance Linked Securities space, meshing expertise in securitisation, insurance and capital markets to create the most innovative structures, addressing the most complex risk scenarios. The Cayman Islands is also developing into a premier choice for domiciling non-traditional reinsurance companies. Our insurance service providers are

Capital markets We are a preferred jurisdiction for issuers and borrowers in the capital markets as a result of our exceptional professional infrastructure, creditor friendly insolvency regime, and a robust legal system that upholds the rule of law and provides certainty. Trust and fiduciary services On the trusts side we recognize the importance of continued reinvestment into new products, growth and innovations in order to continue to meet the needs of global clients and increasing global regulatory

Jude Scott CEO, Cayman Finance Jude is a former Partner of Ernst & Young and former Global CEO of Maples and Calder. He retired as an Audit Partner in 2008 after spending over 23 years with Ernst & Young where he specialised in the audits of investment funds, banks and insurance companies. As the Global Chief Executive Officer of Maples and Calder, he took an active role in the strategic growth and development of the firm. Jude is well respected in the local community and internationally, having served on various Cayman Islands Government and private sector committees, including the Cayman Islands Society of Professional Accountants, the Cayman Islands Financial Services Council, the Education Council, the Insolvency Rules Committee and the Stock Exchange.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

17


ECONOMIC OVERVIEW From the Minister of Financial and Economic Development, Hon. Marco Archer SUSTAINED RECOVERY The Cayman economy has been on a steady upward trajectory in recent years: in 2011-2015, GDP growth averaged 1.7 percent, slightly higher than the potential GDP growth of 1.6 percent. The past two years have seen faster growth of 2.4 percent and 2.0 percent for 2014 and 2015 respectively. Growth in the first quarter of 2016 was estimated at 2.4 percent, demonstrating the durability of the economic upturn. The private sector has led the growth in several industries. Unemployment was reduced to 4.2 percent in 2015, and settled to its natural rate of 3.9 percent in April 2016. The greater-thanpotential growth took place without inflationary pressure on domestic prices, mainly for two reasons: the

global oil price reduction which pushed down fuel-related costs for transport and the production of electricity, and a slowdown in the expansion of government spending which tempered inflation-inducing growth in domestic demand. The latter was driven by fiscal policy committed to curtailing government debt without further introducing new tax measures. Moving forward, the current macroeconomic fundamentals are positioning the local economy for continued expansion in the medium term against the backdrop of stable growth in the global economy. PRIVATE SECTOR-LED GROWTH In 2015, economic expansion was seen in all service sectors, led by real estate, renting and business activities (mainly legal and accounting services); other

Figure 1: Cayman's Macroeconomic Fundamentals 3

2.4

2

1.2

1 0 -1

1.3

1.5

3

2.4

2.0

1 0

2010 2011 2012 2013 2014 2015 2016

-1

Q1

-2 -3

7 6

6.2

2.2

2

1.3

1.2

1.3 0.3 2010

2011

2012

2013

2014

-1.5

-2 -2.7

6.3

6.2

6.3 24.0

5

4.6

-2.3

-3

GDP Growth (%)

Inflation Rate (%)

24.3

22.4

21.1

4.2

4

2016 S1

2015

19.3

18.5

3.9

3 2 1 2010

2011

2012

2013

2014

2015

Unemployment Rate (%)

18

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

2016 S1

2010

2011

2012

2013

2014

2015

Government Debt to GDP Ratio (%)


services (mainly employment activities of households); utilities; and financing and insurance services. The only exception was hotels and restaurants, which was negatively affected by the slowdown in the growth of stay-over visitors, following years of steady growth averaging 7.1 percent between 2010 and 2014. In the first quarter of 2016, GDP growth was also broad-based led by transport, storage and communication, construction and wholesale and retail trade. The financing and insurance services sector which accounted for approximately 41.0 percent of GDP was estimated to have expanded by 1.3 percent in 2015. Insurance services, included under this rubric, grew by 1.1 percent as growth in gross premiums outweighed net claims. Growth in onshore financing services in 2015 was due mainly to higher interest income in the local banking sector as the weighted average interest spread widened and domestic credit grew. In the first quarter of 2016, the sector sustained its 1.3 percent growth, as domestic credit to businesses and households expanded by 0.9 percent and 1.2 percent respectively. In 2015, the real estate, renting and business activities sector was estimated to have increased by 2.9 percent with business services (mainly legal and accounting) dominating the growth. Supporting the growth was the registration of new companies which rose by 7.8 percent to 11,864, and partnerships which increased by 16.5 percent to close the year at 3,370. The first quarter of 2016 saw the sector boosting its growth to 3.1 percent, driven by higher new partnership and new company registrations. The market value of goods and services produced in 2015 by the construction sector suggest that it expanded anew by 5.2 percent. A key indicator - the value of imported

Figure 2: Selected Industries' Growth Rates (%)

3 2 1 0 -1

0.6 2010

2011

1.0

1.5

0.3

2012

2013

1.3

2014

2015

-2 -3

-3.4

A: Financing & Insurance Services

3.4 3

2.1

2

1.0

1 0 -1

-0.1 2010

2.9 1.8

2011

2012

2013

2014

2015

-2 -3

B: Real Estate, Renting & Business Activities

10 5

1.1

0 (5) 2010

2011

(2.9)

2012

2.5 2013

2.9 2014

5.2 2015

(10) (15) (20) (25)

(23)

C: Construction

building materials including imported cement - was higher during the period. Construction activity in the first quarter of 2016 accelerated, registering a growth rate of 6.3 percent as indicated by imports of building materials.

EXPANSION OF

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

19


PRODUCTIVE CAPACITY On the demand side, growth during the period in review was driven by capital investment. The value of capital goods imports have steadily increased over the past five years, with its strongest annual growth recorded in 2015 at 17.1 percent. The first semester of 2016 saw a surge in capital goods importation, with growth of 51.5 percent reflecting two consecutive quarters of increase. Transport equipment and parts similarly recorded a strong pace of growth of 37.5 percent. Demand for investment in buildings and road infrastructure also boosted growth. These include the expansion of the Owen Roberts International Airport, the construction of the Kimpton Seafire hotel and the largescale road engineering work connecting the West Bay Road and the Esterley Tibbetts highway. LOCAL AND INTERNATIONAL DEMAND The notable improvements in production raised overall employment and reduced unemployment rates to 4.2 percent in 2015 and to 3.9 percent in the first semester of 2016. Consequently, consumption demand indicators continued to improve. The importation of food and beverages, and durable consumer goods were on the rise in 2015, with the latter further strengthening in the first half of 2016. Demand for electricity grew by 3.2 percent in 2015, and by 6.1 percent in the first semester of 2016. Water consumption also increased by 0.4 percent in 2015 and by 8.2 percent in the first half of 2016.

by 2.1 percent to $603.1 million or 23.1 percent of GDP as inflows of funds arising from higher visitor expenditure increased, albeit at a slower rate than in 2014. Estimated receipts from offshore financial and business services also increased during the period, supported by higher registration of new companies and partnerships. GENERAL PRICE DECLINE Domestic demand for consumption and investment was also boosted by the general fall in prices. Global inflation declined in 2015 as international crude oil prices and non-fuel prices receded. Consequently, the local headline inflation on average was -2.3 percent in 2015 and -1.8 percent in the first half of 2016. Housing and utilities comprise the largest group of goods and services influencing the headline inflation rate. Its price index dipped by 6.9 percent in 2015, and by 6.0 percent in the first semester of 2016. However, removing the impact of this group from the headline inflation shows that prices of other goods and services have also slowed as seen from Figure 3. The costpushed decline in CPI reduced the pressure to raise wages in the midst of rising employment which could have dented production growth. This price environment created an ideal opportunity for investment given the reduction in price uncertainty. The trend in inflation also tempered the

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

During the year in review, the government remained committed to the Framework for Fiscal Responsibility (FFR). The result is gratifying: for the third consecutive year, the central government recorded an overall fiscal surplus. In 2015, the surplus stood at $116.1 million, an improvement over the $93.2 million in 2014. The expansion directly resulted from an increase in revenue collection due to economic growth coupled with a reduction in expenditure (see Figures 4 to 6). Several tax rates were reduced: (a) imported diesel fuel used by CUC

4 3 2

0

4.0

2.9

2.7

0.3 2010

1.3 2011

1.8

2.2 1.3

1.2 2012

2.2

2013

2014

0.0 2015 -2.3

CPI

20

GOVERNMENT COMMITMENT From the beginning, the government’s fiscal policy has been “economic growth through fiscal prudence.” I put forward the sound reasoning that if the government would practice fiscal prudence, economic growth would follow due to investors’ and business entities’ having increased confidence in the Cayman Islands. Over the past three fiscal years, the government has worked to do just that, improving the state of public sector finances, restoring investor confidence, lowering the cost of doing business, lowering the cost of living in certain circumstances and bringing back national pride and optimism for our people.

Figure 3: Inflation Rates (%)

1

Notwithstanding the uptick in domestic demand for 2015, the current account deficit was estimated to have narrowed

rise in domestic nominal interest rates amidst a sustained increase in demand for domestic credit.

CPI Excluding Housing & Utilities


Figure 4: Central Goverment’s Revenue and Expenditure (CI$M)

Figure 5: Revenue-to-GDP (%) 25

672.6

24

24.0

24.0

2013

2014

24.4

23 588.6

664.3

597.4

635.2

Total Expenditure

590.5

615.6

564.6

623.4

545.9

573.5

517.7

Total Revenue

22 21

21.7

21.9

2011

2012

20.6

20 19 18 2010

2011

2012

2013

2014

2015

2010

Figure 6: Expenditure-to-GDP (%)

24 23

Figure 7: Central Government's Debt (CI$M)

24.7

25

700

23.9 22.8

600

592.7

613.4

586.2

559.9

534.0

2013

2014

500

22.3 21.5

22

2015

21.3

21

511.0

400 300 200

20

100

19 2010

2011

2012

2013

to generate electricity; (b) import duty for licensed traders; (c) import duty on building materials; (d) trade and business license fees for new licensees; and (e) continuation of current incentives for Cayman Brac and Little Cayman. These reductions supported greater economic activity that in turn contributed to the improvement in revenue generation (see Figures 4 to 7). The primary balance, a standard indicator of the government’s capacity to service debt obligations, improved from a surplus of $122.4 million or 4.4 percent of GDP in 2014 to a surplus of $144.1 million in 2015 or 5.2 percent of GDP following the reduction in interest payments and an improvement in the overall fiscal balance. By end 2015, the central government’s outstanding debt declined by 4.3 percent. These actions on the part of the government will create more economic opportunities for the private sector to thrive while more government resources are placed on social, environmental and infrastructural development.

2014

2015

0

2010

2011

LOOKING FORWARD The recent economic performance is setting the stage for growth in 2016 and 2017. With the recent surge in capital investment which is crucial in boosting productive capacity, economic output is projected to expand by at least 2.1 percent in 2016 and 2017. Most of the economic sectors are expected to contribute to growth. Domestic investment is foreseen to be sustained by on-going projects along with proposals in the pipeline. Although the Framework for Fiscal Responsibility constrains the central government’s spending ability, duty concessions have been provided to a few large-scale private sector development projects. The outlook for consumption demand is also cautiously optimistic, supported by employment growth and benign inflation. The government is committed to ending the year 2016 with a robust fiscal balance to further reduce the debt burden, and boost private sector confidence for further growth in 2017.

2012

2015

Hon. Marco Archer Minister Archer holds a BSc. in Economics and Finance from Barry University, an MBA from the University of Miami, an LLB (Honours) from the University of Liverpool and a Postgraduate Diploma in Legal Practice from The College of Law in England. Prior to becoming a Member of the Legislative Assembly and the Minister for Finance in 2013, he was an economic statistician and project manager with the Cayman Islands Government before becoming an attorney-atlaw with a leading offshore law firm. Mr. Archer was recently name Finance Minister of the Year 2016, Caribbean, by Global Markets. He is married with three children.

All graphs sourced from the Cayman Islands Government Economic and Statistics Office

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

21


Cayman Islands

Economy:

a snapshot

The Cayman Islands economy has continued to grow at a steady pace since its economic recovery began in 2011. Real GDP grew by 2% in 2015, which is a slight decline compared to the 2.4% growth in 2014. The government expects growth in the medium term to be driven by the construction, legal, accounting, finance and insurance services. 2.4

11

1.5

1.3

1.2

12

2.0

13

14

15

Real GDP Growth in the Cayman Islands* (2011-2015)

*Source: Cayman Islands Economics and Statistics Office

22

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Financial Services

50-60% of GDP KEY

INDUSTRIES The main economic sectors are financial services and tourism. Various economic impact studies puts the financial services sector at approximately 50 to 60% of GDP. Other sectors include construction, real estate and other business activities. Like many of the smaller islands in the Caribbean, the Cayman Islands economy is a service based economy. The natural resources of the Cayman Islands have not enabled it to pursue traditional industrial development. Historically the economy was relatively small until four decades ago when the country began to pursue tourism and financial services as a path to economic development.


Unemployment Rate

Inflation Imported Labour

-2.3%

50%

4.2%

4.2 2015

Goods and Prices

Labour and Employment

The vast majority of the country’s locally consumed goods are imported and most of this comes from the US as the primary trading partner. As a result of this and the nature of the country’s monetary system, inflation rates in the Cayman Islands tend to track closely with that of the US. Similar to many countries around the world in the recent global economic climate, the Cayman Islands has experienced a general drop in prices over the past year and has experienced deflation for the past four quarters.

The Cayman Islands economy is labour intensive. Due to its relatively small population and the impressive economic growth over the past four decades, the Cayman Islands relies heavily on imported labour to meet the skilled and unskilled human capital requirements for sustaining the economy. Imported labour comprises just over 50% of the entire labour force. This is likely to remain a key feature of the economy for the foreseeable future given the relatively small population. The unemployment rate in the country has declined significantly from 6.1% in 2013 to 4.2% in 2015, reflecting a steady improvement in economic conditions over the past few years.

2.2 1.3

2011

2012

2013

2014

2014

6.1

2013

6.2

2012

6.3

2011

Steady: Unemployment in the Cayman Islands* 2011– 2015

Taxes and Fiscal Stability

1.3

1.2

4.7

2015

-2.3 Inflation of the Cayman Islands* (2011 - 2015)

There are no direct personal income, corporate or property taxes in the Cayman Islands. The government relies on a system of indirect taxation focused primarily in the following areas: • Banks, trust, insurance, company and mutual funds fees • Land or property transfer fees • Work permits

Population

60,413

The country’s population is estimated at around 60,413 according to the last census. The country is very cosmopolitan and it is estimated that there are over 100 different nationalities represented in the Cayman Islands.

• Travel and cruise ship taxes • Tourist accommodations taxes • Business licences • Customs and import duties

Money Matters

57% Caymanian

43%

Non Caymanian

Diversity: Estimated Cayman Islands Population as at 2014*

The Cayman Islands uses the Cayman Islands dollar and the local currency is backed by US dollar denominated securities. This system is managed via a full currency board system and there is no equivalent of a central bank in the country.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

23


POLICY UPDATE

From the Minister of Financial Services, Commerce & Environment, Hon. Wayne Panton

S

ince 2013, the government has made real progress with our plans to enhance the Cayman Islands’ success.

We are understandably proud of this fact, and just as proud that we’ve accomplished these goals in partnership with industry and in particular, the members of Cayman Finance.

24

With key events on the horizon, including assessments by international bodies, my Ministry of Financial

Services remains extremely active because we are determined to continue not just getting things done, but getting things done well.

Indeed, during this administration my ministry has worked on nearly 50 pieces of primary and secondary financial services legislation, all of which have been passed by the Cayman Islands Legislative Assembly or approved in Cabinet. That’s pretty remarkable and efficient for a Ministry of our small size, and I think we’ve broken records in terms of both volume and significance.

To quickly touch on some of our key legislative achievements to date, Cayman’s Limited Liabilities Companies Law was launched in June and has received a great welcome from industry, with registrations exceeding expectations. The popular revamping of the Exempted Limited Partnerships Law and long-awaited legislation relating to the Cape Town Convention are also now in force.

And to put our work into broader context, within the next few months my ministry will have substantially completed all of the legislation on the list that our country’s publicprivate Financial Services Legislative Committee has been proposing for many years as essential to our jurisdiction’s continued success. No doubt we have been moving quickly, but we have no intention of slowing down.

And there’s more to come, because we are committed to doing what Cayman does very well: creating innovative, market-leading legislation, and engaging globally on regulatory matters. With this in mind the agenda for the October 2016 sitting of the Legislative Assembly was ambitious. Bills relating to the Auditors Oversight Authority; Companies Management; Trust Law; Monetary Authority; Non-

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

profit Organisations; and intellectual property rights, including trademarks, patents and design rights, were passed. Despite all this activity, my ministry is not slowing down. In fact for the first 2017 Legislative Assembly sitting, amendments relating to a central platform for beneficial ownership information, as well as foundations, should be heard. While all of these bills are important to further enhance our reputation, prepare for international assessments, or for market products and services, another key piece is the Legal Practitioners Bill (LPB), 2016. This bill has taken the better part of 15 years, if not more, to accomplish and I thank and congratulate both the Caymanian Bar Association as well as the Cayman Islands Law Society for their stellar efforts in bringing it closer to passage than ever before. The LPB would modernise legislation in order to regulate, on a worldwide basis and in line with international standards, practitioners of Cayman Islands law. In so doing it would protect and enhance the reputation of the Cayman Islands as a centre of excellence with respect to the provision of legal services. Once passed into law, it will position us well for the Caribbean Financial Action Task Force assessment in 2017, as legislation governing legal professionals is included in its scope. In addition to our legislative accomplishments, we’ve been more successful than ever with our global engagement initiatives because we have


been wisely and diplomatically bold in our positions and in our contributions to the international dialogue. Cayman has been saying for years that we are among the vanguard of international financial centres. Particularly given the way that this government has continued to enhance our regulatory framework, we have stood shoulder to shoulder and in some cases eye to eye, with influencers, detractors and rainmakers. In April 2016, I travelled to Brussels with two ministry colleagues to address the European Parliament about our tax regime, answering questions in a room of about 60 lawmakers. The following month the Hon. Premier and I, accompanied by colleagues from his office, my ministry and the Cabinet Office, were in London for the UK’s Anti-Corruption Summit. There the Premier made a short, to the point, twominute statement about substantive issues in global transparency that was potent enough to expand the dialogue beyond Overseas Territories, to include countries that had largely escaped broader public examination. His diplomatically delivered speech was supported by interviews given to UK media by government and Cayman Finance highlighting Cayman’s adoption of the highest standards of transparency, international cooperation and exchange of tax information. We were able to stand firm during the UK Summit precisely because Cayman has carefully and successfully navigated the sometimes churning waters on issues as nuanced as beneficial ownership. In fact, following last year’s Joint Ministerial Council, our discussions with the UK deepened and in April this year, we enhanced the exchange of

beneficial ownership information with the UK for law enforcement purposes, through the Exchange of Notes. The Exchange of Notes became the basis for the Hon. Premier’s announcement at the UK’s Summit of our own initiative of entering into similar agreements with other countries. Although we have had no requests, our good-faith and credible offer remains on the table. So in these past three years, we have taken care of business by getting things done. We’ve done it in accordance with good governance and through effective, respectful collaboration with industry. In fact, a key issue that industry raised with government shortly after it took office concerned funding for financial services. At the time I cautioned that government had a lot to do during the first three years, and that our expectation was therefore for slowly improving incremental changes. Yet Government has exceeded even our own expectations in getting our finances back under control and as a result, we have now exceeded my initial projections on our ability to improve support to our regulator, the Cayman Islands Monetary Authority (CIMA); and to industry. We increased funding for CIMA by more than $3 million in this current budget. Similarly we have significantly increased funding for Cayman Finance for stronger collaboration on the jurisdictional marketing plan. And outside of that, we signed on as the sole lead sponsor for a local industry conference that’s taking place in 2017.

a long way to help us to continue our responsiveness in local and international matters. I mentioned earlier that we were able to increase financial services funding because Cayman’s economy has steadily grown stronger. The metrics tell the story of significant improvements. Growth has accelerated to 2.8% so far this year, and is projected to end the year at 3% overall GDP growth. Expenses remain under control, and we have growing reserves for minimums required for operating expenditure. Importantly, unemployment continues its downward trajectory – as of press time, the rate had fallen to 5.6% for Caymanians and 3.9% overall. Furthermore, both the cost of living and the cost of doing business are continuing their downward trends from last year as well. These figures prove that government’s strategy for improving the Cayman Islands economy is working. Our fiscal position is healthy, and we are well positioned for business. As Minister, I am honoured to work alongside persons in my Ministry, CIMA, and industry who are fully committed to ensuring that Cayman continues to be compliant with global regulatory standards, while maintaining and growing our commercial success.

We’ve also increased financial services staffing in the ministry. This will go

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

25


Cayman Islands

LIMITED LIABILITY COMPANIES LAW T

he Cayman Islands Limited Liability Companies Law, 2016 came into force in July of this year (the “LLC Law”). The LLC Law provides for the registration of a new type of corporate vehicle in the Cayman Islands, namely the limited liability company (the “Cayman LLC”). Limited liability companies are widely used in the US and are a familiar feature in many corporate structures including investment funds, joint ventures and structured finance transactions. The introduction of the Cayman LLC is largely a response to requests from the US investment funds industry and major US law firms. The LLC Law has been drafted using the Delaware model as a guide and will thus be familiar to US legal advisers and their clients. In particular, the ability to have similar vehicles in onshore and offshore fund structures will better align the interests of investors regardless of how or where they enter the fund, enable broadly similar documentation to be used onshore and offshore and may well be administratively more efficient. Hybrid Vehicle: The Cayman LLC is a hybrid corporate vehicle combining many of the key characteristics of existing Cayman Islands companies and limited partnerships. Unlike a Cayman limited partnership, the Cayman LLC is a body corporate with separate legal personality. However, in common with limited partnerships, there is no concept of share capital and the interests of the members of a Cayman LLC are typically determined by reference to their capital contributions. Registration: Registration of a Cayman LLC is effected by filing with the Registrar a registration statement signed by or on behalf of any person forming the Cayman LLC and the payment of a prescribed fee. LLC Agreement: The LLC Law imposes a requirement that the members of a Cayman LLC enter into an agreement to regulate the business or affairs of the Cayman LLC (the “LLC Agreement”) and that such agreement must be governed by Cayman Islands law. One of the attractions of the Cayman LLC is that it provides for constitutional flexibility with the members able to agree most aspects of how the Cayman LLC and its members will operate. The Cayman LLC will be bound by the terms of the LLC Agreement whether or not it is signed by the Cayman LLC.

26

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


Membership: A Cayman LLC may be formed for any lawful business, purpose or activity, whether or not for profit, provided there is always at least one member. Other than the initial member, who is admitted upon the registration of the Cayman LLC, a person may be admitted as a member either by being issued with an LLC interest or upon a transfer of a Cayman LLC interest, through a plan of merger or consolidation or in connection with the continuation of a foreign entity as a Cayman LLC in the Cayman Islands. A person ceases to be a member of a Cayman LLC upon the happening of any event provided for in the LLC Agreement. Liability of a Member: The liability of a member to contribute to the assets of a Cayman LLC is limited to the amount that the member has undertaken to contribute, whether in the LLC Agreement or otherwise. Subject to the LLC Agreement, no member or manager of a Cayman LLC is personally liable for any debt, obligation or liability of the Cayman LLC solely by reason of being a member or acting as its manager. Subject to the LLC Agreement, a person may receive an LLC interest or be granted other rights in respect of the Cayman LLC without making any contribution or being obligated to make a contribution to the Cayman LLC. Transfer of LLC Interests: A Cayman LLC interest is capable of being transferred in whole or in part in accordance with the LLC Law and the provisions of the LLC Agreement. An assignee of a member’s LLC interest who is not admitted as a member has no right to participate in the management of the business or affairs of the Cayman LLC except as provided in the LLC Agreement or otherwise upon the approval of all of the members and in compliance with the terms of the LLC Agreement. Subject to the LLC Agreement, unless and until an assignee of a Cayman LLC interest becomes a member, the assignee has no liability as a member solely as a result of such assignment. Distributions: The profits and losses of a Cayman LLC and distributions of cash or in kind by a Cayman LLC are allocated or paid among the members in the manner provided in the LLC Agreement. Subject to the LLC Agreement, the profits and losses and distributions of a Cayman LLC are allocated on the basis of the agreed value of the contributions made by each member. A Cayman LLC may

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

27


not declare, make or pay a distribution or release a member from any obligation to the Cayman LLC if, at the time of such distribution or purported release, it is, or would as a result be, unable to pay its debts as they fall due in the ordinary course of business. A member who receives a distribution, or is purportedly released from an obligation in violation of this solvency test and who had actual knowledge of the violation at the relevant time, is liable to the Cayman LLC for the amount of such distribution or for the performance of the obligation purportedly released. Management: The LLC Law provides for the management of the Cayman LLC to be vested in its members acting by a majority in number unless the LLC Agreement provides for all or part of the management of the Cayman LLC to be vested in a manager or managers (one or more of whom may also be members, if permitted by the LLC Agreement). Unless the LLC Agreement provides otherwise, the members acting by a majority in number or a manager appointed in accordance with the LLC Agreement have the ability to bind the Cayman LLC. Duties Owed by Members and Managers: The rights and duties of the members and managers in a Cayman LLC are, as between themselves, determined by the LLC Agreement. Subject to the LLC Agreement, a manager does not owe any duty (fiduciary or otherwise) to the Cayman LLC or any member or other person in respect of the Cayman LLC other than a duty to act in good faith in respect of the rights, authorities or obligations which are exercised or performed or to which such manager is subject, provided that the duty of good faith may be expanded

28

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


or restricted by the LLC Agreement. Further, subject to the LLC Agreement, a member does not owe any duty (fiduciary or otherwise) to the Cayman LLC or any member in exercising any of its rights or in performing any of its obligations under the LLC Agreement to the Cayman LLC or to any member. Where such member is exercising any vote, consent or approval right, it may act in its own best interests and as it sees fit even though it may not be in the best interests of the Cayman LLC or any other member. Conversion, Continuance and Discontinuance: Existing exempted Cayman Islands companies (other than segregated portfolio companies) may convert to a Cayman LLC and a foreign entity (with separate legal personality) may apply to the Registrar for permission to continue into the Cayman Islands as a Cayman LLC. The LLC Law also contains provisions whereby a Cayman LLC may be de-registered as a Cayman LLC and continued as a foreign entity under the laws of any other jurisdiction by application to the Registrar. The Cayman LLC lends itself to a broad range of corporate and commercial applications where operational and structural flexibility can provide advantages over more traditional companies. The Cayman LLC is a very welcome addition to the Cayman Islands’ existing stable of company, limited partnership and trust vehicles and further enhances the Cayman Islands as a forward thinking and innovative place to do business. Whilst wrong to presume that the Cayman LLC will be the ideal vehicle in all situations, we certainly see it becoming a popular vehicle over time.

ABOUT THE AUTHOR Richard Fear Richard is a Partner in the Cayman Islands office of Conyers Dill & Pearman. His practice covers a broad range of corporate and finance transactions. Richard’s particular focus is on corporate finance, M&A, debt and equity issues, private equity portfolio transactions, stock exchange listings and corporate reorganisations. His clients include multinational banks, corporate groups and investment managers. Richard has been practising Cayman Islands law for more than 15 years and the laws of Bermuda and the British Virgin Islands for 7 years. He brings a commercial approach to transactions, having previously been managing director of the Cayman subsidiary of a London merchant bank and practised as a chartered accountant at a big four firm.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

29


The Reform of

CAYMAN’S INTELLECTUAL PROPERTY LAWS On 30 June 2016, legislation came into effect that has paved the way for sweeping changes to Cayman’s copyright laws. These changes mark the first stage in a complete overhaul of Cayman’s intellectual property laws in their entirety, which will eventually update other laws, as they relate to trademarks and patents as well.

30

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Up until that point, Cayman’s copyright laws were subject to the UK Copyright Act 1956. In the UK, this legislation was replaced almost 30 years ago by the Copyright, Designs and Patents Act 1988, to which numerous amendments have been added, but the Cayman Islands had never adopted the new law of 1988. This meant the jurisdiction’s laws as they


related to copyright protection (i.e. the protection of the exclusive legal right, given to the originator or assignee, to use and/or benefit from all kinds of material, and to authorise others to do the same) were extremely outdated, especially when considering the incredible change in communications that have taken place over the last 60 years, none of which could have been predicted when the legislation was first drafted, thereby making the existing legislation lacking in many areas for modern day usage. THE NEED FOR CHANGE The Cayman Islands has continued with its attempts to expand and diversify its economic base from the two traditional pillars of financial services and tourism, focusing on attracting innovators, entrepreneurs and generally those with considerable intellectual property in need of protection. Among other areas, Cayman has been busy developing a film industry via the establishment of its Cayman Islands Film Commission and subsequent international Film Festival. There is also a vibrant visual arts community within which exists many artists who are able to make a living from selling their artwork. Cayman Enterprise City (CEC) is a thriving enterprise geared up to wooing inward investment with a variety of advantages of establishing a presence in the Cayman Islands, including the ability for a business to mitigate taxes, retain profits and, crucially, protect their intellectual property. The CEC comprises of various bodies dedicated to a particular sphere of business: Cayman Internet Park, Cayman Media Park,

Cayman Commodities & Derivatives Park, Cayman Science & Technology Park and Cayman Maritime Services Park. For businesses within the science, technology and media industries in particular, protecting intellectual property via up-to-date trademark laws and other pertinent legislation is absolutely crucial if they are to succeed in these fast paced environments where discoveries are made, technologies created and communications developed, often at super high speed.

written works (not just newspaper or magazine articles, but also computer programmes and technical writing), dramatic and musical works, artwork, film recording and broadcasting. Another important aspect of the new legislation has been the granting to the owner of material under copyright of the right to claim ownership of that work and to request, via the Cayman’s Customs Department, that these be prohibited goods which are not to be imported into the Cayman Islands.

Protecting the intellectual property of such individuals and businesses has therefore become an increasingly important issue which needed to be addressed, in order to promote Cayman’s international reputation as a safe and secure jurisdiction in which to conduct business, especially if the Cayman Islands intends to market itself as such on the global stage, among established players with sophisticated legislation and treaties already in place.

The Order also made it possible for owners of copyrights to seize or detain their copied work if they are found to be for sale or hire, once the police have been notified. This could have a direct impact on businesses in the Cayman Islands, in particular those selling copied DVDs that are under copyright, as well as restaurants and bars playing music under copyright for which they have not received permission to broadcast commercially.

THE PROCESS OF LEGISLATIVE REFORM To start the process, in March 2015 the Copyright (Cayman Islands) Order 2015 was extended to the Cayman Islands by the UK Privy Council. This meant that the original 1956 UK legislation was revoked, and Part I of the UK’s Copyright, Designs and Patents Act 1988 was extended to the Cayman Islands in its place, subject to certain modifications.

The Order also paved the way for a Copyright Tribunal for the Cayman Islands to be established and detailed enforcement capabilities that could be undertaken by the Director of Commerce and Investment as they related to copyright infringements.

So it was a significant step that, along with this March 2015 Order, the Copyright (Cayman Islands) (Amendment) Order, 2016, which This was significant, because it meant further modifies the extension of the copyright protection for all sorts of 1988 Copyright Act to the Cayman work could be covered, should the Islands, were both passed into law on Order be enacted. Such works included 30 June 2016.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

31


LOOKING AHEAD The next stage in the modernisation of Cayman’s intellectual property is to update its trademark and patents legislation. Currently, the Registrar General maintains a Register of Patents and Trademarks, but this is not a registry of original registration; instead the Cayman Islands registry serves to extend patent and trademark rights that have been registered in other jurisdictions. Clearly this should be updated, because Cayman is in need of an independent trademark right to allow those in need of a local trademark right the ability to register such locally, without the current requirement (causing further expense and extra red tape) of first having to apply overseas for a trademark.

The fact that local entities looking to register trademarks had to first go overseas, as well as the UK now facing an exit from the EU, meant this matter needed attention. It is very encouraging to know therefore that a new trademark law is currently in the final stages of preparation for the Cayman Islands, thereby allowing trademark owners the ability to file for trademark protection in this jurisdiction. In fact, there will be provisions within Cayman’s revised trademark legislation that will ensure Cayman’s trademark set up stands head and shoulders above other competitor markets, hopefully attracting a new mini industry in its own right.

Patents are currently covered in the Cayman Islands under the Patents and Trademarks Law, 2011 and it is Cayman’s current legislation in this anticipated that work to update this will regard was originally based upon an take place in the near future. almost twenty year old law (of 1998), originally only allowing UK trademark A newly developed Cayman Island registrations and International (Madrid Intellectual Property Office now exists Protocol) Registrations designating and an IP media awareness campaign the UK to be extended to the Cayman continues to update the public on these Islands, with the extension of European important legislative changes and the Community trademarks afforded to impact they will have on the community as a whole. Cayman later that same year.

“On 30th June 2016, legislation came into effect that... mark the first stage in a complete overhaul of Cayman’s intellectual property laws...”

32

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


Why is the Cayman Islands one of the world’s leading international finance centres?

Innovative legislation. Practical regulation. Robust legal system. Tax neutral. Strong Government involvement. Quality and experienced professionals in the area of fiduciary services, legal services, public accounting, investment funds & asset management, trusts, capital markets, banking and insurance. For more information on Cayman Finance or the Cayman Islands financial services industry, visit our website or connect with us on social media.

Excellence. Innovation. Balance. www.caymanfinance.ky

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

33


Regulatory Update

CAYMAN ISLANDS MONETARY AUTHORITY CIMA’s Managing Director Cindy Scotland, provides an update on recent regulatory developments.

T

34

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

he Cayman Islands continues to be home to a thriving financial services industry, which is bolstered by prudent and robust regulation. As the principal regulator for the Cayman Islands financial services industry, the Cayman Islands Monetary Authority (CIMA) has developed a regulatory and supervisory framework which emphasises adherence to international standards and which approach is a combined rules-based and risk based approach.

local population about CIMA’s role and functions within the financial services industry. In keeping with this objective, the Authority has launched a 12-week public education radio campaign to highlight topics such as a general overview of CIMA and its operations, including the latest developments in banking, currency, insurance, mutual funds, cyber-security, trust and fiduciary services, relevant legislation, career opportunities and training.

Fundamental to the success of the jurisdiction is comprehensive regulation, supervision and the consideration of the evolving dynamic nature of the industry. In this regard, the Authority has also recently drafted the 2016 – 2018 Strategic Plan to reflect its dedication to continuous improvement. Although the objectives remain similar to the previous plan, a comparison will reveal that there will be more focus on educating the

STATUS OF CAYMAN’S FINANCIAL SERVICES INDUSTRY Since the last update for this publication, CIMA has continued its mandate to supervise and regulate the Cayman Islands financial services industry. The industry remains highly competitive in several areas. The jurisdiction also maintained its position as the top domicile for hedge funds during the period, ending the financial year with


11,021 funds. The Cayman Islands remains a top international location for the provision of trust services, with 242 companies licensed to provide these services in and from the jurisdiction. In the Banking sector, at 30 June 2016, the Cayman Islands is home to 176 licensed and registered banks, compared to 196 in the previous year. This decline is due to mergers, consolidation of banks, and restructuring. With 862 total licensees, the Cayman Islands remains the second largest offshore jurisdiction in terms of the number of international insurers, including captives. There were 36 new insurer licences and 4 insurance intermediary licences added to the Cayman market. The Authority has also issued its second Reinsurance licence this year. As a leading jurisdiction for hedge funds and the second largest jurisdiction for captive operations, the Cayman Islands is well positioned to build on its expertise to be the domicile of choice for the emerging hedge fundbacked reinsurers.

critical to the safety and development of the financial system. As such, the Authority continues to provide comprehensive guidance and oversight of these important frameworks. Among these elements are the relevant laws and regulations passed by the Government of the Cayman Islands; the rules and statements of principle and of guidance issued by the Authority; the regulatory policies and procedures detailed in the Regulatory Handbook and other manuals; the cross-border agreements undertaken by the Authority, and the international standards to which CIMA adheres.

Over the past year, the Authority has issued or revised several measures that impacted the various regulated sectors. The Regulatory Policy on Exemption from Audit Requirements for a Regulated Mutual Fund was revised to expand the list of circumstances under which a regulated mutual fund can apply for an audit waiver. Similarly, a new Regulatory Policy was issued THE REGULATORY FRAMEWORK for Class ‘C’ Insurance companies UPDATE to set out conditions for which such The implementation of robust corporate licensees could be exempted from governance and risk management the annual audit requirement. A new frameworks for the financial sector is Regulatory Policy on Recognised

Overseas Regulatory Authority was issued to provide the criteria used by the Authority to recognise an overseas regulatory authority for the purposes of the Securities Investment Business Law, 2015 (SIBL). Further changes were made to the Regulatory Policy on Licensing Banks to enable Class ‘B’ applicants to have more options to meet CIMA’s expectations of how to hold the minimum required capital. New measures were issued for the insurance sector pertaining to corporate governance and a licensee’s use of an Internal Capital Model. The Authority also enhanced its measures pertaining to fitness and propriety assessments across all sectors. Revisions were also made to the general Statement of Guidance on Corporate Governance with a view to enhance and modernise this measure in line with international standards and best practices. New measures relating to the outsourcing of material functions and activities and approving changes in ownership and control were also issued for all sectors with noted exceptions. In February 2016, the Authority introduced its first edition of the Cayman Islands Monetary Authority’s Supervisory Issues & Information Circular, which will be issued bi-annually. The document aims to raise awareness, in the industry, of common regulatory and thematic issues identified through our off-site and on-site supervisory practices and highlight regulatory developments for the financial sector. As a secondary objective, the circular also aims to emphasise regulatory matters which might not be particularly problematic at this time but are important to our regulatory objectives.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

35


INTERNATIONAL COOPERATION The Authority also remains committed to cooperating and interacting with other regulatory bodies, without compromising the rights to confidentiality of legitimate clients. Therefore, every effort is made to ensure that we continue to meet the requisite standards, both locally and internationally. To date, the Authority has entered into 54 international agreements. The most recent Memorandum of Understanding was signed in June 2016, between with the Financial Services Regulatory Authority of Abu Dhabi. CIMA is also represented in various bodies, including: the Group of International Financial Centre Supervisors (GIFCS); Caribbean Group of Banking Supervisors (CGBS); Association of Supervisors of Banks of the Americas (ASBA); International Association of Insurance Supervisors (IAIS); Group of International Insurance Centre Supervisors (GIICS); International Organization of Securities Commissions (IOSCO); and the Financial Stability Board’s Regional Consultative Group for the Americas. The Authority continues to keep abreast of relevant legislation in other jurisdictions which has an impact, or potential impact, on the Cayman Islands. This is done with a view to reassessing the adequacy of the jurisdiction’s regulatory regime via the Alternative Investment Fund Managers Directive (AIFMD) passport. This directive is aimed at bringing managers of alternative investment funds, such as hedge funds and private equity funds managed or marketed in Europe, under similar regulatory arrangements as mutual and pension funds and their managers.

36

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Another major development which occurred recently was the European Securities and Markets Authority’s (ESMA) assessment of the Cayman Islands at the end of June 2016. This assessment was based on whether there were significant obstacles regarding investor protection, market disruption, competition or the monitoring of systemic risk to making the European Union Passport available to the Cayman Islands. Thus far, the Authority has engaged in several discussions with the Ministry of Financial Services, Commerce and Environment, and stakeholders within the private sector. This involved advising on draft legislation, and providing relevant information to ESMA. This then resulted in the advice issued from ESMA on 18 July 2016. Further to the statement issued by ESMA regarding an update on the AIFMD passport regime, it was noted that ESMA could not give definitive advice in relation to extending the passport to the Cayman Islands since the jurisdiction is in the process of implementing new regulatory measures including internal supervisory practices, and the assessment will need to take into account the final rules in place. ESMA will continue its assessment of the Cayman Islands with a view to reaching a definitive conclusion on whether to extend the passport to this jurisdiction. Given the complexity of the AIFMD, the assessment will require an extensive amount of work, with several steps occurring before completion. To secure our position as a top jurisdiction of choice, the Authority will provide the necessary assistance with any ongoing review.

CONCLUSION Given our robust, yet flexible and competitive regulatory regime, infrastructure and high levels of expertise and experience in service areas such as insurance, legal and accounting, CIMA is confident that the Cayman Islands will continue to thrive as a leading financial centre. Working together with Government, the industry, and other stakeholders, the Authority is committed to playing its part in contributing to the continued success of this industry.

ABOUT THE AUTHOR

Cindy Scotland Cindy is the Managing Director of the Cayman Islands Monetary Authority. She oversees the implementation of policies to ensure the sound management of the Cayman Islands’ currency and the effective supervision of various regulated entities operating in and from the Cayman Islands. She also has responsibility for the development and maintenance of strong working relationships between the Authority and other international regulatory bodies including the Group of International Financial Centres Supervisors, the International Organisation of Securities Commissions, the International Association of Insurance and the Financial Stability Board Regional Consultative Group.


Sean Flynn, Cayman Islands

John Hamrock, Ireland

Patrick Harrigan, Singapore

Independent Directorship Services HF Fund Services Ltd. provides experienced, non-executive independent Directors to hedge funds, fund of hedge funds, private equity funds, real estate, venture capital and investment management companies. Our team of six Directors take a partnership approach with clients, adding value based on our years of experience. Each Director averages 20 years at a senior level in either public accounting, law, fund administration and asset management prior to becoming an independent director with HF Funds Services Ltd. We have extensive proficiency in the setup, structuring and corporate governance of alternative investment funds. Our Directors have excellent relationships with investment management companies and professional service providers in all major financial centres. HF Fund Services Ltd. has offices in Cayman, Ireland and Singapore, which allows us to service clients in all time zones. To find out more contact:

Sean Flynn Tel: (345) 949 9900 Email: sean@hffunds.com www.hffunds.com

HF Fund Services Ltd. 45 Market Street, Gardenia Court Camana Bay, P.O. Box 242 Grand Cayman KY1-1104 Cayman Islands

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

37


Cayman Investment Funds

IN EUROPE

Henry Smith takes a look at how recent developments within the EU might impact Cayman’s investment funds sector.

I

n July 2016 European politics were profoundly shaken when UK voters unexpectedly opted by a narrow margin in a referendum for the UK to “Brexit” the EU. It is too early to say whether a Brexit means the UK will completely leave the EU or retain some sort of affiliated membership (like the EEA countries). UK-EU negotiations will likely go on for a few years after the UK formally triggers the exit process under Article 50 of the Treaty of Lisbon so it will be quite some time before these details become clearer. The task of unbundling decades of legal, regulatory and tax integration is a complex and unprecedented undertaking. CAYMAN AND BREXIT Although the Cayman Islands is a British Overseas Territory, it is not a Member State of the EU so Cayman’s own position will not be directly changed by Brexit. For the time being it will be business as usual for Cayman domiciled investment funds and companies with European focused activities. Cayman is one of the largest domiciles for alternative investments funds and is home to many of the world’s best hedge and private equity funds managed by

38

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

the most well respected investment fund managers. As such, Cayman remains committed to servicing European clients and to be open for EU-based pension funds and other sophisticated investors to invest in these world class alternative investment funds. EU pension funds, in particular, need to invest in a diversified global portfolio of cost efficient tax neutral alternative investment funds, including many based in Cayman, if they are going to meet their pension fund obligations in this low and negative interest rate environment. Depending on how Brexit finally looks, the UK could be in a similar position to other non-EU Third Countries (e.g. the US or Cayman) with respect to EU Directives like the Alternative Investment Fund Managers Directive (AIFMD) or in due course under the Markets in Financial Instruments Directive (MiFiD II) as to how UKbased financial services firms can continue to do business across the whole EU under various EU-wide passports.

AIFMD Currently, alternative investment funds based in Third Countries must be marketed in EU Member States under their individual national private placement rules (NPPRs) or may respond to reverse solicitation. The AIFMD for the first time introduced the possibility of an EU-wide marketing passport for Third Country alternative investment funds and their fund managers. The AIFMD requires three threshold criteria for Third Countries to be considered eligible for the passport, namely: (a) cooperation agreements with EU regulators; (b) absence from


any FATF blacklists; and (c) tax information exchange agreements with EU Member States. The European Securities and Markets Authority (“ESMA”) was given the task of advising the EU Parliament, EU Council and the EU Commission (together, the “EU Authorities”) on whether the Third Country passport should be activated and the NPPRs terminated. Until the final decision is made to activate the passport, the NPPRs will continue for qualifying Third Countries until at least 2018 (and now possibly well beyond that date). Cayman currently satisfies the basic criteria and Cayman funds qualify to be marketed under the NPPRs.

ESMA took a country-by-country approach to this passport review. In July 2016, ESMA delivered its latest advice to the EU Authorities including in respect of Cayman. ESMA has so far given unqualified positive advice in relation to only five of the 22 jurisdictions considered. Other Third Countries (including the US, Hong Kong, Singapore and Cayman) received qualified assessments. ESMA is still gathering information on a larger group of Third Countries.

funds can be marketed in the EU under the relevant NPPRs until at least 2018, when there will be a further consideration of whether the NPPRs should continue indefinitely or not.

ESMA advised that there were no significant obstacles regarding competition and market disruption impeding the application of the AIFMD passport to Cayman; but it could not provide its final advice in relation to the other aspects of Cayman,s eligibility until the implementation of: (a) final versions of the proposed AIFMD-like regime; (b) legislative amendments giving the Cayman regulator power to impose administrative fines directly for certain regulatory breaches; and (c) a macro-prudential policy framework to enhance systemic risk monitoring.

Therefore many managers will likely continue to operate parallel fund structures. If market access across the whole EU is critical, managers may opt to establish fund structures in AIFMDcompliant EU jurisdictions that have a proven track record of EU management and marketing (e.g. Ireland). In parallel to that, managers will continue to establish Cayman funds to target investors in countries where Cayman remains the dominant fund domicile (such as North America, Asia and the Middle East), relying on the existing NPPRs for marketing in the EU or reverse solicitation where appropriate.

The Cayman government is well advanced in addressing ESMA’s points and is confident that once these are addressed ESMA will give Cayman a positive assessment for the passport. The EU Authorities will have ultimate discretion on how to implement ESMA’s advice. Given that only five of the original 22 relevant jurisdictions identified have been unqualifiedly assessed by ESMA, it would seem sensible for the EU Authorities to delay activation of the passport for any Third Country until more jurisdictions have been positively assessed, as suggested by ESMA. In the meantime, Cayman Islands alternative investment

As a result, there is still no one-sizefits-all approach to AIFMD and the status quo will probably continue to apply for managers looking to access investors globally, with the fund’s domicile chosen to match the relevant investors, expectations.

BLACKLISTS AND WHITELISTS Perhaps surprisingly, given the recent introduction of tax information exchange arrangements, the EU has recently stated that it is currently drawing up criteria for the creation of a new tax haven blacklist. Cayman is neither a tax haven nor a secrecy jurisdiction and by any objective standards should not appear on this list. Cayman is a transparent and compliant jurisdiction and a good trading partner to EU Member States. It has introduced full anti-money laundering legislation and entered into tax information exchange agreements with most EU Member States. Since 2005 Cayman

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

39


banks have automatically reported bank account information on EU residents to EU Member States. More recently Cayman has implemented the OECD’s Common Reporting Standard for the automatic exchange of tax information. Cayman will also offer to EU Member States the chance to benefit from a new portal giving access to beneficial ownership information on Cayman companies. Cayman simply provides a neutral, cost efficient platform for international stakeholders to pool and allocate assets. Cayman funds are good capital allocators and act as a global conduit to allow international capital investment to flow into EU based businesses, which in turn

promotes economic activity in the EU and ultimately results in job creation and tax revenues being generated in the EU. Encouragingly, the Italian government recently added Cayman to its own whitelist (which will allow Cayman companies to invest in Italian debt securities and be paid gross of withholding tax) and consequently hopes to attract much needed inward investment from Cayman investment funds. Hopefully other EU Member States will follow suit and similarly welcome business from Cayman investment funds, so they too can benefit from more global inward investment which will ultimately stimulate their domestic economies.

ABOUT THE AUTHOR Henry Smith Henry is a partner at Maples and Calder in the Cayman Islands, where he previously served as the Global Managing Partner for six years. Henry has extensive experience in all aspects of offshore finance transactions, focusing on private equity funds, hedge funds and structured finance transactions. He has been named as a leading banking and private funds lawyer by Who’s Who Legal and Legal 500, and ranked as an Eminent Practitioner by Chambers and Partner’s Global Guide. Henry is a Director and Global Council Member of the Alternative Investment Management Association (AIMA) and a board director of Cayman Finance.

Building better business

TOGETHER With a vast wealth of industry focused expertise, our team of professionals will look after all your fiduciary needs, including:

www.caymanmanagement.com (345) 949-4018 Grand Cayman, Cayman Islands

• Independent Director Services • Specialist corporate services for Funds and Investment Managers, including registration and management • Full corporate registration and representation services for all business undertakings Working closely with clients and industry professionals in the Cayman Islands and internationally we provide you with the utmost professional service, delivered with that extra personal touch.


CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

41


&

Perceptions, Reputations MAINSTREAM INTERNATIONAL FINANCIAL CENTRES Paul Byles takes a deeper look into recent trends from the Global Financial Centres Index to assess how the major offshore centres are doing.

42

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


If we are to go by the news stories in the media, or the latest Hollywood flick, with the now almost mandatory references to an ‘offshore account’, it's clear there is still some way to go before offshore centres put a dent into the negative perceptions (mostly unwarranted) that still prevail. But what if we were to use a more objective measure of perception rather than those

occasional news stories and movies targeted at entertaining readers? And in the face of numerous global regulatory changes and pressures, what has been the impact on these centres? Since 2007, the Z/Yen group in London has published the Global Financial Centres Index (GFCI) twice per year. The survey is based on a mix of instrumental factors and an online survey aimed at financial

services professionals around the world. Using data from the past six reports, from 2016, dating back to 2011, this article looks at how the mainstream offshore centres in the Caribbean (Cayman Islands, Bermuda and BVI) are doing in comparison to the offshore crown dependencies from across the Atlantic (Isle of Man, Jersey, and Guernsey). The GFCI is being used here to illustrate

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

43


what can be achieved through the use of similar tools. Taking a look at how certain IFCs have fared with this measure might give us some insight into whether the various changes made to their regimes and efforts to counter negative publicity have had any impact so to speak, on how they are perceived.

in terms of perception (see Figure 1). This supports the idea that the region (or islands) tend to suffer from being lumped together perception-wise. It also explains why their reputations would tend to improve together as well. On the contrary, Figure 2 shows there is a much larger gap between the scores of the Channel Islands IFCs during the period with the possible exception of the drop in 2014, suggesting their reputations may be more independent of each other.

The GFCI has been consistent in its methodology, so it may be a useful exercise to compare how these countries have performed over a period of time. The fall report has been used, which is normally published in October/ September each year. All of the regional IFCs also have a higher score in 2016 than the Channel Looking at the numbers, the regional Islands. The regional IFCs demonstrate IFCs have displayed a stronger trend contrasting fortunes in 2016, with upwards and have stuck closely together the Cayman Islands being the only

financial centre to show an increase in its index, while the BVI and Bermuda both declined. There is a similar trend at play in 2016 in the Channel Islands, with Jersey demonstrating an upward bias over the year while Isle of Man and Guernsey both saw declines in their indices. That the Cayman Islands and Jersey have experienced an upward trend is not especially surprising because anecdotal evidence suggests these two centres are held in high esteem by clients in their respective areas. This does not mean the other centres are viewed poorly but relatively speaking, Jersey and Cayman are regarded as being more developed than their respective peers in each group.

Figure 1: Main Regional IFCs & The GFCI 2011 – 2016

Figure 2: Channel Islands & The GFCI 2011 – 2016

2011

2011

680

660

640

620

2012 Cayman

44

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

2013

2014 Bermuda

2015 BVI

2016

Jersey

2012

2013

2014

Guernsey

2015

2016

Isle of Man


One of the key differences between the Caribbean and the Channel Islands is that the Channel Islands started off with relatively high indices in 2011 and are all lower now as compared to five years ago, while the Caribbean IFCs generally started at lower points and have all experienced consistent average increases in their indices over the same period, see Table 1.

Cayman Bermuda BVI Jersey Guernsey Isle of Man

ALL ABOUT PERCEPTION? Using the index as a proxy for perceived reputations, the Caribbean based centres have done much to improve their perception over the years and this may be the direct result of numerous sweeping enhancements to their regulatory regimes, some of this starting as early as 2001 after the OECD blacklisting. This is very interesting because in general the Caribbean IFCs have most certainly faced the harsher criticisms Table 1: Main IFCs & The GFCI 2011 – 2016 over the years in terms of media reporting of 2011 2012 2013 2014 2015 2016 weaknesses in regulatory 610 628 642 632 668 676 frameworks, reinforcing 616 621 641 628 659 654 negative perceptions. 611 624 626 639 658 653 Since those heavy 650 654 657 624 633 639 635 641 649 619 632 630 criticisms at the start of 617 629 638 622 628 611 the century, there have

been numerous objective assessments conducted including by the IMF, which highlighted that weaknesses existed across many varying financial centres and that, not only were earlier perceived well developed IFCs such as the USA failing in certain areas, but some of the previously perceived weaker jurisdictions ranked higher in some key factors relating to AML and CFT frameworks. It could be argued that the Caribbean based IFCs, faced with relatively more pressure have pushed hard to either correct their true deficiencies or address the perceived ones with effective public relations campaigns, while the Channel Islands which have not faced similar pressures (relatively speaking), have not benefitted from any additional ‘push’ to address such perceptions.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

45


Figure 3: Reputational Disadvantages of The IFCs 2016 0

-10

-20

-30

place continues to perceive these centres. Policymakers would do well to follow its trends as an objective measure of, if nothing else, how their jurisdictions are perceived by thousands of financial services professionals around the world, as well as how that perception compares to their competitors and importantly how reputations might be impacted by changes in regulatory frameworks.

-40 Cayman

Bermuda

BVI

Jersey

Guernsey

Isle of Man

RELATIVE REPUTATIONS The GFCI report also provides a measure of what it terms ‘reputational advantage’ or ‘disadvantage’. In summary this measure looks at the average score that a centre receives from financial professionals across the world and compares that number with the actual GFCI index. The report explains that if a centre has a higher average assessment than its GFCI rating this indicates that respondents’ perceptions of a centre are more favourable than the quantitative measures alone would suggest. The difference between the two is then regarded as a reputational advantage (a positive number) or a reputational disadvantage (a negative number). Figure 3 demonstrates that all of the IFCS in the Caribbean and Channel Islands suffer to varying degrees from this reputational disadvantage. At -5, Guernsey has the least reputational disadvantage with Cayman being next while Bermuda and BVI demonstrate the largest reputational disadvantage (meaning the index scores are worse than respondents expected).

46

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Delving into the numbers (and the numbers behind the numbers) the GFCI provides some interesting insights into how Caribbean IFCs compare with their counterparts across the Atlantic. Perception is almost as important as the reality in the market place and this is especially the case where financial services and financial markets are concerned. In that sense the GFCI data presents a useful comparison on how the global market

ABOUT THE AUTHOR Paul Byles Paul is Managing Director of First Regents Bank & Trust. He is also serves as an independent director and consultant to financial services firms. He is an economist and former regulator who has worked in the offshore sector for over 20 years. He is author of the books “Inside Offshore” and “Introduction to Offshore Financial Services: A BVI Text.”


Cayman Islands Financial Services Nimbleness. Purpose. Strength.

The reason why the Cayman Islands is a premier financial services centre is simple: Third-party global bodies have noted our adherence to international standards, and our Government is dedicated to maintaining and further enhancing our legal and regulatory framework.

For more information, visit www.cimoney.com.ky. CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

47


Cayman’s New

ANTI CORRUPTION COMMISSION A

n amendment to Cayman’s existing Anti-Corruption Law (2014 Revision) has been passed, the AntiCorruption (Amendment) Law, 2016, and it has far reaching consequences as to how corruption is now investigated within the public sector in the Cayman Islands, enhancing the methods by which corruption will be investigated and ensuring the establishment of an independent body for carrying out the provisions of the law, specifically ensuring independence when it comes to the oversight of each investigation conducted. The Anti-Corruption Commission, a vital body that is required to enhance and promote the accountability of all public officials, was originally created in accordance with Part 2, Section 3 of the Cayman Islands Anti-Corruption Law (2008). It is extremely important that such a body, established to investigate reports of public sector corruption, stimulates accountability and public confidence, by taking proper responsibility for the administration of this law. But while the Commission had broad reaching powers to investigate reports of corruption, liaise with overseas anti-corruption authorities, and obtain Court Orders to freeze the assets of those suspected of committing corruption offences, it was felt, in the quest for good governance, that the Commission would be far more effective and independent with a reexamination of its composition and the methods by which it gathered such information. NEW MEMBERS APPOINTED The original Commission required the membership of five appointees from local law enforcement and the public sector, including, the police commissioner, the auditor general and the complaints commissioner. However, the 2016 amendments have removed this requirement, with the Governor now responsible for the appointment of all five members of the Commission. All of these members are volunteers, and none of whom are from the public sector, which is a clear move to end the dual role played by some members of the original Commission, and to ensure a transparent, effective and independent Commission henceforth.

48

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


The changes to the law, which were approved by the Legislative Assembly in June 2016, also stated that, in addition to the removal of the police commissioner, auditor general and complaints commissioner from the board, no one else from the public sector should be appointed to replace them. The amendment does however permit the Commission chairman to invite the attorney general or the police commissioner to attend any meeting of the Commission and to participate or to provide information to the Commission with regard to work which relates to anti-corruption matters, but crucially neither individual will be able to vote in the Commission. INTEGRITY, EXPERIENCE, COMPETENCE In particular, it was a requirement that the individuals who would be appointed to the Commission were, in the opinion of the Governor, of high integrity and were able to exercise competence, diligence and sound judgment in fulfilling their responsibilities under this law. They were also required to be residents of the islands and could include retired judges of the Grand Court or the Court of Appeal, retired police officers,

retired justices of the peace or magistrates, chartered or certified accountants, attorneys-at-law or retired attorneys-at-law. Following the announcement of the new amendments to the law, former Cayman Islands Attorney General Richard Coles was appointed as the Commission Chairman. Mr Coles has also served as the Chairman of the Cayman Islands Human Rights Commission. Three other new members to the Commission are: former Cayman Islands Monetary Authority Chairman and Maples & Calder Senior Partner Timothy Ridley, OBE; Sophia Harris, Managing Partner of Solomon Harris who has a string of public service positions to her name, including Past President of the Cayman Islands Chamber of Commerce and Past Chairwoman of the Cayman Islands Department of Immigration Business Staffing Plan Board; and accountant and recent Young Caymanian Leadership Award recipient Kadi Pentney-Merren. Local highly respected businessman, Mr Norman Bodden, OBE, Managing Director of Bodden Corporate Services and a Director of Bodden & Bodden, Attorneys at Law, is the only currently appointed commission member to retain his post. Each of the members have been appointed to shorter terms than their predecessors on the Commission, who were originally given five year terms under the old law. Mr Bodden, Mr Coles and Mr Ridley were given two year terms, Mrs Harris and Ms Merren have been appointed for three year terms.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

49


DUTIES ARE BROAD The primary functions and duties of the Anti-Corruption Commission are broad and far-reaching, and include, among other things, the requirement to: receive and consider any report to the Commission of a corruption offence and investigate such report; receive and request, analyse and disseminate disclosures of any information concerning corruption offences under the Law or suspected offences; or required by any law in order to counter corruption.

Taking the above into consideration, the Commission members do not physically investigate the acts of crime themselves. Instead, under the old law, they would second Royal Cayman Islands Police Service officers to investigate such matters. Eventually, police officers were assigned full-time to undertake the investigative work of the Anti-Corruption Commission, but this method of investigation proved slow and unsatisfactory. ABOUT THE AUTHOR Lindsey Turnbull Having changed careers from financial services to writing and editing in the late 1990s, Lindsey runs Mayflower Features and services a wide range of clients in the Cayman Islands and abroad, including newspapers and magazines, government entities, PR firms, non-profit organisations, real estate companies and the financial services industry. She was the editor of Cayman Executive magazine, and went on to establish the Cayman Islands Journal, which she edited for nine years. One of Lindsey’s biggest clients is Destination Cayman, Cayman’s foremost tourism magazine, for which she writes, edits and photographs.

50

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Now, under the new law, investigators will be appointed by the Governor to investigate complaints under this law and to carry out such other duties as may be provided. That said, the investigators will possess all the powers and immunities of constables acting generally in the ordinary course of their duty. Under the law the investigators will have powers of arrest, but they will have to hand over custody of the suspects to police once the arrest has been made. With the above changes having been implemented, it is anticipated that the AntiCorruption Commission will be able to carry out its important work efficiently and effectively, with the full support and confidence of the general public. Independent of the government, they are able to work for the good of the islands, investigating matters of public fraud and ensuring that perpetrators of such crimes are duly brought to justice.


Looking for an independent director? in 1974, International Management Services (IMS) is one of the largest and Looking for Formed an independent director? longest established offshore company management firms in the Cayman Islands. Our Management Fiduciary Team focuses onisthe of directors and trustees to hedge Formed in 1974, International Services (IMS) oneprovision of the largest and funds. We havemanagement over 200 yearsfirms of collective experience in the fund industry and provide longest established offshore company in the Cayman Islands. services to provision some of the global fund organizations. Our Fiduciary Team focuses on the of largest directors and hedge trustees to hedge

funds. We have over 200 years of collective experience in the fund industry and Senior staff members of IMS areorganizations. all professionally qualified and are recruited from provide services to some of the largest global hedge fund Independent Directors household names in the funds industry. IMS staff are not only independent of the investment manager, but alsoedindependent of thefrom fund administrator and other Senior staff members of IMS are all professionally qualifi and are recruited Responsive, Dedicated Service serviceindustry. providers. household names in the funds IMS staff are not only independent of the investment manager, but also independent of the fund administrator and other We have capacity constraints limiting the number of director appointments Qualified, per Experienced Personnel service providers. Fiduciary Team member. We take our role as directors and trustees seriously, thus providing exceptional corporate governance of the highest standard. We have capacity constraints limiting the number of director appointments per Fiduciary Team member. We take our role as directors and trustees seriously, thus Give usgovernance a call to findofout providing exceptional corporate themore. highest standard.

Exceptional Corporate Governance

Give us a call to find out more. Contact:

Geoff Ruddick Contact: Tel: 345 814 2872 Geoff Ruddick Email: gruddick@ims.ky Tel: 345 814 2872 Email: gruddick@ims.ky

International Management Services

P.O. Box 61, KYI-1012, 3rd Floor, Harbour Centre, George Town, International Management Services Grand Cayman, Cayman Islands P.O. Box 61, KYI-1012, 3rd Floor, Harbour Centre, George Town, www.ims.ky Grand Cayman, Cayman Islands www.ims.ky

IMS


From Strength to Strength

VIEW FROM THE FSD Cayman’s financial services division of the Grand Court has been a key addition to the industry.

W

ith the biggest ever trial to come to the businesses involved. Furthermore, before the Cayman Islands and some the occasions do arise when judicial major cases clarifying important issues resources need to be adjusted to match of law regarding investment funds, it has been perhaps the most impressive year yet for the Financial Services Division (FSD) of the Grand Court of the Cayman Islands. Established in 2009 to provide the special procedures and skills required for issues typically thrown up by the more complex civil cases coming out of the financial services industry, the introduction of the Financial Services Division was a landmark for the judiciary and is a significant the varying patterns of workload. Video differentiating factor for the Cayman conferencing is used considerably, which reflects the global nature of Cayman Islands legal system. financial services in modern markets. The FSD’s procedures reflect that urgent actions need to be taken from time to time. For example, often there is a requirement for justice to be administered in public, but without the risk of sensitive information being publicly available too early in a case, which could render considerable harm

52

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Finance is a highly specialised area and by having dedicated FSD judges with a high level of practical experience, along with judicial expertise, Cayman both demonstrates its value and has cemented its position as the destination of choice for high value, high stakes litigation.


To ensure that the FSD continues to adapt and meet the changing needs of financial and commercial business, a The scale of this case – the largest to be held in Cayman – is evident with the courts blocking out seven months for the trial to be followed by two to three months for deliberations and writing on the judgement. The great and the good of the Cayman legal profession have been advising parties on this mammoth case, with the first complaint was filed back in 2009. Mourant Ozannes, Harneys, Walkers and HSM Chambers are the main Cayman firms involved. ‘Users Committee’ has been established to provide open channels of communication and a steady flow of constructive suggestions and dialogue between the FSD, representatives of potential litigants, professional advisors and practitioners. This includes all of the main industry associations and local regulators. LANDMARK CASES There is perhaps no better example of complex, multi-faceted, international litigation at present right now than the SAAD litigation, which began in July, turning the world’s attention to the Grand Court in Cayman. The case, Ahmad Hamad Algosaibi & Brothers (AHAB) v Al-Sanea and Others, involves worldwide matters and issues arising from the credit crisis involving a large family conglomerate in the Middle East and financial institutions in Saudi Arabia, Bahrain, London, New York, Switzerland and the Cayman Islands. Borrowings from some 118 banks worldwide were central to the matter.

Participants in the litigation have said the trial showcases the Cayman legal profession and the financial industry as a whole, highlighting both the responsiveness of the FSD and the skill of the judges who have received special training for the complex financial matters. It is also seen as demonstrative of Cayman’s status as a world class jurisdiction to do business, as much as a leader in the offshore disputes arena. Another premier case to test the Cayman courts during 2016 was the long running Herald/Primeo Fund litigation which came out of the Maddoff scandal. Primeo was a fund which had invested substantially all of its assets into Bernard L Madoff Investment Securities (BLMIS). In December 2008 when Madoff confessed his fraud, the fund lost around US$750 million and was placed into liquidation. Since then the liquidators Zolfo Cooper have been trying to recover the losses, resulting in various pieces of litigation, including

clawback claims by the Maddoff Trustee in both New York and Cayman. Matters were complicated further because although Primeo’s investment was originally directly into BLMIS, in 2007 it invested into another fund called Herald which in turn invested into BLMIS. Herald had to be placed into liquidation because the Madoff Trustee was wary of dealing with Herald’s management. It ended up in a three way deal with the Madoff Trustee in November 2014, while Primeo brought proceedings against its investment manager in 2014, which were settled and against HSBC its administrator and custodian which were due to go to trial in November 2016. A recent decision by the Cayman Islands Court of Appeal related to creditor claims. Justice Jones held at first instance that Primeo and other investors who redeedmed on December 1 2008 had valid creditor claims and this decision was recently upheld by the Cayman Islands Court of Appeal, which means that Primeo and the other investors are entitled to be paid out around US$200 million from Herald in priority to other investor claims. Peter Hayden, Managing Partner of Mourant Ozannes in Cayman, said: “It is an important decision because there has long been debate about the interpretation of section 37(7) of the Companies Law, which addresses the circumstances in which investors have creditor claims against a company. The Court of Appeal decision is based on and is consistent with English authority and other Cayman authority, and provides certainty, which is important for investors.” “The case is providing important clarification of the relevant provisions of the Cayman Companies Law,” Hayden added. “This will provide greater certainty for investors and should enhance the attractiveness of the Cayman Islands as a domicile for investment funds.”

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

53


United Kingdom Supports Cayman’s

ENHANCED BENEFICIAL OWNERSHIP PLATFORM

What a difference a year makes. In the space of the past 12 months, the Cayman Islands and its plans for a searchable beneficial ownership platform, instead of a central register of beneficial ownership information, has gone from an impasse with the UK and the focal point of attacks by politicians across the G20 to being an accepted industry partner.

54

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


G

lobal acceptance of Cayman’s approach to collecting beneficial ownership information by licensed corporate service providers and providing access to the information to law enforcement officials, rather than the public central register and system of self-certification that former UK prime minister David Cameron had initially proposed, has come as Cayman agreed to join an initiative by the UK to develop an enhanced programme of information sharing. This programme will effectively lead to the sharing of information on the beneficial ownership of companies and trusts with the UK and other jurisdictions that take up Cayman’s offer to participate in the new programme. The Exchange of Notes agreement, signed by a delegation from the Cayman Islands on the cusp of a key Anti-Corruption Summit in the UK in April, builds on Cayman’s record in participating in the global fight against financial crime. The crucial point for the Cayman financial services industry is that this will be without the use of a central register of beneficial ownership information, as the UK had originally intended, nor will any information be accessible by the public. The key to this agreement was a visit to the Cayman Islands by senior representatives from the UK’s National Crime Agency (NCA) and the Foreign and Commonwealth Office (FCO), two months earlier, when the proposed improvements to the current system of reporting beneficial ownership information were examined. Having met with Cayman Islands Premier, Hon. Alden McLaughlin and Minister of Financial Services, Wayne Panton, the UK delegation were convinced that Cayman’s proposed system would be “a similarly effective, viable alternative to the UK’s approach of a central register,” Minister Panton said in a statement after the 23 February meeting. The Cayman Islands proposals, which are still being finalised include a non-public, centralised platform, which would be accessed locally, which Cayman officials said would be an

additional enhancement to the nation’s current, strong anti-money-laundering regime. Cayman law has already required for some time that corporate service providers verify the beneficial owners of entities incorporated in the Cayman Islands. The proposed enhancements to the framework in Cayman have been developed not only to align with global regulatory standards and to support other jurisdictions in the fight against serious crime, while also being appropriate for Cayman’s business model which consists

“Global acceptance of Cayman’s approach to collecting beneficial ownership information by licensed corporate service providers and providing access to the information to law enforcement officials has come as Cayman agreed to join an initiative by the UK to develop an enhanced programme…” of primarily institutional clients. The Exchange of Notes between the Cayman Islands and the UK outline the parameters for the enhanced collaboration on this issue. It will ensure that competent authorities in both countries should be able to quickly identify all companies that a particular beneficial owner has a major stake in, and that companies or their beneficial owners must not be alerted to the fact that a law enforcement or tax authority investigation is under way. The main benefit of the new platform compared to the current system in the Cayman Islands is that UK authorities will have the right to request information from a competent authority in the Cayman

Islands who will have direct access to the information. This will allow for greater efficiency and faster reporting of key information that may be required in order to detect money laundering, corruption and bribery. It is notable that the proposed beneficial information platform will only be accessible by a competent authority in the Cayman Islands, as is currently the case. “Government continues to maintain a position of zero tolerance on illicit activity and financial crime,” Premier McLaughlin said. “Our commitment to the UK, and to other foreign authorities, is to collaborate and cooperate to ensure that those responsible for illicit activity can be prosecuted in the relevant jurisdictions.” Final proposals for the G5/G20 initiative on beneficial ownership are expected from the OECD in October 2016 with some 48 countries already committed towards the programme, including the UK’s Overseas Territories and Crown Dependencies. The portal, when it is in place, which will allow law enforcement – and not the public – to search for beneficial information, is understood to be capable of providing a response within 24 hours, or even one hour where there is a matter of urgency.

ABOUT THE AUTHOR David Bentley David is a financial writer and editor with over 20 years’ experience, specialising in offshore finance and regulatory topics. Reporting in London he worked for Dow Jones Newswires, appeared in the Wall Street Journal Europe and covered structured finance for the International Financing Review. He is a former editor of the Cayman Financial Review magazine and acts as a media consultant to a number of firms in the offshore financial services sector.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

55


“G20 Plus” GLOBAL FINANCIAL AGREEMENTS T

he Cayman Islands is a premier combatting corruption, money-laundering, to the highest global standards compared

global financial hub, connecting law-

terrorism financing and tax evasion. The with those of G20 members and other

financing around the world - benefitting

of a transparent jurisdiction by meeting or

Cayman Islands has gained the reputation

top IFC’s (together the “G20 Plus”). G20

both developed and developing countries. exceeding all globally-accepted standards

Islands, Bermuda, Jersey and Guernsey)

abiding users and providers of capital and

Both the jurisdiction, and our financial

for

decades as a strong international partner in

chart below shows Cayman’s adherence

services industry, have been recognised for

56

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

transparency

and

cross

border

cooperation with law enforcement. The

Plus includes G20 countries (The Cayman plus

the

top

international

financial

centres that adhere to the highest globally implemented standards for transparency


and cross border cooperation. They are

and UK Overseas Territories are included.

adopt the full range of globally-accepted

by being tremendous extenders of value jurisdiction’s leadership on transparency is

border cooperation with law enforcement.

pivotal in benefitting the global economy

But in a global financial system, a single

for G20 economies across the world. not enough. Combatting global financial Cayman has adopted at least as many global standards as any G20 country –

crime requires a unified legal, social and

law enforcement approach by all G20

and more, when agreements specific to countries and IFCs together. Cayman

standards for transparency and cross

As new standards are considered, it is critical that they apply to all jurisdictions as well.

International Financial Centers (IFCs) Finance hopes all jurisdictions will

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

57


Sharing Financial Information THE CAYMAN STORY WORTH TELLING O

ver the last 40 years, the Cayman Islands has matured into one of the world’s most sophisticated and successful international financial centres, providing a competitive, effective, transparent, cost-efficient and tax-neutral platform for international capital flows underpinned by an environment of legal, political and economic stability. Although the Cayman Islands has worked hard to secure its position as a fully co-operative and well-regulated jurisdiction, much to the annoyance of those of us who actually live and work in the islands and understand the regulatory environment, tired stories of shady deals and cloaks of conspiracy persist. The reality on the ground in George Town is much more interesting and, I dare say, aspirational. Rather than being a dark hole in which shady deals fester and proliferate, the Cayman Islands’ modern legal and regulatory framework shines a light on suspicious activity that sends proverbial rats scurrying.

58 CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB THE PREMIER GLOBAL FINANCIAL HUB

The story worth telling about the Cayman Islands is that few are aware of the lengths to which the Cayman Islands go to cooperate with other jurisdictions to provide accurate and verified information to facilitate the global fight against money laundering, terrorist financing and unlawful tax evasion. A quick review of Cayman’s current cross-border information sharing regulatory and legal framework will demonstrate that rather than being the whipping boy for all manner of ills, the standards designed and implemented in the Cayman Islands should be the yardstick to which all others should aspire and be judged. CONFIDENTIAL INFORMATION DISCLOSURE LAW The backbone of any proper information sharing regime is the clarification of what confidential information may be disclosed and the protection of those who seek to disclose wrongdoing in good faith. A mere five pages long, Cayman’s Confidential Information Disclosure Law, 2016 (CIDL) is short but mighty.

CIDL re-affirms pre-existing gateways through which confidential information may be legitimately shared domestically and internationally, and protects those who would disclose wrongdoing. CIDL expressly protects disclosures made (a) pursuant to requests by local tax, law enforcement and regulatory authorities, (b) in response to an order from a Cayman Islands authority pursuant to its international obligations, (c) in the normal course of business and (d) pursuant to any other rights or duties under Cayman Islands law. CIDL goes a step further and includes common-sense provisions to protect “whistle-blowers” who make disclosures of confidential information on wrongdoing, or in relation to a serious threat to the life, health or safety of a person or in relation to a serious threat to the environment. Whistle-blowers must act in good faith and in the reasonable belief that the information was substantially true and discloses evidence of that wrongdoing. DATA PROTECTION The Data Protection Bill, 2016, published in April 2016, introduces a rigorous data protection regime on par with the extensive regime in place across the European Union and is currently working its way through the legislative process to become law.


No doubt, Cayman’s detractors will be tempted to accuse the Cayman Islands of some sinister conspiracy to manipulate data protection legislation to facilitate bank secrecy and unlawful tax evasion. The reality is that the legitimate right to privacy is one that is rightfully defended as a human right and is entirely distinct from so-called “bank secrecy” used to facilitate unlawful tax evasion, money laundering and terrorist financing. In fact, the right to privacy is enshrined in the European Convention on Human Rights and is incorporated into English Law under the Human Rights Act. Similar provisions appear in the 4th Amendment to the United States Constitution and in the domestic legalisation of numerous democracies across the globe. If the right to privacy is protected abroad it must be protected in the Cayman Islands. AUTOMATIC EXCHANGE OF TAX INFORMATION Whether or not they know it by name, everyone working in the industry or attempting to access financial services is aware of or has been effected by the implementation of FATCA. In 2014 the Cayman Islands Government entered into an intergovernmental agreement with the United States to facilitate and standardise the exchange of information relating to taxes. The agreement gave effect to the provisions of the United States’ Foreign Account Tax Compliance Act (FATCA) which is concerned with obtaining information on accounts held outside of the United States for domestic United States taxation purposes. FATCA, which by no coincidence

sounds remarkably like “fat cat”, requires foreign financial institutions to report on certain United States financial accounts with non-compliant institutions being frozen out of global capital markets and significant withholding taxes being imposed on the recalcitrant. The US-Cayman intergovernmental agreement is now enshrined in Cayman law and requires, for example, Cayman Islands investment funds and banks to register directly with the United States’ Internal Revenue Service and to disclose details of financial accounts owned by reportable US persons to the Cayman Islands Tax Information Authority which may then provide such information directly to the United States Internal Revenue Service. A similar intergovernmental agreement between the Cayman Islands and the United Kingdom quickly followed and is also enshrined in local law with similar effect for certain UK accounts being reportable to Her Majesty’s Revenue and Customs. The Cayman Islands was also one of the first jurisdictions to commit to implementing the Organisation for Economic Cooperation and Development’s (OECD) Standard for Automatic Exchange of Financial Account Information – Common Reporting Standards (CRS). CRS is akin to a global version of FATCA and will also require financial institutions to identify the tax residency of account holders and to report on details of

specified accounts to the tax authorities in relevant jurisdictions. Almost 100 jurisdictions have now signed up. The implementation of automatic exchange of tax information legislation was a sea-change in the way financial information is disclosed to global tax authorities. While complying with FATCA and CRS has quickly become “business as usual” in George Town, the expense of doing so should never be understated. Huge government and private sector resources have been diverted to studying and implementing the requirements of this new regime and, as one of the earliest adopters, the Cayman Islands bore this expense and created the formula for compliance and implementation which has now been largely copied and rolled-out by other jurisdictions. ANTI-MONEY LAUNDERING Collecting the information necessary to classify reportable accounts under FATCA and CRS is typically conducted in the same way and at the same time that “know your client” due diligence

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

59


information is collected and vetted for compliance with anti-money laundering regulations. In fact, with all of the international press given to the new automatic exchange of tax information legislation, it is easy to overlook the fact that Cayman Islands financial service providers have been complying with anti-money laundering (AML) requirements since the 1990s. The Cayman Islands’ Proceeds of Crime Law, Money Laundering Regulations and the Cayman Islands Monetary Authority's Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands have created a solid framework for the implementation of the Cayman Islands’ robust anti-money laundering regime. The Cayman Islands also adheres to the Financial Action Task Force (FATF) 40 Recommendations on Combating Money Laundering and the Financing of Terrorism and Proliferation.

60

suspicious activities. Non-compliance with the AML framework, including “tipping off ”, is a criminal offence and is punishable by significant fines and custodial sentences – and ultimately, the obliteration of an offending person’s professional reputation. As anyone who has successfully opened a bank account or engaged a law firm to conduct relevant financial business in Cayman will attest, the requirements are onerous and far exceed those typically required onshore. The volume and nature of the information needed and the subsequent verification process admittedly steers those who cannot or will not comply away from the jurisdiction – and that is precisely the intended outcome.

Cayman’s AML framework does not just require the mindless collection of photocopied passports which are then locked away in a dusty vault after the appropriate box has been ticked on an account opening form.

REGULATORY OVERSIGHT As the Cayman Islands’ independent financial regulatory authority, the mission of the Cayman Islands Monetary Authority (“CIMA”) is to “protect and enhance the reputation of the Cayman Islands as an international financial centre by fully utilising a team of highly skilled professionals and current technology, to carry out appropriate, effective and efficient supervision and regulation in accordance with relevant international standards.”

Rather, Cayman has adopted a riskbased approach which requires the identification and verification of the beneficial ownership of Cayman entities and the intended nature and purpose of relevant financial business. In addition, the AML framework requires service providers to confirm the source of funds used in financial transactions, provide ongoing staff training and report

CIMA regulates over 11,000 investments funds with net assets in excess of US$3.5 trillion and supervises 176 banks with total international assets and liabilities as at June 2015 (cross-border positions in all currency and domestic positions in foreign currency) of US$1.39 and US$1.44 trillion. The Cayman Islands benefits from CIMA being the sole

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

financial services regulator as CIMA is able to consistently apply regulatory requirements across various sectors of the financial industry and is able to monitor and respond to trends across the industry. What is less well known is that CIMA has entered into memoranda of understanding with various overseas regulatory authorities and with domestic public sector and industry bodies to facilitate information exchange and regulatory assistance. What must now be understood is that there are clear information sharing gateways under Cayman law (specifically, the Confidential Information Disclosure Law and the Monetary Authority Law) through which CIMA shares information with overseas regulatory authorities. In the context of the operations of foreign banks’ branches and subsidiaries located in the Cayman Islands, Cayman’s existing legislative framework facilitates the sharing of relevant information with foreign financial regulators for the purpose of consolidated supervision in accordance with the relevant Basel Core Principles for effective banking supervision. BENEFICIAL OWNERSHIP AGREEMENT As financial service providers have been collecting and verifying beneficial ownership information and CIMA has been legitimately sharing information with overseas regulatory authorities for decades, the Cayman Islands Government was able to enter into a reciprocal framework agreement with the United Kingdom to allow designated


Cayman Islands officials to directly obtain and provide details of beneficial ownership of companies incorporated in Cayman to the United Kingdom. Under the terms of the agreement, beneficial ownership details will not be made public but would remain with the service providers managing them and information would be accessed via a central technical platform. Over the next year, the Cayman Islands has committed to making changes to legislation and to complete details of how the new regime and protocols will work. Any keen reader will immediately recognise the circuitous and repetitious nature of this latest agreement. The Cayman Islands’ existing legislative and regulatory framework already accomplishes what the United Kingdom has tried to “negotiate.” This quick review of Cayman Islands’ legislation and regulation and the application of a little critical thinking has demonstrated that beneficial ownership information is already required to be collected and vetted under the AML framework. Information about the operations of foreign bank branches and subsidiaries is already legitimately shared by CIMA with overseas regulatory authorities. The UK-Cayman intergovernmental agreement on the automatic exchange of tax information is already enshrined in local law and requires the disclosure of the financial information on UK reportable accounts to Her Majesty’s Revenue and Customs and similar provisions will apply to accounts of

the nearly 100 countries that have signed up to CRS. The USCayman intergovernmental agreement on the automatic exchange of tax information is already enshrined in local law but its requirements are even more stringent. CONCLUSION What is clear to those of us who work in the Cayman Islands financial services industry is that the truth about Cayman’s transparency and cooperation regime is very simple – it exists, it is more sophisticated and robust than many of its peers, it is constantly being improved and it works. The weakness in the Cayman story is that the jurisdiction has been so focused on the delivery of world-class financial services and reinforcing its role as the standard setter for transparency and global financial security that it has been less focused on defending itself from misrepresentation from would-be detractors. Rather than being a global whipping boy, the standards created and upheld in the Cayman Islands are the yard stick to which other jurisdictions should aspire and be judged. But in order to move forward, the Cayman Islands must not only do right by its clients but must now do right by itself and vigorously and unapologetically defend its reputation. It is time for the tired and factually incorrect view of the Cayman Islands as a paradise for money launderers, terrorist financiers and unlawful tax evaders to be put to bed.

ABOUT THE AUTHOR Dorothy Scott Dorothy is based in Walkers’ Cayman Islands office where she is a partner in the firm’s Global Investment Funds Group. She specialises in advising on the formation, ongoing operations and wind down of Cayman Islands investment funds, including unit trusts. Dorothy has particular expertise in re-structuring work and a strong background in general corporate work. Dorothy is also a lead member in Walkers’ Global Latin American Group and regularly advises some of the largest Latin American investment management firms and financial institutions on their Cayman Islands funds.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

61


The Cayman Islands BUILDING ON SUCCESS AT HOME AND INTERNATIONALLY E very book in the business section of the book store will tell you that success hinges on having a great mission statement. Cayman Finance has one, and it is a mouthful:

Cayman Finance’s mission is to protect, promote, develop and grow the Cayman Islands financial services industry through cooperation and engagement with domestic and international political leaders, regulators, organisations and media; to promote the integrity and transparency of the Industry by legislative and regulatory enactment; and to encourage the sustainable growth of the Industry through excellence, innovation and balance. Well, no one could fairly accuse this organisation of lacking in ambition. But big ideas don’t get you very far in business, or in our tough business environment. The true test is whether or not you can live up to your mission statement in the real world. Consider the following sampling of our recent and ongoing efforts and I think you will agree that Cayman Finance is successfully putting ideas into action. Let’s grab a couple of random words from that mission statement and hold them up to the light. What is being done to promote the integrity and transparency of the industry on the legislative front?

62

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

With the Throne Speech and budget address dominating the agenda for the 2016 summer sitting of the Legislative Assembly, it was something of a surprise to see the long-debated Confidential Information Disclosure Law, 2016 ushered swiftly into force. The Disclosure Law repealed what had been derided by critics as “the Caymans’ bank secrecy law,” which threatened criminal penalties for the unlawful breach of confidentiality. The new law puts such matters squarely back into the hands of the civil courts. Given that the capacity for criminal proceedings had never been acted upon during the law’s entire 40 year history, the repeal is more important for what it indicates than for what it does. It signals a modern approach, waving away the spectre of criminal prosecution and presenting a clear view of the various pathways towards lawful disclosure of otherwise confidential information for proper purposes. Further proof that the Cayman Islands has found the correct balance between the right to privacy and the need to actively participate in the fight against financial crime is found in the conclusion to the negotiations with the UK on registration of beneficial ownership interests. The proposal for the registration of beneficial ownership of companies grew out of G8 and G20 discussions about how to counter cross-border tax evasion and


avoidance. The UK publicly took the lead in pushing this strategy, insisting that the UK’s Crown Dependencies and Overseas Territories make a plan to implement central registers of beneficial owner information. Initially, the central registers were to be open to the public. Counter-productively, the contents of the registry were to be ‘self-declared,’ meaning that instead of information being collected and verified by a licensed and regulated corporate service provider, the information would be provided directly from the company themselves. The Cayman Islands, through the Ministry of Financial Services and supported by Cayman Finance, took the view that the proposal was a retro-grade step that would cost a fortune and add nothing to the fight against cross-border tax evasion or other crimes. In a well-reasoned and sensible response to the public consultation on the initiative, Cayman highlighted that the existing system, in place for more than a decade and functioning as intended, was not only adequate, but in fact superior to what was being proposed.

information through one portal, rather than having to deal with separate corporate service providers individually. Beneficial ownership information will not be accessible by the wider public and the existing gateways to legal access will remain in place. So for those keeping score at home, that’s two points in the ‘win’ column under ‘integrity and transparency’. One might have expected the next sitting of the Legislative Assembly to be less ambitious. However, in what was perhaps a record-setting performance, 22 bills were considered in the course of just the first week or so, of the October sitting, with the Minister of Financial Services seldom off his feet. The flurry of activity was in large part in preparation for the upcoming

In the end, the UK agreed to our proposals. Licensed and regulated corporate service providers will continue to gather, verify and record beneficial owner information. A centralised technological platform will allow the proper authorities to access

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

63


Caribbean Financial Action Task Force’s (CFATF) mutual evaluation process, currently scheduled to kick off in Cayman mid-2017. To get ready for the on-site CFATF visit, the Cayman Islands government, with the input of Cayman Finance and other stakeholders, undertook a full review of the financial sector’s regulatory framework. The mandate was simple: to ensure that our regulatory structure is sufficient to not only meet our core obligations to the international community but to place ourselves at the head of the class on matters of sound regulation and compliance. The result was a raft of enhancements to the regulatory framework. Some changes, such as those to the Monetary Authority Law, the Auditors Oversight Law and the

64

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Companies Management Law, serve to strengthen existing standards and provide greater power and flexibility to the regulator. Other initiatives, such as the Non-Profit Organisations Law, step into new territory and were perhaps more controversial. The Non-Profit Organisations Law provides for the regulation and monitoring of all nonprofit organisations which solicit contributions from the general public. It responds directly to FATF Recommendation 8, which focuses on combatting the abuse of these kinds of organisations for the purposes of financing terrorist activities. Concerns were raised about the impact that this may have on fundraising efforts by local Cayman Islands charities. To pick up another key word from the mission statement, careful balance was required. Time will tell if the correct balance has been struck, but we can be confident that the new law meets the FATF recommendation and serves to put the Cayman Islands in good stead in that regard.


With all of this happening in the Legislative Assembly, one may have expected things to be quiet on the diplomatic front, but October also saw the Cayman Islands play host to Britain’s new overseas territories minister. Joyce Anne Anelay, the Baroness Anelay of St. Johns, was the first OT minister to visit all three of the Cayman Islands and spent some time with representatives of Cayman Finance, discussing international initiatives. You can read more about this visit and some of our other diplomatic efforts in Cayman Finance’s Year in Review. In the meantime put a checkmark next to cooperation and engagement with international leaders in the mission statement. Also on the international front, the AIFMD passport initiative remains a key area of interest for Cayman Finance. Steven Maijoor, chairman of the European Securities and Markets Authority, announced in an October 11 speech that the next areas of focus for the AIFMD passport include as a priority the continuing assessment of whether to extend the passport to Bermuda and the Cayman Islands. Cayman Finance has this important initiative squarely in focus as we move through a highly uncertain post-Brexit landscape.

Another area where Cayman Finance is seeing good progress is on the issue of correspondent banking. Onshore banks have been engaged in derisking efforts, and their legitimate desire to stay on the right side of the regulator has caused an unfortunate side-effect. Some onshore banks have simply terminated correspondent banking relationships in the Caribbean outright. The Office of the Comptroller of Currency of the US Department of the Treasury has responded helpfully by issuing clear guidance to the effect that banks are expected to undertake periodic risk evaluations and make individual decisions based on those results, rather than just lop off relationships with foreign financial institutions as a block. This is another area where Cayman Finance will be fully engaged in the coming months.

ABOUT THE AUTHOR Barbara Padega Barbara qualified as a Barrister and Solicitor in Ontario, Canada in 1997 and is called to the bar in Bermuda and the Cayman Islands. Barbara is a contributing author of a number of texts, including Neate and Godfrey on Bank Confidentiality and the International Guide to Money Laundering Law and Practice and is an active member of Cayman Finance’s International Relations Committee. Barbara is the Director of Knowledge Management for Appleby Global, stationed in Appleby’s Cayman Islands office.

The year ahead contains a great deal of uncertainty – we are all watching the Article 50 Brexit vote and the Trump White House in suspense – but our mission statement is sound in theory and working in the real world. The path forward through all of this uncertainty is the same path that has taken us this far: stick with the mission. It’s working.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

65


Brexit & THE OVERSEAS TERRITORIES Fiona Chandler of Harneys discusses the potential impact of Brexit on the Overseas Territories including the Cayman Islands.

What impact will the UK vote to leave the EU have on the UK’s Overseas Territories? Bermuda, the British Virgin Islands (BVI) and the Cayman Islands are each Overseas Country and Territories of the EU (OCTs) under the Treaty of Rome and successive EC/EU treaties, by virtue of being Overseas Territories of the United Kingdom. They are not, however, direct members of the EU, and EU law does not apply directly to them. Following the UK’s vote to leave the EU on 23 June 2016, nothing has changed for these jurisdictions as they each have their own separate legal systems and it is very much business as usual for them as leading international finance centres. Although the UK Government has now announced that it will formally give notice to leave the EU under Article 50 of the Lisbon Treaty by the end of March 2017 (and once it does give notice that process will take two years to formalise the UK’s exit from the EU), it’s not expected that there will be any direct impact on these jurisdictions’ existing legislation or stability as a result of the referendum. As it is not possible to predict the ultimate terms of the exit agreement between the UK and the EU at this stage, the actual impact of a Brexit on OCTs is inevitably uncertain. However the relationship

66

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

between these jurisdictions and the UK is not expected to change and their relationship with other UK Crown Dependencies and Overseas Territories with strong financial services sectors, such as Jersey and Guernsey, will remain strong following an exit of the UK from the EU. The OCTs have diverse economies and the impact of Brexit will not be the same across each OCT. OCT status provides for preferential trading rights for, in practice, less developed OCTs. Bermuda, the BVI and the Cayman Islands, ranking amongst the highest


GDP per capita in the world, have not historically looked to benefit extensively from these rights, although any loss of these rights may have more of an impact on other OCTs. The ending of OCT status is unlikely to materially impact on the scope or viability of the financial services industries in any of Bermuda, the BVI and the Cayman Islands. Their relationship with the EU will technically change in the future, however, following a Brexit, as they will cease to be OCTs. Brexit (once it happens) may also impact foreign policy, including economic and financial sanctions and restrictive measures. Although EU regulation is not usually implemented in the Overseas Territories (including the BVI, Bermuda and the Cayman Islands) as they are outside the EU, currently the UK directly applies EU-origin sanctions to its Overseas Territories. Following a Brexit, UK foreign policy can be expected over time to start to differ from the EU’s policy, including in the way it deals with countries currently subject to sanctions. How it will differ and any impact it may have on these jurisdictions is speculation at this stage.

influence over EU financial services legislation and policy following the referendum vote and subsequent Brexit. Although these jurisdictions are not members of the EU and EU law does not apply directly to them, there could be indirect effects on them following the referendum result. This could include in relation to the likely process of the EU in creating its ‘common EU list of problematic tax jurisdictions’ by the end of 2017. The political element of this is extremely high and the lessened influence of the UK increases the likelihood that this could become an attack on low tax rates. This obviously raises concerns for Bermuda, the BVI and the Cayman Islands, notwithstanding their full compliance with the OECD’s transparency requirements. The European Commission recently issued its initial scoreboard of indicators setting out its pre-assessment of non-EU countries against the Commission’s risk indicators. Bermuda, the BVI and the Cayman Islands were each only included in the no corporate income tax category, confirming their strong co-operation on transparency and exchange of information and non-preferential tax regimes.

What are the key concerns for OCTs in The European Finance Ministers the light of the EU referendum result? meeting in November 2016 also provided some comfort as the screening Given the importance of the financial criteria agreed (reported to have been services industries to Bermuda, the BVI influenced by the UK) require an and the Cayman Islands economies, analysis of whether a jurisdiction has one potential area of concern for these fair taxation, not just the Commission’s OCTs is the likely decline in the UK’s indicator of an absence of corporate

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

67


WE’RE HERE ASSURING QUALITY.

CIIPA regulates the Cayman Islands accountancy profession, facilitating trust and confidence in the Cayman Islands to ensure the continued growth and success of the world’s fifth largest financial services centre.

CAYMAN ISLANDS

CIIPA has over 1000 members and plays a leading role in ensuring Cayman remains a world-class international finance centre - at the forefront of finance transactions for investment funds, structured finance, capital markets, asset finance, captive insurance and private wealth. For more information visit our website.

WWW.CIIPA.KY

Shaping Cayman. Together. Formed in 1979, the Cayman Islands Bankers’ Association (CIBA) comprises 54 ordinary members and 86 associate members. Membership has its benefits: We champion the common interests of members in their relationship with government, citizens, businesses and professional associations within the Cayman Islands. Our functions are an excellent forum to interact with high level financial industry decision makers. As a promotional opportunity, members can provide speakers for these functions. Visit our website and learn about membership. 345.949.0330 | ciba@cibankers.org cibankers.org


income tax. It is now for EU member states to decide which countries should receive further screening over the next few months for the common EU list and it is hoped that the UK will retain some influence over that process, regardless of the referendum result.

in place, the third country passport regime will then be extended to Bermuda and the Cayman Islands once it is introduced, along with other jurisdictions like Jersey and Guernsey which have already been approved by ESMA, regardless of the referendum result and Brexit.

Another area of potential concern is whether the AIFMD passport for marketing alternative investment funds will be extended to include OCTs such as Bermuda and the Cayman Islands. Although ESMA’s recent advice noted that there are no significant obstacles regarding competition and market disruption impeding the application of the AIFMD passport to Bermuda and the Cayman Islands, ESMA delayed its definitive advice on the basis that both countries are in the process of implementing new AIFMDlike regulatory regimes and other legislative changes. It is hoped that once those regimes and changes are

To what extent, if any, has the relationship of Cayman with the EU differed from that of the UK as a whole?

ABOUT THE AUTHOR Fiona Chandler Fiona is a professional support lawyer at Harneys with extensive investment funds experience, including the establishment of investment funds and restructuring and winding down investment funds’ affairs and on financial services regulatory matters Fiona also has extensive onshore and offshore corporate transactional experience including public and private M&A, equity capital markets matters, joint ventures and restructuring group structures.

As the Cayman Islands is not a member of the EU, its relationship with the EU is via the Cayman Islands’ status as an OCT. The UK is currently a full member of the EU, with the direct rights and obligations that involves. What role would the Cayman Islands seek to play in any negotiations concerning the UK’s future relationship with the EU? The UK government has confirmed that when preparing for its negotiations with the EU on Brexit it will consult the Overseas Territories to ensure that the interests of all parts of the UK are protected and advanced. Some of the Overseas Territories may take the opportunity to try to become directly involved in negotiations on specific matters of concern to them, which could include financial services where relevant, even though this is not the UK’s preferred approach and the UK government has reiterated that it will be the UK that is negotiating with the EU on the terms of Brexit. Cayman is expected to participate in the UK government’s consultation process.

Has the government of the Cayman Islands taken any position on the form of relationship it would like to see the UK adopt with the EU? The government of the Cayman Islands has not taken any position on the form of relationship it would like to see between the UK and the EU. Are there any issues you think lawyers who deal with Cayman should consider at this stage? Cayman Islands law remains unchanged as a result of the EU referendum result. We do not expect there will be any significant impact on Cayman’s existing legislation or stability following a UK exit from the EU, as EU law does not apply directly in the Cayman Islands. To the extent that Cayman entities have entered into contractual arrangements which include references to EU regulations, there may be implications for their lawyers to consider with relevant onshore counsel.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

69


Cayman Confidential

EXPLORATION OF EVOLVING REGIMES Significant developments this year, both in legislation and business practice, demonstrate the evolving nature of confidentiality regimes and considerations in the Cayman Islands, writes Simon Dickson and Rhiannon Williams.

70

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


T

he repeal of the Confidential Relationships (Preservation) Law (2015 Revision) and the publication of the Data Protection Bill, 2016, plus enhanced awareness of the importance of cyber security, all play a role in the framework balancing transparency with adequate and internationally recognised safeguards to protect the confidential information of both individuals and businesses. CONFIDENTIAL INFORMATION DISCLOSURE LAW, 2016: A WELCOME REFORM On 22 July 2016 the Cayman Islands Government published the Confidential Information Disclosure Law, 2016 (the CID Law) which repeals the Confidential Relationships (Preservation) Law (2015 Revision) (the CRP Law) and establishes a new statutory regime in the Cayman Islands for the disclosure of confidential information. The CRP Law dates back to 1976 and was enacted with a view to maintaining the confidentiality of commercial activities which take place in, or in connection with, the Cayman Islands. The CRP Law applied to certain categories of individual and set out what constituted confidential information, certain gateways through which information could be lawfully disclosed and prescribed penalties for unlawful disclosure of confidential information. Penalties for breaching provisions of the CRP Law were severe and included fines, imprisonment and the disgorgement of profits. However, given that there have been no prosecutions in the almost 40 year period since the CRP Law was introduced, it could be

argued that these strict penalties were THE DATA PROTECTION BILL: practically ineffectual. A WORLDWIDE CONCERN The Data Protection Bill, 2016 (the The CID Law appears to be more of an DPB) was published by the Cayman enabling piece of legislation compared Islands Government on 1 April 2016. to the punitive approach adopted by the This draft legislation aims to balance the CRP Law. The key differences can be rights of individuals to expect that their summarised as follows: personal data will be kept safe, and the legitimate requirements of businesses – the abolition of the criminal offence and public authorities to collect and use of disclosure; such data. – it must be established that the information imparted was subject to a duty of confidence before any breach can be established (instead of the automatic protection of information imparted to a person carrying on business of a professional nature); and

The need for data protection legislation has become increasingly urgent over recent years. Exponential increases in technical innovations and applications have meant that more public and private entities are collecting and maintaining personal – an additional “whistleblowing” data, and the ease with which this gateway through which information data can be transferred across national can be lawfully disclosed in certain boundaries has significantly improved. circumstances if it is in relation to “a The negative consequences of such serious threat to the life, health, safety personal data being used illegitimately, of a person or in relation to a serious both to the individual concerned threat to the environment.” personally and to the reputation of the disclosing entity, are a worldwide The decriminalisation of disclosure concern and have led to data protection is welcome, not least because it was legislation being implemented in most an ineffective deterrent. However, developed countries. notwithstanding such decriminalisation, businesses should remain vigilant to The DPB is modelled on the UK’s their on-going obligation to maintain Data Protection Act 1998, with some confidentiality. The CID Law does simplification and enhancements not contain any specific penalties for customised to the Cayman Islands. contravening its provisions, and so the The UK legislation is itself based on court will apply common law and rules the EU’s Data Protection Directive, of equity in the event of any breach. The which is generally considered to be the publication of the CID Law and the most rigorous data protection standard amendments to the statutory framework globally. The key purpose of aligning the which it enacts play a key role in balancing DPB with the EU legislation is that it the Cayman Islands’ obligations to be is hoped that the EU Commission will financially transparent with its duty consider the DPB to be an “adequate to protect the confidentiality of lawful level of protection for the rights and business activities. freedoms of data subjects in relation to

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

71


the processing of personal data” in the Cayman Islands, as required by Principle 8 below; the effect of such a decision is that personal data can flow from EU member states and other countries which have adequately adopted these principles to the Cayman Islands without any further safeguards being required. If and when this legislation comes into force businesses operating here will also need to ensure that they comply with each of the Principles at all times, and Principle 8 in particular when dealing with their overseas clients and colleagues.

8. Personal data shall not be transferred to a country or territory unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data. Although each of the Principles is important, the last two are interconnected and of particular interest. Principle 8 is relevant due to the importance for the Cayman Islands of operating internationally, as discussed above.

The obligations imposed by Principle THE PRINCIPLES 7 play a vital role in enabling private The DPB is centred around eight Data and public entities to adhere with the Protection Principles (the Principles) obligations imposed by Principle 8 (and the other Principles). 1. Personal data shall be processed fairly and only if specific conditions are met (for example, consent has been given). Additional conditions apply to sensitive personal data. 2. Personal data shall be only obtained and processed for specified lawful purposes. 3. Personal data shall be adequate, relevant and not excessive in relation to the purpose(s) for which they are collected or processed. 4. Personal data shall be accurate and, where necessary, kept up-to-date. 5. Personal data shall not be kept for longer than is necessary. 6. Personal data shall be processed in accordance with the rights of individuals as specified under this Data Protection Law. 7. Appropriate technical and organisational measures shall be taken against unauthorised or unlawful processing of personal data and against accidental loss, destruction of, or damage to, personal data.

72

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

All such public and private entities should take note that any failure to adhere to Principle 7 (and indeed all of the Principles) is a breach which could give rise to enforcement action by the Information Commissioner, which includes monetary penalties and criminal prosecutions; given the necessity for increasingly complex information security systems as discussed further below, it is clear that maintaining “appropriate technical and organisational measures” will be both expensive and an evolving process. CYBER SECURITY: AN OVERRIDING CONSIDERATION In addition and complementary to any legal obligations, recently there has been

tremendous commercial focus on the importance of maintaining appropriate

information security systems in light

of well-publicised breaches of, and

unauthorised disclosure of data by, professional firms and government

entities, causing severe financial and reputational loss.


The Cayman Islands, on account of its response to the escalating risk of cyber role as an international finance centre, is attacks on the Cayman Islands generally particularly vulnerable to cyber attack. and the financial industry in particular. Due to the increasing threat of such attacks, on 25 May 2016 the Cayman Islands Monetary Authority (CIMA) issued guidance to its licensees to raise awareness generally and remind licensees to remain focussed on their organisations’ data security. CIMA’s guidance notes that as well as reviewing and strengthening its own security strategy, CIMA strongly encourages its licensees to assess their cyber security risks and strategies and to test their information security systems for vulnerabilities. In future, CIMA plans to review its licensees’ approaches to data security risk management by examining the technical controls, incident response and / or staff training a licensee has in place, as appropriate to its business and risk profile.

ABOUT THE AUTHOR Simon Dickson Simon is a Partner in the Litigation and Insolvency Department in the Mourant Ozannes Cayman Islands office. Prior to this, he was a barrister in chambers in London. Simon has extensive experience in insolvency and restructuring, fraud and asset tracing and regulatory matters. Simon graduated from Durham University in 1996. He was called to the Bar of England and Wales in 1998 (currently non-practising) as a Harmsworth Scholar and the Cayman Islands Bar in 2002. He is a member of the Honourable Society of the Middle Temple.

CAYMAN: TRANSPARENCY, CONFIDENTIALITY, SECURITY These legislative and commercial developments are part of the evolution of confidentiality regimes in the Cayman Islands which are important in maintaining its reputation and position as an international finance centre. They also demonstrate the balance which needs to be struck between operating in a transparent manner whilst protecting the confidentiality of lawful business activities, and also between the protection of individuals’ data and the legitimate requirements of business and public authorities to use such data. Awareness of and adherence to good information security practices is of the utmost importance, both to enable compliance with the legislation and in

ABOUT THE AUTHOR Rhiannon Williams Rhiannon specialises in all areas of corporate, finance and commercial work, with a particular focus on investment funds. Rhiannon advises on joint venture arrangements, mergers and acquisitions, corporate finance, corporate governance and regulatory issues, as well as the establishment, management and restructuring of Cayman investment funds. Rhiannon is an Attorney of the Grand Court of the Cayman Islands and a Solicitor of the Senior Courts of England and Wales (currently non-practising). Rhiannon studied Economics at Churchill College, Cambridge and studied law at the BPP Law School in London.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

73


The EVOLVING

C Y B E R T H R E AT L A N D S C A P E I

n this article, we will briefly explore the increasing cybersecurity threat landscape, the various sources of threats, discuss the evolving regulatory environment and introduce some practical options that business leaders should be considering as they develop, enhance and refine their strategies to manage cybersecurity risks. Over the last five years, cyber-attacks have become more sophisticated and increasingly coordinated. According to PwC’s 2016 Global Economic Crime Survey, cybercrime jumped to the second most reported economic crime in 2015, with more than one in three organisations surveyed reporting being victimised by an economic crime. The financial services sector is a prime target and Cayman, along with the rest of the Caribbean should be acutely aware of the increasing threat.

74

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Recently, there have been numerous news reports in Cayman of phishing and social engineering attempts aimed at customers across multiple industries. Businesses are evolving and are increasingly relying on connected technology and third-parties to meet customer expectations, deliver services and remain competitive in the market place. As a result, the number of target points for cyber threat actors is rapidly increasing and the potential points of weakness are becoming less obvious as connected infrastructures and use of third-party service providers proliferates. Local and global regulators have taken notice and are actively introducing new regulatory measures to address the increasing risks. Financial services is the largest revenue generating industry in the local economy and is a prime target for cyber criminals. The Cayman Islands Monetary Authority

(CIMA) is responding and announced the introduction of targeted cyber focused inspections for licensees in their May, 2016 Cybersecurity circular. Similarly, in January, 2016, the US Securities and Exchange Commission (SEC) announced cybersecurity as a top focus area for 2016 and beyond. WHO ARE WE PROTECTING AGAINST?: Broadly speaking, we define categories of threat actors that include: Nation States, Hactivist/Hactivism, ThirdParties, Organised Crime, Cyber Terrorists and Insiders. The various threat actors have different motivations for their activities, which adds to the complexity of the problem and increases the need for comprehensive understanding of the risks at regional, industry, institutional and process levels.


T H R E AT A C T O R

DESCRIPTION

Nation State

Hackers directly employed by an arm of a national government to penetrate commercial and/or government computer systems in other countries

• Cyber espionage

Hactivist / Hactivism

Individuals or groups who use digital tools looking to advance their owns social, political and ideological agendas

• Political and /or social change • Thrill seeking • Reputational damage

Third Parties

3rd party vendors and service providers who: a) Have access to data b) Have access to systems c) Have access to facilities

• • • •

Organised Crime

Highly structured criminal organisations and groups of hackers that seek to attack under-defended targets and exploit weaknesses

• Immediate financial gain • Collect information for future financial gains

Insider

Current or former employees who may be disgruntled or under duress using internal access and authority for nefarious purposes

• Personal advantage, monetary gain • Malevolent behavior (revenge) • Bribery, blackmail / coercion or collusion

PRACTICAL CONSIDERATIONS: It’s important to note that there is no one-size-fits-all solution for cybersecurity, and no silver-bullets. Understand your current state, your risks and your assets Consider performing an initial evaluation of where you are through a collaborative effort between IT and business. Identify and prioritise your “crown jewels” in order to determine the current risks and controls in place. On the technology side, consider performing assessments to determine if controls implemented follow leading practices. Ensure you are considering the end-to-end environment inclusive of all relevant third party providers. Formulate a cyber-strategy and risk appetite Once the current state has been established and the key assets identified, consider developing a cybersecurity strategy and define your appetite for cyber risk to help guide investment decisions and drive decision-making – it is important to understand what’s

M O T I VAT I O N

at risk and how much can you lose to inform how much can you should be spending on protections. Establish policy and governance Establishing formal policies and procedures for managing cybersecurity and implementing a governance model with clear roles and responsibilities will enable more efficient and consistent decisionmaking. The responsibility for cyber risk is shared across the business, IT, Senior Management and the Board of Directors. It is critical to define the governance model to ensure you’re able to proactively manage your infrastructure assets and to be able to respond to incidents. Many companies appoint a Chief Information Security Officer (CISO), who is responsible for providing direct oversight over the security function. CISO’s generally have access to all parties in the governance framework and provide regular security updates to senior management and the Board of Directors. Integration is critical, cybersecurity should be considered

Immediate financial gain Collect information for future financial gains Competitive advantage Collusion with other threat actors

as part of a broader operational risk framework that covers risks associated with people, processes, systems, data and external factors. Adopt a framework There are many industry accepted frameworks that can be leveraged and customised to your company’s needs (e.g. NIST, COBIT5, ISO, COSO, etc.) The selection of a framework should be informed by your baseline assessment, risk appetite and governance model. Ensure that when implementing a framework you create linkages and integration with the governance model, risk appetite, strategic plan and the broader enterprise risk management functions. It is also important to consider the broader regulatory framework and environment to inform framework selection. For example, in a May 2016 Cybersecurity circular, CIMA indicated that they will be adopting the National Institutes Standards and Technology (NIST) cybersecurity framework.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

75


Implement and monitor The effectiveness of a cybersecurity framework and governance model is dependent on effective implementation and adoption. On-going monitoring and reporting provide management visibility into their cybersecurity risks and the effectiveness of their control environments. Consider providing targeted reporting to various stakeholder groups by defining and implementing Key Risk Indicators (KRI) and Key Performance Indicators (KPI) linked to business and operational objectives in alignment with a formal governance model. In addition to governance reporting, it is critical to monitor and report on cyber security incidents and threats to ensure

ABOUT THE AUTHOR

76

both proactive management as well as effective incident response. Close the loop by learning from incidents and enhancing processes and framework elements as threats evolve and new threats emerge. Monitor internally as well as externally, there is a lot to be learned from incidents at other companies, and in other jurisdictions. Effectively monitoring your own endto-end capabilities and external trends will create the greatest value. IN SUMMARY: Cyber criminals continue to become increasingly sophisticated and organised. Threats come in many forms with many underlying motivational factors. Increasing reliance on systems

ABOUT THE AUTHOR

and interconnected infrastructure is driving the need for stronger controls and more formal management as threats emerge and evolve. Cybersecurity isn’t just an IT issue, it’s a business issue and everyone is a stakeholder. Multifaceted solutions that evolve to manage new threats will position you to weather the storm when it comes. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. PwC refers to the Cayman Islands member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.

ABOUT THE AUTHOR

Isabel Gumeyi, CISA, CISM, ARM

Assaad Sakha, CISM, CISSP, PCI-QSA

Robert Stanier, MBA

Isabel is a Senior Manager with PwC’s Risk Assurance Group. She has over ten years of extensive experience assessing IT related risks, adding value to clients across various industries by providing advice on strategies to enhance their IT and business processes to address key risks and meet good practice standards. Her experience covers areas such as IT governance, Information Security and other IT general control considerations.

Assaad is a Senior Manager with the Cyber Security practice at PwC. He has over twelve years of experience across various areas of Information and Cyber Security which includes security strategies, information protection, threat intelligence and vulnerability management, breach indicator assessments, digital identity and access management and compliance with various frameworks. Assaad has a number of cyber security publications including participating in the development of the ITU Toolkit for Cybercrime Legislation for United Nations Cybersecurity Programme in association with the American Bar Association’s Privacy & Computer Crime Committee.

Bob is a Partner with PwC Cayman Islands leading Risk Assurance services across the Caribbean region and Bermuda. Bob has more than 15 years of global executive level experience leading enterprise and operational risk organisations and engagements for some of the largest and most complex global companies in the financial services, development finance and consumer and industrial products industries.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


Striving to enhance your performance. We’ll continuously innovate and adapt to respond to your changing needs.

Showing a deep commitment to improvement and excellence in everything we do, from concept to delivery. Having a passion for making a real impact to identify clear practical solutions that set us apart. kpmg.ky

© 2016 KPMG, a Cayman Islands partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. “The KPMG name and logo are registered trademarks or trademarks of KPMG International.” The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of thedate it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Experienced legal specialists in Cayman Islands investment funds, litigation, insolvency, trusts and corporate transactions. Anguilla Bermuda British Virgin Islands Cayman Islands

Cyprus Hong Kong London Mauritius

Montevideo Sao Paulo Shanghai Singapore

www.harneys.com | www.harneysfid.com

Tokyo Vancouver

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

77


CIIPA:

THE CHANGING FACE OF ACCOUNTANCY Sheree Ebanks explains how the Cayman Islands Institute of Professional Accountants has evolved since its inception. HUMBLE BEGINNINGS Our financial world isn’t as new as we perhaps think it is. In fact, the moment early civilisations learned to exchange commodities, the concept of finance was born. Advances in writing, mathematics, and currency in ancient Egypt led to the development of early accounting, and in 1494 a 27-page thesis on doubleentry system bookkeeping was published for Venetian merchants. Simply titled “Details of Calculation and Recording”, the book arguably played a major factor in laying down the foundation for modern day accounting. And the rest, as they say, is history. ARRIVING ON THE SCENE Perhaps a tad late to the financial scene, Grand Cayman in 1960 was a quiet place to be. With turtling as its main industry and a lack of banks on the island, it seemed an unlikely contender to rival the likes of London, New York and Singapore. The game changer in 1965 was the opening of the islands’ first trust company, the Bank of Nova Scotia Trust Company (now Scotiabank). This led to amendments to the Banks and Trust Companies Regulations Law, and suddenly businesses had new freedom to flourish. Just two years later, a young accountant set up the first accountancy firm on the island. Doors began to open, and other firms elsewhere in the world realised the opportunity to establish themselves in a tax neutral jurisdiction. As more and more accountants began to arrive in the early 1970s, a small group of pioneers in Cayman’s accountancy field decided to form the Cayman Islands Society of Professional Accountants which later became the Cayman Islands Institute of Professional Accountants.

78

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


QUALITY ASSURANCE REVIEWS CIIPA has come a long way since those early days. Presented with an increasingly changing regulatory environment, CIIPA quickly understood that it needed to change right along with it. Therefore, when the Public Accountants Law came into effect in 2008, it ushered in a new era of regulatory oversight – with CIIPA taking on the role as regulator to the profession. Just five years later, CIIPA was admitted as a full member of the International Federation of Accountants (IFAC). CIIPA completed its first, soft cycle review in 2015 while waiting for the passage of The Accountants Law (2016). This came into effect on November 28, 2016 and paves the way for the second review cycle in 2017. As such, CIIPA adheres and encourages its members to comply with the International Standard of Quality Control (ISQCI) and has established a process of Quality Assurance Reviews, reviewing and monitoring compliance by audit firms. This process involves the selection of firms to be scheduled for review, with each firm reviewed once in any three year period. CIIPA has completed its first cycle of reviews in 2015 and will start the second phase in 2017, once the new Accountants Law is enacted and the accompanying regulations are passed. CIIPA works closely with the Institute of Chartered Accountants of England and Wales in this process. It is essential that reviews are performed in order to ensure not only that audits comply with professional standards, but firms meet the requirements of ISQCI and applicable audit standards. Once the reviews are complete, firms are provided with the findings, and a summary report is published on ciipa.ky. Should deficiencies be identified, CIIPA will endeavour to support the firm in rectifying the deficiency; however, if the requirements are disregarded, the matter will be referred to investigation, and disciplinary action may be considered.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

79


In addition to firm reviews, another member obligation to IFAC is ensuring members comply with International Education Standards (IES) and in particular IES7: Continuing Professional Development. Each year, CIIPA randomly selects a percentage of its membership who are required to submit their CPD record together with supporting evidence for review. If any deficiencies are noted, CIIPA will work with that member to ensure their hours are attained. MEMBERSHIP & LICENSING REQUIREMENTS Criteria is strict for membership and licensing. Regular members must comply with IES7 and Licensed Practitioners must be able to prove competency through experience and CPD. In order to maintain their ongoing membership with CIIPA, members are expected to continue certain obligations. Regular Members and Licensed Practitioners are expected to act diligently and in accordance with technical, professional and ethical standards. In order to be admitted as a Regular Member of CIIPA, an accountant must be in good standing with its Overseas Professional Accounting Institute (OPAI), maintain a minimum requirement of continued professional development hours, and prove legal status and residency in the Cayman Islands. COMPLAINTS & INVESTIGATION CIIPA strives to ensure complete competence and compliance, and therefore takes its complaints process very seriously. The process is governed by Part 4 – Discipline, of The Accountants Law, 2016. Anyone may bring a complaint against a member of CIIPA based on grounds ranging from incompetence to breach of professional standards. All formal complaints are received by Council, which will determine whether the claim should be referred to an Investigation Committee.

80

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


If there is a prima facie case, the Investigation Committee will then further refer the complaint to a Disciplinary Tribunal. To ensure a fair and impartial approach, the Disciplinary Tribunal has three rotating chairs who are not CIIPA members. ADDITIONAL OVERSIGHT When it comes to accounting, CIIPA is not the only organisation with oversight responsibilities. The Cayman Islands Monetary Authority (CIMA) approves audit firms, and these firms must provide additional reporting requirements. CIIPA works closely with CIMA and the audit firms to ensure compliance with the Proceeds of Crime Law. In 2011, the Auditors Oversight Law was passed, establishing the Auditors Oversight Authority (AOA). The AOA is charged with regulating and supervising firms that conduct audits of the accounts of market traded companies. CIIPA is also working with AOA to develop efficiencies in the review and oversight process. LOOKING AHEAD CIIPA worked closely with the Ministry of Financial Services on the new Accountants Law, 2016 and its accompanying Regulations. CIIPA’s President Serge Berube noted that The Accountants Law, 2016 reflects changes in international oversight practices, ensuring CIIPA has the framework to enforce international Standards.

ABOUT THE AUTHOR Sheree Ebanks Sheree is CIIPA’s first appointed CEO, with over 40 years of experience in areas such as asset management and fiduciary services. She spent her early career years developing the bank and asset management business at one of Cayman’s largest banks and trust companies later on taking on an executive position. She holds a number of board positions in the Cayman Islands, and has participated in government representative bodies, assisting local and international matters.

Globalisation has created a competitive landscape in the world of accounting, and CIIPA is poised to lead the accounting profession and the Cayman Islands into the future. It has come a long way in the past 45 years and its commitment to Cayman remains as strong as ever.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

81


AT A GLANCE

TRUSTS The Cayman Islands is one of the leading international centres for the creation and administration of trust structures. The country’s trust industry has kept pace over the years due to a number of important factors. The Cayman Islands has a solid Trust Law, it led the way with the creation of the Special Trusts Alternative Regime (‘STAR’), it provides for the licensing of Private Trust Companies (PTCs), and has more recently introduced a registered but not licensed PTC regime. The jurisdiction is also home to some of the most talented and forward thinking trust professionals. TRUSTS LAW In the Cayman Islands, as in England, the law of trusts is not statute-based but primarily grounded in rules of common law and equity. These are supplemented by local statutes including the Trusts Law (2011 Revision), which incorporates the previously separate statutes The Trusts (Foreign Element) Law, STAR Law and the Trusts (Amendment) (Immediate Effect and Reserved Powers) Law.

82

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Cayman Islands’ trust law continues to evolve through judicial decisions relating to issues that are at the forefront of legal development in this field. The islands’ robust trust legislation is supported by a strong and independent local judiciary. Private and public sectors are continuously reviewing and updating legislation so it remains current and viable. TAX NEUTRALITY The Cayman Islands is a tax neutral jurisdiction. There has never been any direct taxation in the Cayman Islands, the only fiscal impositions being stamp duty and import duty. A trust can be registered as an “Exempted Trust” and obtain an undertaking from the Governor in Cabinet which exempts the trust from risk to future taxation for 50 years.


CATEGORY OF TRUSTS In addition to traditional wealth planning, Cayman Islands trusts are used extensively in capital markets transactions and structured finance deals. Cayman Islands trusts can be divided into the following conceptual categories (which are not necessarily mutually exclusive): • Unit Trusts • Pension Trusts • Security and Securitisation Trusts • Private Trusts • Charitable Trusts • STAR Trusts • Exempted Trusts • Reserved Powers Trusts • Forced Heirship Planning Trusts STAR TRUSTS A STAR trust can be established for any purpose, provided it is lawful and not against public policy. They create innovative trust planning opportunities and advocates of STAR trusts continue to find new uses for this regime in their planning. There are a number of features that distinguish the STAR provisions from the purpose trust legislation of other jurisdictions. These include: • the objects of a STAR trust may be persons or purposes, the persons may be of any number and the purposes may be of any number or kind, charitable or non-charitable, provided they are lawful and not contrary to public policy. This differentiates from the position in other jurisdictions

where it must be decided whether a trust is a purpose trust or a person trust before deciding whether the purpose trust law applies. • the rule against perpetuities, which limits other types of trusts in the Cayman Islands to the statutory perpetuity period of 150 years, does not apply to a STAR trust and therefore a STAR trust can have perpetual existence. • the STAR provisions stipulate that a STAR trust is not rendered void by uncertainty as to its objects or mode of execution. It allows the trust deed to give the trustee or any other person power to resolve an uncertainty as to its objects or mode of execution. • the STAR provisions deal comprehensively with the issue of enforcers. They provide that the only persons who have standing to enforce a STAR trust are such persons, whether or not beneficiaries, as are appointed to be enforcers by the terms of the trust deed, or in certain circumstances by order of the court. Therefore beneficiaries who are not enforcers have no right to enforce the trust or to obtain information regarding the trust.

Produced with kind assistance from the Society of Trust & Estate Practicioners (STEP).

REGULATION Trust Companies in the Cayman Islands are regulated by CIMA through the various licenses granted and registrations required. Generally, there are two types of licenses granted to trustees carrying on a trust business in Cayman: • A full trust license entitles the holder to provide trustee services to the public generally. • A restricted trust license is issued subject to the condition that the trust business is limited to certain named clients. A Restricted Licence Trust Company is restricted to acting as trustee to specific named trusts that are for related parties or a specific group. All directors and senior officers (including any changes after licensing) must be approved by CIMA. FUTURE LEGISLATION The Cayman Islands have a record of enacting innovative and forward-looking legislation. The Government continues to demonstrate responsiveness to the needs of the financial industry and there is a broad on-going commitment to enact further legislation in the trust and related areas. The expert service providers in the Cayman Islands can assist stakeholders with an efficient and effective strategy to establish or move structures to the jurisdiction.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

83


THE STATS 84

Licensees/Registrations under the Fiduciary Services Division LICENSEES UNDER THE COMPANIES MANAGEMENT LAW

TRUST COMPANIES Period

Unrestricted

Restricted

Nominee

Total Number of Trust Companies

Registered Controlled Subsidiaries

Registered Private Trust Companies

Company Managers

Corporate Services Providers

2001 2002 2003 2004 2005 2006 2007 2008 2009 QTR. I QTR. II QTR. III QTR. IV 2010 QTR. I QTR. II QTR. III QTR. IV 2011 QTR. I QTR. II QTR. III QTR. IV 2012 QTR. I QTR. II QTR. III QTR. IV 2013 QTR. I QTR. II QTR. III QTR. IV 2014 QTR. I QTR. II QTR. III QTR. IV 2015 QTR. I QTR. II QTR. III QTR. IV 2016 QTR. I QTR. II

54 53 49 51 48 51 51 54

62 67 74 74 78 83 87 87

31 28 26 22 20 27 21 18

147 148 149 147 146 161 159 159

– – – – – – – 4

– – – – – – – –

51 81 73 69 68 70 69 74

0 1 5 5 5 5 7 6

55 53 53 53

86 85 85 83

22 22 22 21

163 160 160 157

8 9 13 15

7 9 18 24

75 77 82 77

6 6 7 7

52 50 51 51

78 78 78 76

21 21 22 23

151 149 151 150

13 14 18 20

29 37 40 44

77 77 79 80

7 7 7 9

53 53 52 54

72 71 71 69

23 23 23 24

148 147 146 147

21 23 28 29

50 56 60 65

81 82 82 83

9 9 10 9

53 53 53 52

71 71 69 66

24 24 24 24

148 148 146 142

32 34 34 30

65 70 77 77

84 86 87 86

10 11 12 12

52 51 51 50

67 67 67 67

23 22 22 22

142 140 140 139

32 35 34 34

83 85 87 88

91 93 92 93

14 15 17 17

49 49 49 47

65 65 64 63

27 27 27 27

141 141 140 137

38 38 38 36

88 91 93 95

90 97 98 96

18 16 16 16

50 56 58 57

63 62 62 61

27 26 31 31

140 144 151 149

32 34 35 36

100 107 113 121

98 99 98 102

17 20 20 21

57 59

62 62

31 31

150 152

34 37

116 121

105 111

22 22

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Statistics source: Cayman Islands Monetary Authority (CIMA)


Single Family Offices IN THE CAYMAN ISLANDS

MOVE TO CAYMAN Ken Dart and his family first visited Grand Cayman in the late 1980s and fell in love with the island. Recognising the opportunities Cayman could offer, both as a place to make his family’s home and base his family office, he opened a small investment office in 1993 with three employees. Some 23 years later that investment office has grown to become the base of Ken Dart’s global operations and Grand Cayman continues to be home to his family. At the time, the Islands offered a unique blend of genuine hospitality, a safe, welcoming community and some of the most beautiful beaches in the world. It had a stable government, a legal system based on English Common Law, good basic infrastructure including telecommunications, airports and port; an open policy on foreign property ownership and an advanced registered land title system. Above that, it was tax neutral and provided access to best-inclass service providers competing in the global arena. The fact that the Cayman Islands is geographically proximate

to the United States, is located in the Eastern Time Zone, is English speaking and uses a fixed exchange rate with the U.S. Dollar were also attractive features. This combination of factors gave Mr Dart the confidence to relocate his family office and expand the size of its team. With a goal of growing the capital base and with a long-term investment horizon, Ken saw opportunities to invest in the Cayman Islands – investing both for profit and to enhance the quality of living in the community. Many of these investments have helped make the Cayman Islands an even more exciting proposition for other family offices looking to relocate. SUBSEQUENT INVESTMENT & DEVELOPMENT One of Ken Dart’s first initiatives was the establishment of a 26-acre nursery that would supply mature, native landscaping materials for hisown private gardens and the future developments he might undertake.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

85


To date, his signature development is the mixed-use town of Camana Bay, which broke ground in 2005 and continues to grow. Inspired by the principles of new urbanism, Camana Bay features thoughtful and sustainable design and has a commitment to public open spaces, focusing on human engagement and interaction. Mr Dart’s vision was to create a community where businesses thrive and people want to live, to attract and retain top employees by creating an environment with a focus attractive as an alternative to the typical on life, productivity and wellbeing. luxury approach and the brand had a track record of success with adaptive, Understanding that access to quality reuse of existing buildings, transforming education is a vital factor for businesses them into signature hotels. hoping to attract and retain talent, After rounds of careful study, it was Camana Bay’s first completed phase ultimately decided that a better use included a world-class school campus, of the land was to raze the existing home to the Cayman International structure and start anew. In July 2013, School, adding much needed capacity Dart and Kimpton announced their to the handful of quality private schools partnership and together set out to on the island. create the brand’s first foray outside of the United States, a boutique hotel with Today, his vision is a reality and Camana an expansive beach setback, beautifully Bay is a dynamic 650-acre, community landscaped grounds, stunning ocean with over 800,000 square feet of views and a modern Caribbean vibe commercial office, retail, residential and that was at once rustic yet polished. entertainment spaces; where more than a thousand people gather each day to The Kimpton Seafire Resort + Spa and work, learn, shop, dine, play and live. It The Residences at Seafire fill a need in is a thriving Caribbean town with city Cayman’s hotel and real estate market, amenities in a beautiful island setting. offering accessible luxury in a boutique

TRUSTS

In January 2011, Mr Dart acquired a hotel that had permanently closed in 2008. After an extensive search for the right hotel brand, one emerged as the clear, best choice: the US-based Kimpton Hotel and Restaurant Group.

86

Recognised by Fortune as one of the 100 Best Companies to Work for 7 years running, Kimpton is renowned for its people-focused culture. Its philosophy of genuine, unscripted hospitality was

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

setting of high design and personalised guest experiences. It will grow, rather than dilute the market. Regaled as one of the most important resort hotel opening of the year, Kimpton Seafire opened on schedule in November 2016, adding 266 rooms, with 62 for-sale residences scheduled for completion in 2017.

at 18 Forum Lane and welcomed PwC as the anchor tenant, adding yet another global financial services name to the growing list that have chosen Camana Bay as their Cayman address. Continued interest in state-of-the-art commercial office spaces at Camana Bay has prompted Dart to construct One Nexus Way, scheduled to open in 2017. Today Dart Real Estate, one of the DART group of companies, has invested more than US$1 billion in the Cayman Islands across a diverse portfolio of commercial, retail, resort and residential real estate including infrastructure such as public parks, roads and bridges. From Dart Real Estate’s roots at Camana Bay to its first hotel development at the Kimpton Seafire and an upcoming fivestar resort on Seven Mile Beach, Mr Dart’s design philosophy is dedicated to place-making where people naturally gravitate, enabling them to lead more fulfilling lives whether at work, home or play. He believes that greater than the sum of the architecture, interiors and landscape is the experience of the people spending time in these places, whether a small community park or an expansive mixed-use community growing around a vibrant town centre.

CONTINUED GROWTH In December 2015, Dart Realty introduced the Caribbean’s first During the past 25 years, while the LEED1 Gold Class-A office building billionaire entrepreneur has been


quietly investing from and in the Cayman Islands with a focus on longterm value creation, the country itself has continued to evolve and develop. The Cayman Islands often leads the way among international financial jurisdictions, meeting or exceeding global regulatory standards and domestically, improving its capabilities in technology and telecoms, offering fibre-based reliability and speed, essential to global competitiveness and business continuity. Grand Cayman today is a one-stop shop for professional services in accounting, law, trusts and auditing, with worldclass leaders in their respective fields offering unparalleled service delivery in a competitive business environment.

use. The Cayman Islands specifically permits those creating trusts to reserve a range of powers over the trusts and, through the use of the innovative and unique “STAR Trust”, it allows the creation of purpose trusts which can be used to facilitate philanthropic giving, succession planning, or the furtherance of commercial goals.

Cayman continues to innovate and is expected to soon pass its Foundation Companies Law, an exciting legal development which will introduce another unique form of legal entity to the Cayman Islands. This commitment to legal innovation, supported by a network of highly qualified professionals allows the Cayman Islands to continue to meet the needs of an increasingly The continued rise of growing global sophisticated client-base. wealth means more family offices, and more of them exploring the optimal As the global BEPS (Base Erosion jurisdiction in which to base operations. and Profit Shifting) project marches More than ever before, the Cayman on apace, it is becoming increasingly Islands is prepared to serve single- important for legal entities to show family offices and the professionals that they have substance behind their responsible for wealth preservation, corporate exterior; that real decisions are management and growth.   made in the place where the company is established. Cayman is ideally placed In the early 1990s when Ken Dart set to ensure that family offices established up his family office, the jurisdiction here will be able to evidence that their offered political stability, good transport “mind and management” really is in links to the US, and a sufficiently robust the Cayman Islands. Not only can communications infrastructure to allow family offices look to relocate their key a family office to operate. Over the next individuals to the Cayman Islands, the 25 years, Cayman has continually been family's structures can then be serviced refined to the point where today, it by local professionals.  offers the depth and diversity needed to establish and service sophisticated wealth Cayman has a professional services and succession planning structures. culture underpinned by an open competitive market for services Building on solid English legal boasting multiple firms of highly skilled principles for trusts, the Cayman Islands professionals. During the past two has introduced trust-specific legislation decades, the jurisdiction has become which provides a number of creative highly regarded and is used directly and flexible tools for family offices to and indirectly by a large proportion

of the world's ultra-high-net-worth individuals and families and offering a degree of excellence, which underpins its established positive reputation amongst the jurisdiction’s clients. What Mr Dart thought was already a great international financial centre and destination to relocate to in 1994 has been significantly enhanced and modernised during the past 25 years. There is only one place in the Western Hemisphere where you can manage sophisticated trust structures, in a tax-neutral environment with access to excellent professional services, in a location with a stable government, proximity to the US and an incredible quality of life: right here on the tiny Caribbean island of Grand Cayman.

ABOUT THE AUTHOR Mark VanDevelde Mark is the CEO of Dart Enterprises Ltd. and director of its Cayman subsidiaries including Active Capital, Dart Development and Dart Real Estate. Based in the Cayman Islands, Dart has a global presence with investments in Europe, the US and Caribbean; in addition to oversight of Dart’s global investments he leads the Cayman-based Family Office. He spent the first 15 years of his career in securities and investments and in the last 10 years, has added real estate development and mergers and acquisitions to his areas of focus. VanDevelde works closely with Dart’s visionary owner and shareholder, Kenneth B. Dart, to realise Mr Dart’s vision of a strong and sustainable local economy supported by the Dart Group’s corporate and community development activities. VanDevelde moved to Cayman over 20 years ago and considers it his home. He holds a Bachelor of Science degree in Finance from Michigan State University and is a Chartered Financial Analyst.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

87


AT A GLANCE

BANKING

Cayman offers a breadth of banking services that is on par with the major financial centres of the world. As at June 30, 2016, there were 176 licensed Banks in Cayman, six of which are Retail Category ‘A’ banks licensed to conduct business with domestic and international clients. There are five non-retail Category ‘A’ banks and 165 Category ‘B’ banks, servicing international clients and carrying out limited domestic activity.

88

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

The category ‘A’ banks in Cayman are: Butterfield Bank (Cayman) Limited, Cayman National Bank Limited, Fidelity Bank (Cayman) Limited, CIBC First Caribbean International Bank (Cayman) Limited, RBC Royal Bank (Cayman) Limited and Scotiabank & Trust (Cayman) Limited. At the end of 2014, the retail banks reported total assets of US$12.9 billion. They are well capitalised and maintain a sound financial position as highlighted in Tables 1 and 2. The Cayman Islands Monetary Authority is the governing body with responsibility

THE STATS

The Cayman Islands is recognised as a premier international financial centre and the banking sector is a vital support mechanism for financial services. Banking in Cayman provides a dual functioning role within the financial services industry. Retail banks provide a full range of products and services to residents and local commercial entities and at the same time act as a service provider to other financial services, such as the fund and captive insurance sectors.

for supervision and regulation of the banking industry. The jurisdiction is recognised by the IMF and other global agencies as having a comprehensive regulatory and compliance framework and is underpinned by a well developed banking infrastructure and internationally experienced workforce. Since the start of the financial crisis that began in the last decade, Cayman is one of the few jurisdictions in the world that did not have a single bank failure, highlighting the overall strength and resilience of the industry.

TABLE 1: Cayman Retail Banking Figures All currencies in US$ billion

Total Assets

Total Loans

Of which Resident Loans

Total Deposits

Of which Resident Deposits

2012

14.1

8.0

3.69

12.48

6.25

2013

14.8

8.2

3.89

13.14

7.43

2014

12.9

7.5

3.87

11.37

6.18

Source: Cayman Islands Monetary Authority (CIMA)


Today both local and international clients can expect a full range of banking products and services, including personal, corporate and wealth management. Specific offerings include foreign exchange, deposit products, residential and commercial mortgages. Retail banks also offer robust electronic delivery channels including on-line banking, as well as local and international ATM and POS networks. Banks in Cayman also manage and administer a variety of corporate

structures, which cover aspects of the industry such as trust companies, custodial and treasury services. Cayman, as a global financial centre, plays an integral role in the management of capital flows worldwide. Cayman continues to be ranked fifth based on banking liabilities of US$1.44 trillion, as shown in Table 3, highlighting its role as a key financial intermediary. The banking industry in Cayman remains multi-faceted and is extremely effective at servicing the needs of residents and international clients alike.

TABLE 2: Financial Soundness Indicators for Cayman Retail Banks (in %)

TABLE 3: Cross-Border Assets & Liabilities All currencies combined in US$ trillion

Capital Adequacy Regulatory capital to risk-weighted assets

Asset Quality Non-performing loans to total loans

Liquidity Liquid assets to total assets

2012

2013

2014

19.8%

18.3%

17.6%

3.4%

3.8%

2.7%

33.0%

35.5%

24.2%

Produced with the kind assistance of Cayman Islands Bankers Association (CIBA).

Assets

Liabilities

June 2012

1.42

1.47

June 2013

1.50

1.49

June 2014

1.42

1.44

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

89


AT A GLANCE

INVESTMENT FUNDS The Cayman Islands laid the foundations for its growth to become the leading offshore funds domicile by being the first jurisdiction to implement specific legislation for hedge funds in 1993. Since then the market has grown exponentially, initially encouraged by the liberalisation of international finance, with the end of currency controls and trade barriers, which resulted in demand for financial services from Cayman. International investors increasingly gained comfort with Cayman structures, primarily due to the robust and effective legal system – based on the UK’s Common Law - and the quality of the professionals working in the Cayman Islands. As the market developed, Cayman structures became the standard in the hedge fund market and a benchmark for competing jurisdictions to aim at. Responsible for hundreds of billions of dollars of investment into OECD economies, Cayman Islands domiciled hedge funds have enabled investors around the world to gain access to the most successful investment products and opportunities. By domiciling

90

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

in a tax neutral jurisdiction such as Cayman, capital is pooled for the purpose of investing in major investment projects or deployed in international markets, without an additional layer of tax being applied at the fund level. That helps to ensure the overall project is successful, while investors in Cayman funds will all pay tax in their home jurisdiction. A significant body of economic research demonstrates that investment by Cayman Islands funds into OECD countries makes a considerable contribution towards global GDP. Furthermore, Cayman funds and the investment dollars they provide, have been responsible for supporting growth in developing countries, helping China and India for example to move out of poverty. By studying the flow of funds to and from Cayman structures it is clear there is no capital flight out of OECD countries and on the contrary OECD countries are major beneficiaries of the inward capital flows from investors all around the world, seeking the most attractive and efficient investment products.


More recent years has seen Cayman maintain its leadership of the offshore funds sector and the total number of funds has held above the 10,000 level, which is testament to the strength of the industry. At the Q3 stage in 2016 there were 10,830 funds regulated by CIMA and this does not include the large number of unregulated funds, such as closed ended funds or funds with less than 15 investors. The fund administrators are well represented with over 100 operating in Cayman. The past 12 months has been characterised by the specific taken action by the Cayman Islands government in terms of cooperation with international transparency initiatives such as Common Reporting Standards and FATCA. The Cayman Islands has also prepared a new AIFMD compliant regime for funds and managers that wish to participate in Europe.

THE STATS

Cayman has been fortunate to attract a large number of the finest professional services clients in the investment funds sector. All of the major global auditors and fund administration firms have a presence in the Cayman Islands and the caliber of the legal professionals is equivalent to that you would find in any major financial center such as New York or London,

Mutual Funds Registered

Master

Administrated

Licensed

Total

2010

8,870

-

435

133

9,438

2011

8,714

-

424

120

9,258

2012

8,421

1,891

408

121

10,841

2013

8,235

2,635

398

111

11,379

2014

7,835

2,685

386

104

11,010

2015

7,654

2,805

380

101

10,940

2016

7,465

2,899

370

96

10,830

Mutual Fund Administrators Full

Restricted

Exempted

Total

2010

94

38

2

134

2011

92

35

2

129

2012

90

32

2

124

2013

88

31

2

121

2014

84

29

2

115

2015

82

24

2

108

2016

84

21

1

106

Source: Cayman Islands Monetary Authority (CIMA)

Produced with kind assistance from the Alternative Investment Management Association (AIMA).

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

91


Growing Up: A NEW ENVIRONMENT FOR HEDGE FUNDS Rupesh Daya explains how the results of a recent sur vey demonstrate how the

INVESTMENT FUNDS

hedge funds climate is evolving.

92

The hedge fund industry continues to face pressures to transform. Managers are forced to become more focused on evolving regulations, operational effectiveness, alignment of interests and delivering value to their investors. New strategies, new investors and demands for more customised products and services are changing the market dynamics. The changes are impacting almost every facet of hedge fund management. In recent years we have seen changes

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

in fee structures, product mixes, target markets and investor types. KPMG, the Alternative Investment Management Association and the Managed Funds Association partnered to undertake a survey that looks at the impact of these changes. The survey, titled Growing up: A new environment for hedge funds, included over 100 hedge fund managers that together represent approximately US$440 billion in assets under management. The respondents included managers located in North America, the United Kingdom, other

areas of Europe and the Asia-Pacific region. Managers expect the industry AUM to continue to grow, on average, at 10% per year. Institutional investors are expected to continue to be the industry’s primary source of investment, further eclipsing high net worth individuals. Traditional fee arrangements are being cast aside in favour of more customised models. New markets are expected to emerge for both capital and investment destinations. Some managers are customising their products to broaden their appeal, and many are


adopting liquid alternative products in response to investor demands. The impact of new regulation remains a concern and is creating barriers to growth in most markets. The key survey findings include: • The majority of managers believe that pension funds will be their primary source of capital by 2020, with public pension funds and sovereign wealth funds together accounting for at least a quarter of capital inflows by then. • Two thirds of managers think their client demographics will be less concentrated in the next five years, and only one in five say they will be the same. Product diversification such as liquid alternatives and customised fees are anticipated to attract additional investors. • 46% of respondents expect to either alter their fund strategy or launch new products to attract institutional investors in the next five years, while more than two-thirds say they expect to offer specialised fee structures. • 43% of respondents said they expect to change the markets in which they invest their capital, and 21% said they would invest more into developed markets, while 30% pointed to the emerging markets and 7% to frontier markets. • Managers are moving towards customised product offerings with almost half of all fund managers reporting they already offer a fund of one or managed account solution and 21% saying they plan to offer these solutions within the next five years. • 38% of respondents said they either had, or were developing, a UCITS fund, with 27% saying the same about 40-Act funds. • Three quarters of respondents said

they expect the number of hedge fund

managers to either decrease or stay the same over the next five years.

• More than three-quarters cited

increased regulation as the biggest

threat to the industry overall, with

84% saying their operating costs had increased as a result of compliance obligations.

The global trend of ageing populations has implications for the needs of

investors, and particularly institutional investors

who

are

becoming

increasingly attracted to low volatility

returns over extended periods of time. Hedge funds are likely to receive increased

allocations

as

investors

look to optimise risk adjusted returns

in a low bond yield environment. The

needs

of

the

investors

are

forcing managers to adapt in order to

retain and attract capital. One manager noted,

“Investors

particularly

institutional investors – are demanding more detailed reports from their fund

managers, arguing that they should

have the same level of granular data

after successful implementation of US and UK FATCA services lines, service providers are well equipped to offer a full suite of compliance services and expertise. The Cayman Islands have been at the forefront of global CRS implementation and are part of a group of 50 jurisdictions that committed to early adopting the standard, demonstrating the Cayman Islands’ commitment to adopting the highest standards in tax transparency. When asked about where they would domicile new funds setup in the next five years, managers said that they would most likely domicile their master funds offshore, with 64% identifying the Cayman Islands as their jurisdiction of choice. The enactment of the Limited Liability Companies Law, 2016 further strengthens the Cayman Islands position by providing a new flexible structure that is very familiar to US based managers.

that regulators enjoy”. Managers are evolving from providers of products to providers of customised solutions. Managers

expect

the

level

of

competition to level out, with the cost

and complexity of regulation being a key challenge to the industry. The increased

complexity has forced many managers to have costly dedicated regulatory and compliance functions, while others are looking for more assistance from

service providers. One large manager

commented that institutional investors will continue to invest with small fund managers where there is a commitment

to following best practices and a strong

track record. With evolving regulations, Cayman Islands service providers have been swift to adapt systems and offerings to support their clients’ regulatory compliance and reporting needs. Common Reporting Standard (CRS) deadlines are approaching and

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

93


ABOUT THE AUTHOR Rupesh Daya

As regulations mount, capital markets morph and investor needs change, managers are forced to do more than ever before to retain and attract capital. The Cayman Islands’ legislation also continues to evolve to ensure that Cayman continues to be the hedge fund jurisdiction of choice. Service

providers have expanded their service lines and developed their expertise in order to provide timely and efficient solutions to clients. It is clear that while the industry is facing tremendous pressure to transform, the Cayman Islands will continue to play a significant role in its future.

Rupesh is a Director with KPMG’s Alternative Investments practice in the Cayman Islands. With over 10 years of experience in the financial services industry, Rupesh’s portfolio includes a wide range of hedge funds, mutual funds, private equity funds and investment management entities. Rupesh is a member of the South African Institute of Chartered Accountants and the Cayman Islands Institute of Professional Accountants with a Bachelor of Accountancy degree from the University of the Witwatersrand, South Africa.

conyersdill.com

WE WROTE THE BOOK Doing business in the Cayman Islands? So are we, and we wrote the book on it. Globally our Cayman Islands attorneys are recognised for providing expert and authoritative advice on significant transactions involving Cayman entities. Our Cayman Islands coverage spans throughout key international financial centres. With decades of experience in these markets and the Cayman Islands our team has extended their expertise through the first-ever Cayman law text. This text provides invaluable coverage and legal insight on commercial transactions including: private equity, IPOs, mergers & acquisitions and corporate finance. For more information about our Cayman Islands practice, please contact: KEVIN C. BUTLER kevin.butler@conyersdill.com | +1 345 814 7374

BERMUDA

94

BRITISH VIRGIN ISLANDS

CAYMAN ISLANDS:

CAYMAN ISLANDS

2016_05_CAY_CORPORATE_CAYMAN-FINANCE-MAGAZINE_CAYMAN-BOOK_v10616AB.indd 1 THE PREMIER GLOBAL FINANCIAL HUB

DUBAI

HONG KONG

LONDON

MAURITIUS

SINGAPORE

7/20/2016 9:48:11 AM


Cayman Funds TRANSPARENT, SOPHISTICATED AND TAX NEUTRAL Jack Inglis of Alternative Investment Management Association (AIMA) explains how tax neutrality and transparency work in the funds world.

W

e are often asked to explain why a significant proportion of the world’s alternative investment funds, including hedge funds and private equity funds, are set up in the Cayman Islands and other offshore jurisdictions. Some policymakers and members of the press assume it must be to evade tax or hide assets, but this article seeks to provide the real answers. We also opine on the prospects for the Alternative Investment Fund Managers Directive (AIFMD) passport being extended to Cayman funds. COLLECTIVE INVESTMENT IS GOOD FOR INVESTORS Investors such as pension funds, sovereign wealth funds, not-forprofit organisations, charities and other similar entities (often called “sophisticated investors”) can either make alternative investments directly or invest via a collective investment scheme - a fund that pools monies from a number of sophisticated investors and then manages those monies on their behalf. The use of such a collective investment scheme gives investors significant benefits including (i) professional management with specific industry expertise, (ii) the ability to diversify their portfolios across a broad range of alternative investment strategies, (iii) sharing of

investment expenses and (iv) access to alternative investment types which are outside the scope of even sophisticated investors acting alone. However, collective investment can also bring legal, regulatory and tax complications, which sophisticated investors wish to minimise in order to maximise returns to their stakeholders. OFFSHORE FUNDS ARE “TAX NEUTRAL” Tax neutrality essentially means that the country where the fund is formed, such as the Cayman Islands, does not impose its own duplicative layer of taxes on the fund. However, that does not mean that investors in tax neutral funds registered in offshore jurisdictions such as the Cayman Islands do not pay taxes. Tax neutral status is not unique to offshore funds. There are tax neutral fund categories in the UK and the USA, for example. What sets apart offshore funds – and particularly, offshore alternative funds such as those domiciled in Cayman - is the combination of tax neutrality, investment flexibility and sophistication allowed by offshore alternative fund structures. This is what makes offshore alternative funds so attractive to sophisticated investors.

As funds are often set up as a company or a partnership, those companies and partnerships can be subject to a separate tax charge in the place where they are formed. This means that investors could effectively (and unfairly) be taxed twice on the same income and capital gains. Such double taxation would render most funds uneconomic and defeat their purpose of assisting investors. Tax neutral funds provide an answer to this problem by removing this unfair “Layer 2” of tax. Tax neutrality in the jurisdiction where the fund is established – whether onshore or offshore – ensures that such duplication of taxation does not occur, preserving the attributes that an investor would have if investing directly in the underlying assets rather than through an alternative fund. A fund should be seen as an aggregation of capital rather than a discrete taxable entity and such characterisation underpins many of the rules allowing exemption for funds in general. OFFSHORE FUNDS ARE TRANSPARENT As regulation has evolved, particularly since the global financial crisis of 2008, the scope of “know your customer” (KYC) rules and standards has been expanded.Today, the identity of investors in Cayman funds and other offshore

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

95


funds is reported to international tax authorities such as the IRS and HMRC. As a matter of US and Cayman law implementing FATCA, the alternative fund must register and provide this data. If it does not, it will face penalties but also in practice will not be able to trade with market counterparties (who are required to confirm the FATCA compliance of firms or funds they deal with). Ultimately, funds will likely expel investors who refuse to disclose sufficient information about their identity.

INVESTMENT FUNDS

OFFSHORE FUNDS ARE DESIGNED FOR SOPHISTICATED INVESTORS Offshore alternative funds are primarily designed as investment products for sophisticated investors. Such sophisticated investors usually employ experienced internal teams, or external consultants, who know how best to navigate the more flexible environment that offshore alternative funds operate in. Simply put, managers of offshore alternative funds face fewer restrictions - for instance, in their ability to leverage investments with borrowed money, to hedge their positions by going ‘short’ as well as ‘long’, or to impose restrictions on withdrawals (redemptions) – than managers of onshore funds authorised to raise money from retail investors. Some onshore fund locations, including Ireland and Luxembourg, do have fund regimes with similar flexibility aimed at certain types of sophisticated investors, but the Cayman Islands remains the leading alternative fund jurisdiction because a Cayman Islands alternative fund is what US sophisticated investors in particular expect to invest in.

96

AIFMD PASSPORT The Cayman Islands authorities are working hard with EU regulators to ensure Cayman alternative funds qualify for the third country marketing passport under AIFMD. We continue to believe that the European Securities

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

and Markets Authority (ESMA) will provide positive advice to the European Commission (the “Commission”) regarding the extension of the ability to passport to Cayman Islands managers and Cayman Islands funds and that the Commission will act on that advice to provide the necessary delegated act to extend the passport. The timing of the Commission’s delegated act to extend the passport to managers and funds from any third country is currently unknown, opening the door to the possibility of ESMA providing positive advice regarding the Cayman Islands before the passport is extended with respect to any third country. In the meantime, managers of Cayman Islands funds can continue to market those funds in EU countries that have an available national private placement regime. Those regimes, unless withdrawn by the individual Member State, will remain in effect for at least three years following the effective date of the Commission’s delegated act extending the passport to any third country. CONCLUSION Decades of experience and extensive due diligence have shown investors, fund managers, counterparties, regulators and international authorities the benefits of doing business through offshore fund jurisdictions such as the Cayman Islands. For example, the Cayman Islands has the following attributes: • An English-based legal system, established judiciary and absence of political or sovereign concerns. • Well recognised legal concepts (including limited liability and separate corporate personality) underpinning the corporate, partnership and trust vehicles used as collective investment schemes, as well as the principles governing lending and granting security over assets, all of which have been tried and tested and


TABLE 1: The three layers of tax LAYER OF TAX

DESCRIPTION

COMMENT

LAYER 1 – INVESTORS

Tax in investors’ own jurisdictions on investment income and realised capital gains, either as these arise to the fund or when investors receive proceeds from their interests in the fund.

The investors do not cease to be liable to domestic tax, even if they invest in an offshore fund. Offshore fund investors are visible to their tax authorities, which automatically receive information on their holdings.

LAYER 2 – FUND

Tax in the jurisdiction where the fund is registered on the fund’s investment income and realised capital gains.

This would be an additional tax charge to be borne by the investors as it arises in respect of the same amounts as in Layer 1 and Layer 3. Onshore, as well as offshore, tax neutral funds are not taxed at this level.

LAYER 3 – INVESTMENTS

Tax in the jurisdiction where the fund invests on income and realised capital gains from the fund’s investments, e.g. on an equity stake that the fund has taken in a company or bonds that the fund holds.

Some jurisdictions charge tax on non-resident investors, unless they benefit from a double tax treaty or other relief. Offshore tax neutral funds are not exempt from this layer.

found to be robust during the recent global financial crisis. • The Cayman Islands is a well-known and trusted centre of excellence for its established and experienced financial services sector and professional service providers. That is a feature that grows on itself and having financial institutions, sophisticated investors, rating agencies and professional firms elsewhere used to and comfortable dealing with counterparts in the Cayman Islands may have become as big a reason as any for the use of Cayman Islands vehicles in many cases. There is a strong philosophy of government and industry cooperation and consultation. Indeed, a number of members of government are experienced finance experts who previously worked in the alternative fund industry.

• Professional and responsive procedures in place to establish Cayman Islands alternative fund vehicles. • The Cayman alternative investment fund industry supports and encourages good corporate governance for its funds, including the extensive use of independent directors and administrators. WHY ANY FUND SHOULD BE TAX NEUTRAL – THE THREE LAYERS OF TAX Investment through any alternative fund or other collective investment scheme adds a potential layer of tax over and above that which would be payable were the investors to own the underlying assets themselves. Ideally, alternative funds will be established with tax neutral status to prevent “Layer 2” tax being applied to the fund in addition to the taxes incurred (i) by the investors at “Layer 1” and (ii) on the investments at “Layer 3”, as illustrated in Table 1.

ABOUT THE AUTHOR Jack Inglis Jack became the Chief Executive Officer of AIMA in February 2014. He has been involved with hedge funds for 25 years and has held leadership positions in prime brokerage at both Morgan Stanley, where he served for 16 years, and Barclays, where he was prior to joining AIMA. From 2007 to 2010, he was CEO at the convertible bond specialist, Ferox Capital Management. He began his career in 1983 and has extensive experience across origination, distribution and trading across the capital markets. He holds a Master of Arts in Economics from Cambridge University.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

97


A

ccording to EY’s 2016 Global Private Equity Fund and Investor Survey, the private equity (PE) asset class continues to experience steady growth and sustained appeal to global

The Cayman Islands, as a premier international financial centre, excel at all of these criteria and has developed into a globally recognised centre of excellence for the domiciliation

A domicile of choice FOR PRIVATE EQUITY FUND In the PE sector, the Cayman Islands best meets the needs of clients looking to balance market and regulatory requirements, explains Baron Jacob and Jeffrey Shor t.

INVESTMENT FUNDS

investors. Fundraising has been strong in recent years, with high-net-worth individuals and family offices increasing their allocation to PE. Nonetheless, the growing success of the PE industry is not without its challenges. The global regulatory environment is ever evolving, with new rules and regulations imposed on managers. Additionally, the global financial crisis has bred a new awareness and sophistication among investors who are demanding more transparency and oversight.

98

Against this background, the choice of domicile for a private equity fund (PEF) is driven more than ever by an investor’s need for tax-efficient and transparent structures, concurrently balanced with strong governance, reputation and access to top talent.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

and servicing of PEFs and related structures, such as the general partner (GP), investment manager and special purpose vehicle (SPV). REPUTATION Cayman has an enviable reputation in the global asset management industry and a track record of developing robust, innovative regulations while preserving the highest standards of integrity, governance and transparency. The government, its regulator and professionally accredited service providers promote a vigorous compliance culture. Cayman has a modern and independent legal and judicial system, based on English common law, which enhances its reputation as a leading financial services centre.


“Diligence is the mother of good luck.” – Benjamin Franklin

The government has several decades of engagement with international initiatives around KYC, AML and ATF, and is actively engaged in a number of international tax transparency and exchange of information initiatives such as the Organisation for Economic Cooperation and Development (OECD) Convention on Mutual Administrative Assistance in Tax Matters, as well as UK and US FATCA. Cayman is on the OECD’s “white list” and is one of the first jurisdictions to agree to implement the global automatic exchange of information under the OECD Common Reporting Standard by September 2017. FLEXIBILITY AND INNOVATION Cayman vehicles for PEF are industry-friendly and offer many advantages in terms of structuring and operational flexibility, tax-neutrality, fiscal transparency, investor protection, confidentiality, speed and simplicity, as well as cost-effectiveness. The most common structure for a Cayman-domiciled PEF is an Exempted Limited Partnership (ELP). A Caymandomiciled PEF can also be structured using an Exempted Company to meet investor preference, tax structuring and regulatory considerations.

Cayman continues to innovate and respond to the global asset management market needs. The government has recently introduced new Limited Liability Company (LLC) legislation modeled after Delaware’s LLC legislation. An LLC is a hybrid between a partnership and a corporate entity, which offers structuring flexibility for the GP, investment manager and fund

vehicles – in particular those investing in an illiquid asset class. An LLC is also widely used as an SPV for tax structuring to hold private equity investments. In short, Cayman ELPs and LLCs are pass-through entities for US federal income tax purposes; investors in an ELP or LLC benefit from limited liability, and there is flexibility in drafting economic and governing arrangements in the Limited Partnership Agreement (LPA) or Member Agreement.

Cayman structures are widely used as global PE fund platforms facilitating cross-border investment flows and supporting the global economy. For instance, Cayman-based global infrastructure funds invest in both developed and developing countries to build power plants, renewable energy and water treatment facilities, among many other projects, which are improving quality of life. Moreover, special situations strategy PEFs invest in companies that need restructuring or turnaround, or are facing a liquidity crisis and heavily indebted. PEFs provide both financial and professional support to these distressed companies, promoting industrial growth and saving jobs. Cayman entities are used in a variety of fund structures: stand-alone fund, master-feeder, fund of funds, parallel structure, blocker companies, SPVs and holding companies. Increasingly, Cayman structures are used for bespoke solutions or special accounts, alongside commingled funds, for co-investments, deal-by-deal and managed accounts. PEFs are structured as closed-end investment vehicles. Closed-end PEFs are not regulated by the Cayman Islands Monetary Authority (CIMA) under the Mutual Funds Law.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

99


There are no capital gains, income, withholding, estate or inheritance taxes in the Cayman Islands. ELPs/LLCs can apply for an undertaking from the government that no form of taxation that may be introduced in the Cayman will apply to the ELP/LLC for up to 50 years. TOP TALENT Cayman has an extraordinary concentration of top talent. The financial services community in Cayman is characterised by trusted and mutually beneficial commercial and professional relationships, whereby local service providers collaborate to offer integrated and complementary services to their clients at fair and competitive fees, with speed-to-market.

INVESTMENT FUNDS

Responsive and talented professionals, including fund administrators, lawyers, accountants and tax advisors, in Cayman have a long history of servicing clients from start-ups to multibilliondollar, global PEF managers. Our highly credentialed professionals are adept at working closely with their counterparts in major financial centres in North America, Europe and the Far East, as well as emerging markets, to help PEF sponsors to achieve business success by providing the best advice and support from a PEF’s launch to future expansion and growth.

100

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

“The financial services community in Cayman is characterized by trusted and mutually beneficial commercial and professional relationships…” Cayman is populated with fund administrators who provide highquality customised client service, which is a prerequisite for a PEF, in a controlled environment. In fact, Cayman-based fund administrators are well-positioned to benefit from the increasing demand from investors for outsourcing of back-office activities and independent third-party oversight. Moreover, local fund administrators are differentiating themselves by offering value-added solutions to alleviate the burden on PEF managers of the ever-increasing regulatory changes.

In response to investor demand, fund administrators are enhancing their middle-office and data aggregation and reporting capabilities by investing in best-in-class technology. The major accounting firms in Cayman provide assurance, tax and advisory services and have in-depth experience dealing with complex structures and strategies, valuation, capital account or LPA, reporting and tax issues for PEFs of all sizes. Legal firms in Cayman have expertise in advising on fund formation, structuring and transactions, including complex, cross-border PE deals, financing, M&A and IPOs. Cayman has an exceptional pool of highly experienced, independent directors who can provide “mind and management,” evidence of substance of activities, and independent, objective oversight over the activities of the GP and investment manager. There is currently no statutory requirement or investor pressure to have independent board oversight in a PEF. However, from an investor’s vantage point, it is certainly beneficial to have independent members on a PEF advisory board or committee to reinforce governance and oversight.


Independent board members would provide objective guidance and sound judgment in matters relating to ongoing fund operations, governance, legal and accounting issues.

better understand the risk/reward trade-off when making investment decisions. Is the business model sustainable and providing good value for money to customers?

Cayman’s professional firms of independent directorship services offer a unique value proposition to the global PE industry beyond governance and oversight. Professionals acting as independent members on a PEF’s advisory board or committee bring a wealth of experience and industry benchmarking, sharing insights and leading practices with their clients.

FinTech, well-known to be backed by venture funds, is now attracting significant interest from PE investors. According to the PitchBook Platform, PE investors in 2015 closed a record 95 deals involving FinTech companies. Cayman service providers are well-positioned to service FinTech strategy start-ups and middle market managers.

PRIVATE EQUITY INVESTMENT IN FINTECH The evolving needs of a tech-savvy population and the drive for efficiency are boosting significant investments in companies developing innovative and disruptive technologies, making FinTech one of the most important sectors for investing. Investors are taking notice and are asking the right questions about FinTech to assess the potential opportunities and help them

PEF MANAGERS LAUNCHING FinTech strategy structures will need to face investors and inspire confidence in the robustness of their risk management framework. PEF managers can trust their Cayman service providers to help them to launch structures that demonstrate sound governance, by also helping the managers in offering independent third-party oversight, transparency and strong reporting capabilities.

ABOUT THE AUTHOR Baron E. Jacob Baron is a partner in the Financial Services Organization of EY in the Bahamas, Bermuda, British Virgin Islands and Cayman Islands. He has over 18 years of accounting experience, including 16 years in the Cayman Islands and 2 years working in EY’s San Francisco office, where he focused on providing audit services to complex onshore investment vehicles including hedge funds and venture capital companies. Baron serves a variety of financial services clients including alternative investment fund managers, hedge funds, fund administrators, multinational banks and trust companies.

ABOUT THE AUTHOR Jeffrey Short Jeff is a partner and the sector leader for Wealth & Asset Management in the Financial Services Organization of EY in the Bahamas, Bermuda, British Virgin Islands and Cayman Islands. He has over 20 years of experience with Ernst & Young the majority of which have been in the Cayman Islands office. Jeff is dedicated to serving asset managers, hedge funds and private equity funds. His clients encompass start-ups to global multibillion dollar complexes.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

101


AT A GLANCE

INSURANCE

102

The Cayman Islands is home to over 700 captive insurance companies. The word ‘captive’ refers to the relationship between the insurance company and its owner. Most owners have little to do with insurance but have found that it’s far more cost-effective to insure with their own insurance company than with somebody else’s. If there are no claims they keep the profit. There are many other important advantages that captives offer, but they will not be covered at this time.

These are enormous figures especially for an industry that employs fewer than 300 people in Cayman. The Cayman Islands remains the second-largest captive domicile in the world after Bermuda.

Cayman’s reputation as a global insurance centre is primarily based on the quality and experience of the local insurance managers and the professionalism of the insurance regulator, CIMA.

To be more specific, of these 709 insurance companies 90% come from North America. Medical malpractice liability is the single largest line of business underwritten representing 33% of the companies and contributing 22% of the annual premium.

You may be interested to know just how important this modest and unpretentious captive industry is to the Cayman Islands. According to the Cayman Islands Monetary Authority’s (CIMA) statistics as at 30 June 2016, IMAC’s clients generated annual insurance premiums of US$13.6 billion and had assets under management of US$58billion.

Workers compensation, general liability and property represent a further 42% of the companies, and although there are only twenty six life assurance companies, these contribute 28% of the total premiums. The type of risk these insurance companies underwrite is important as it determines the skills that the insurance managers need to employ.

As with many other financial services based in Cayman such as banks and funds, although huge amounts of funds are channelled through the jurisdiction, only a relatively small amount ‘sticks’ in Cayman. IMAC’s own studies have calculated that its contribution to the local Cayman economy, measured by gross domestic product, is approximately US$85million per year, i.e. the captive insurance industry contributes $85million to Cayman’s economy every year.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

This amount is broken down into three main categories: government fees (insurance licence & registry office), $11million; service fees to insurance


THE STATS

managers, lawyers, accountants etc, $62million; transport, hotels, restaurants and leisure, $12million. This is understandable when you consider constant flow of the 700 insurance company owners visiting the Cayman Islands to hold board of director meetings and to meet with the insurance department at CIMA.

Scholarship Foundation which was started in 1994. Since then it has raised US$2.9million which has been used to fund thirty eight young Caymanians attending university overseas. T

In addition to helping Cayman’s general economy, IMAC has a number of specific charitable projects. One of these is the IMAC Education and

All in all, the captive insurance industry is a very important component of the economy and the success of the Cayman Islands.

Produced with kind assistance from

the Insurance Managers Association of Cayman (IMAC).

he university courses are not limited to financial based subjects, but cover anything ranging from tourism to medicine.

INTERNATIONAL INSURANCE COMPANY STATISTICS BY PRIMARY CLASS OF BUSINESS All currencies in US$

Business Class

License Count YTD

License Count % YTD

Total Premiums Period

INTERNATIONAL INSURANCE COMPANY STATISTICS TOTAL COMPANIES BY RISK LOCATION

Total Assets Period

Accident & Health

12

1.69%

49,816,504

603,523,847

Automobile P.D. & Liability

21

2.96%

155,710,244

401,292,095

Credit Life

13

1.83%

222,292,037

1,668,238,780

Deferred Variable Annuities

9

1.27%

766,988,512

3,785,976,852

General Liability

78

11.00%

718,159,057

2,724,433,215

Life

26

3.67%

3,848,718,647

15,206,225,967

Marine and Aviation

10

1.41%

29,121,238

384,851,051

Medical Malpractice Liability

237

33.43%

2,964,721,537

13,406,466,289

Products Liability

14

1.97%

47,791,881

336,033,893

Professional Liability

61

8.60%

581,512,096

2,472,793,109

Property

70

9.87%

1,051,083,357

7,768,350,386

Surety Bonds

7

0.99%

12,063,234

34,784,827

Workers’ Compensation

151

21.30%

3,115,555,559

9,172,829,025

TOTALS:

709

100.00%

13,563,533,903

57,965,799,336

Source: Cayman Islands Monetary Authority (CIMA) / Updated as at 30 June 2016

0.28% 0.85% 1.97% 3.10% 4.09% 89.70%

0.28% 0.85% 1.97% 3.10% 4.09% 89.70%

Pacific R Africa, A Europe Caribbea Worldwi North Am

Pacific Rim Africa, Asia & Middle East Europe Caribbean & Latin America Worldwide North America

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

103


A

CIMA MEETS REGULATORY CHALLENGE IN INSURANCE

s Cayman’s captive insurance and nascent reinsurance, international insurance and life and annuity industry continues to evolve to meet the growing challenge of competition from onshore domiciles and continued soft market conditions, CIMA has responded by expanding the breadth of its regulatory capabilities.The regulator also recently published an extensive summary of the industry feedback relating the Rule on Corporate Governance in the insurance sector, which is seen as enhancing and underpinning the operations of insurers and reinsurers incorporated within the Cayman Islands.

INSURANCE

In July 2016, Ruwan Jayasekera was confirmed as Head of the Insurance Supervision Division at CIMA. No s t r a n ge r t o C ay m a n , J ay a s e k e r a previously worked in the division between 2007 and 2011 before he returned to Sri Lanka, working for Allianz Insurance Lanka Ltd. He returned to CIMA in 2013 as Deputy Head of the Insurance Division and was installed as acting head in March 2016.

104

As Head of Insurance at CIMA, Jayasekera said his priorities will be to continue to follow CIMA’s regulatory philosophy and as a team, continue to remain responsive, pragmatic and accessible to our licensees. “CIMA’s regulatory philosophy has been to use a risk-based and proportionate

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

approach to ensure that our licensees are supplemental insurance expertise to appropriately supervised in accordance the CIMA Board. CIMA Chairman with international standards,” he said. Grant Stein commented at the time: “The recent addition of a Director “The Division has a very strong senior who has over 20 years’ experience in management team with substantial the insurance industry in domestic collective regulatory and captive and and inter national insur ance and (re)insurance industr y experience, reinsurance has strengthened the supported by a group of analysts with Board in this area. This follows on relevant professional qualifications from other recent appointments of and experience. My task would be to individuals with strong backgrounds integrate the experience and expertise in banking, legal and compliance.” of the team to ensure that we achieve CIMA’s supervisory objectives. “One of the competitive advantages of Cayman is its regulatory regime,” Jayasekera added. “CIMA, as the primary financial ser vice regulator, always tries to remain accessible, responsive, flexible, efficient, and transparent in our dealings with licensees and industry. Not many regulators in the world are easily accessible the way our licensees access CIMA! One of my priorities is to maintain these standards which CIMA has been maintaining for decades.” The insurance capability within CIMA was also bolstered by the appointment of Garth MacDonald to the Board of Directors in March 2016. MacDonald was the former CEO of Cayman Islands insurance company Island Heritage Group and Financial Services Minister Wayne Panton had previously indicated that he was seeking to add


Jayasekera said he intends to continue to listen to the industr y, which is one of the hallmarks of the financial services community in the Cayman Islands. “The captive insurance concept is well established and recognised in the insurance world today, and captive owners and service providers now put their captives to more sophisticated and innovative use than ever before. As Head of the Insurance Supervision Division, another priority is to listen to the

“The captive insurance concept is well established and recognised in the insurance world today, and captive owners and service providers now put their captives to more sophisticated and innovative use than ever before. ”

captive industry and to be keep abreast of changes taking place in the captive/ insurance world globally and to find ways to accommodate sophistication through appropriate changes to our processes and procedures and, if necessar y, recommend needed amendments to the regulatory framework.”

knowledge in captives/(re)insurance, as the expertise and experience of my team are key to achieving that balanced and proportionate risk-based supervision.”

The Cayman Islands continues to maintain a strong position in the captive insurance sector, second only to Bermuda in terms of the total number “It is also one of my priorities to provide of captive insurers, while being the opportunities and exposure to my team leading jurisdiction for both medical to enhance their regulatory and technical professional liability (‘healthcare’) captives and for group captives as well as catastrophe bonds. “Recent market trends suggest that more and more (re)insurance buyers are seeing the benefits of owning or using captive insurance vehicles to take advantage of their risk mitigation and financing,” Jayasekera said. “Whilst this confirms that the captive insurance concept is well established and well accepted in the (re)insurance world, this has created competition for business due to emerging captive domiciles, especially in the United States. Yet, domiciles like Cayman which has been in captive business for decades still hold the advantage over new domiciles due to well established regulatory regimes and an experienced service sector.” Cayman has a lot going for it in terms of industry experience and expertise, with high quality insurance managers,

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

105


INSURANCE

Intelligent and insightful offshore legal advice and services. Delivered with perspective.

106

auditors, attorneys, bankers, investment Looking at the evolving legal and managers, as well as the professional regulator y landscape, CIMA said attitude of CIMA’s regulatory staff. Cayman always strives to meet inter national best pr actices and “These specialists have developed an s t a n d a r d s , w h i l s t e n c o u r a g i n g incomparable amount of experience and i n n o v a t i o n a n d s o p h i s t i c a t i o n . expertise over the decades, which have CIMA is a founding member of made Cayman a leader in the captive the International Association of insurance world,” Jayasekera said. Insurance Super visors (IAIS), the global insurance standard setter and the “On the other hand, Cayman is not in authority has been involved in various competition for quantity or number of capacities, from executive committee to captives. The jurisdiction’s vision is to technical working groups, in the global grow through quality with the industry standard-setting and implementation and regulators, as “Cayman Inc.” have one efforts of the IAIS. common goal – to maintain the Cayman Islands’ reputation for quality, integrity “A s a l e ad i n g c a p t i ve i n s u r a n c e and being an adherent to international jurisdiction, the Cayman Islands standards and best practices. Cayman has has a duty and responsibility to set the necessary requirements to maintain ver y high standards and, because its leadership in the captive market, of this, achieving compliance with even with stiff competition especially international standards has always been from emerging captive domiciles, since top priority for CIMA,” Jayasekera said, the jurisdiction’s expertise, regulatory adding that with more sophisticated framework and regime, infrastructure applications for captives, regulatory and stability are hard to match.” frameworks do not remain static, due to

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

applebyglobal.com

the evolution of international standards and the business itself. “In the last couple of years, CIMA has issued new standards, or revised a number of existing regulatory standards and rules, mainly as a result of changes made to international standards. CIMA will continue to assess its regulatory framework to identify areas needing further enhancements and do the needful. W hilst CIMA strives to maintain its regulatory framework to meet international standards, the Authority takes a principled, proportionate and pragmatic approach in adopting international standards to meet the jurisdiction’s unique business requirements. Unlike traditional commercial insurers, captives are versatile risk-financing tools formed to provide greater risk management flexibility, and therefore it is important that captive regulatory frameworks remain modern, flexible and yet robust enough to keep pace with the dynamic captive industry.”


Dillon Eustace, Cayman. Committed to our clients.

Stay connected with Cayman Finance At Dillon Eustace we work for a range of lawyers, banks, investment managers, family offices, administrators, custodians, financial services providers and asset allocators in a number of jurisdictions. We guarantee the same high levels of expertise, service and support for all our clients in each of the following areas: • Asset Management • Carried Interest Structures • Distressed Asset Funds • Hedge Funds • Financial Services

• Funds of Funds • General Commercial • Mezzanine Funds • Master-Feeder Funds • Private Equity

• Real Estate Funds • Regulatory Compliance • Restructuring • Umbrella Funds

Sign up for our weekly MediaWatch e-newsletter for local and industry news on our website www.caymanfinance.ky Like us on Facebook | Follow us on Twitter | Follow us on LinkedIn |

www.dilloneustace.ie

/CaymanFinance /caymanfinance

/company/cayman-finance

www.caymanfinance.ky | 345-623-6725 | enquiries@caymanfinance.ky

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

107


INSURANCE

Cayman Captive Forum

108

THE BEST SHOW IN TOWN By Conor Jennings for the Insurance Managers Association of Cayman

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


C

ayman is well known as an attractive international destination for financial industry conferences, particularly in the hedge fund sector, but you might be surprised that the biggest annual conference is for the captive insurance industry. The Cayman Captive Forum (the “Forum”) spans over three days and attract close to 1,500 delegates every November/December and has in recent years been held at the Ritz Carlton, Grand Cayman. Every other hotel is also jam packed and for the restaurants and taxi cabs it’s an early Christmas. The Forum is hosted by the Insurance Managers Association of the Cayman Islands (IMAC) and it’s the industry’s annual showcase. Besides being the largest such event in Cayman it is also the largest offshore captive conference anywhere in the world. It’s a big deal. The Cayman Islands is home to over 700 captive insurance companies. According to the Cayman Islands Monetary Authority’s statistics as at 30 June, 2016 IMAC’s clients generated annual insurance premiums of US$13.6 billion and had assets under management of US$58 billion. These are enormous figures, especially for an industry that employs fewer than 300 people in Cayman. Cayman’s first captive insurance conference in 1988 was held in the conference room at the Grand Pavilion, with approximately 150 delegates. The venue changed to the Hyatt in 1993 and then to the Westin until 2005. Each change in venue was a direct response to an increase in delegates. However, it was only after 2006, when it moved to the much larger, then-new Ritz Carlton, Grand Cayman that the conference rapidly grew into what it is today.

The 2016 Conference, held at the Ritz Carlton, Grand Cayman was the tenth Cayman Captive Forum, a significant milestone for any financial services conference.

poker player, Jason Belfort, the real Wolf of Wall Street and Dr. Michio Kaku, the theoretical physicist and futurist. The 2016 key note speaker was Diana Nyad, who at the age of 64 and in her fifth and final attempt successfully fulfilled The recipe of the Forum’s success is her lifelong dream of completing the no secret, being a combination of a 110-mile swim from Cuba to Florida number of unique events carefully on 2 September, 2013. timed and spaced so that one runs effortlessly into the next, culminating The Wednesday evening cocktail party in a beach party on the final evening. is held at a different location from the The events include tutorial sessions previous evening and gives delegates the opportunity to see another part of the island. The Thursday sessions are an extension of Wednesday and keep the delegates busy until the finale on the beach. That final beach party with its live bands, cigar rolling and fireworks display is talked about all over the world, and brings together all that it good about the Cayman Islands. The Cayman Captive Forum attracts delegates from many different countries and is an event of which everyone in Cayman is very proud. and a golf tournament on the Tuesday followed by an evening cocktail party. On Wednesday, the key-note speaker is the highlight of the morning followed by various technical and topical sessions led by internationally renowned experts in insurance, tax and accounting. The Forum is a great platform for all those wanting to learn about a breadth of issues impacting captive insurance business, also providing an opportunity to network with a whole cross section of captive insurance industry service providers. Some of the better known speakers in the past have been Frank Abagnale, the protagonist played by Leonardo DiCaprio in the film Catch Me If You Can, James Bradley, the author of Flags of our Fathers, Jeffry Ma, the infamous

ABOUT THE AUTHOR Conor Jennings Conor is the M.D. of Captiva Insurance Managers and is based in the Cayman Islands. Conor is a Fellow of both the Institute of Risk Management (IRM) and the Chartered Insurance Institute (CII). Over the past twenty years as a captive insurance manager in a number of different countries around the world, he has built up considerable practical experience working closely with risk management professionals and captive owners.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

109


A Year in Review

CAYMAN FINANCE

C

harged with the protection, promotion, development and growth of Cayman’s financial services industry, Cayman Finance has had one of its most successful years to date. From interviews on the UK’s BBC World, the 3rd annual New York breakfast briefing, representation at a number of significant industry conferences and collaboration with government on new legislation and regulatory issues, Cayman Finance has made significant strides in maintaining the Cayman Islands’ position as a worldclass, premier global financial hub. The Panama Papers disclosure brought international financial centres into the media cross hairs again, but while other jurisdictions may have been challenged by this situation, the strength of our industry, along with its overall growth this past year, demonstrates the confidence our clients have in the Cayman Islands. The UK government’s proposed publicly accessible central register of beneficial ownership information, the London anti-corruption summit, together with Brexit, meant much of our focus was on the United Kingdom this year. Jude Scott, Cayman Finance CEO visited London in May and November to ensure Cayman’s financial services industry was represented to discuss these important issues with key stakeholders.

110

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Cayman was able to demonstrate to the British government that its system for collecting and sharing beneficial information, via a non-public central platform, only accessible by Cayman law enforcement officials and including verification by licensed corporate service providers, was a substantially better option than the proposed public register. Cayman agreed to an enhancement to its system which will help the UK law enforcement agencies access that information with the utmost urgency, but in a way that is appropriate for Cayman and its clients. The British government acknowledged the many steps already taken by the Cayman Islands to implement international automatic exchange of tax information protocols, such as the OECD Common Reporting Standard, and to adopt high standards with regard to tax transparency. Our visit to London at the time of the Anti-Corruption Summit was important in terms of promoting Cayman’s role as a strong partner in combatting money laundering, terrorism financing, corruption and tax evasion. We sent a strong signal that we were open to further enhancements to our legal infrastructure to promote even greater transparency with law enforcement – but any such enhancements must apply to all financial centres around the world.


In London, Jude Scott was interviewed economy, particularly when it comes to by the BBC World, Sky News and developing young talent and investing in other mainstream financial media. our next generation of financial services professionals in Cayman. Following the UK’s vote to leave the EU, Cayman Finance worked to We are proud to report the successful communicate that Cayman would conclusion to our second year of the do its part to ensure the success and Cayman Finance Student Education stability of the global financial economy and Work Experience Programme after in a period of uncertainty. Cayman’s nine weeks of workshops and mentor own political and economic stability, its sessions and a four week long work sophisticated and comprehensive legal placement component. system and stable and business-focused government means the Cayman Islands is in a strong position to face any change. A two week visit to Europe and the UK in November was undertaken to promote the Cayman Islands financial services industry and its role within Europe, the United Kingdom and the global financial economy. Mr Scott’s visit coincided with the Joint Ministerial Council meetings held in London, as well as an EU debate about a potential new tax blacklist. Government, industry and media stakeholders in Europe play critical roles in creating the rules and perceptions that impact our industry and jurisdiction. Cayman Finance organised this trip to help them further understand how we facilitate international trade and investment while adhering to the highest international regulatory standards.

“…with the goal of educating young Caymanians on the importance of the financial services industry…”

Year 12 students in the government dual-enrollment programme in Grand Cayman. This year the programme was expanded to include Caymanian students in private schools, as well as students from Cayman Brac. In total, 68 students completed the workshop and mentor components, with 64 students accepting work experience placements at 29 different organisations.Cayman Finance partnered with the CFA Society on a local radio show Money Sense for a series which ran for a few months. Each segment focused on a different industry which explained what their industry does, how Caymanians can get involved, what their society does for the community, how it contributes to employment, what skills are needed to get involved, why it is important to Cayman.

Supporting the Cayman Islands Chamber of Commerce Career Expo, Jude met with students about the local financial services industry and the numerous career pathways available within it, including The programme was developed in those in accounting, law, IT, marketing, partnership with the Ministry of human resources and operations. Education, Employment and Gender Affairs and the Ministry of Financial Cayman Finance is proud to serve as Services, Commerce and Environment the industry voice for the largest pillar of with the goal of educating young the Cayman Islands economy and looks Caymanians on the importance of the forward to continuing our work in 2017 to financial services industry, as well as fortify the Cayman brand and the brand creating pathways for those who are of our financial services industry, both Domestically, Cayman Finance continues interested in pursuing careers in the internationally and domestically. Following to build on the message of the positive industry. In its pilot year in 2015, the are just some of the highlights of what was contribution of our industry to the Cayman programme was available exclusively for an eventful and productive year.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

111


A Snapshot of Our Year

MARCH: GAIMOPS CAYMAN Below: Cayman Finance CEO Mr Jude Scott, Cayman Finance speaks at GAIMOps.

Throughout the year Cayman Finance communicated the jurisdictions key messages as being the premier global financial hub at conferences and high profile events such as Cayman Captive Forum, Cayman Alternative Investment Conference, GAIMOps Cayman, Cayman Investment Forum and IBC International Trusts & Private Client Forum. Cayman Finance also presented to organisations such as the Cayman Islands Compliance Association, Caymanian Bar Association and the Cayman Islands Fund Administrators Association.

JANUARY

FEBRUARY

MARCH

JANUARY: 3RD ANNUAL NEW YORK BREAKFAST BRIEFING

FEBRUARY: SPEECH TO YALE UNIVERSITY BUSINESS ETHICS STUDENTS

APRIL: RIMS RISK MANAGEMENT SOCIETY ANNUAL CONFERENCE

Above: Cayman Finance hosts 3rd annual New York Breakfast Briefing at the Harvard Club of New York City.

112

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

Yale University students heard Jude Scott, CEO of Cayman Finance speak about the jurisdiction and combat rumours and misconceptions about international financial centres. The class professor, Vikram Mansharamani, subsequently wrote an article ‘America enabling tax evasion’ in which he discussed how it was easier to open an anonymous corporation in the US than in what he termed “traditional tax havens.”

Above Right: The RIMS (Risk and Insurance Management Society) conference for the captive insurance industry was attended by a large Cayman delegation including Jude Scott, underscoring Cayman Finance’s close working relationship with government and IMAC (Insurance Managers Association of Cayman). Mr Scott also made remarks at IMAC’s Cayman Islands Financial Services reception and interviewed with various media.


/

APRIL

MAY

MAY: STEP CARIBBEAN CONFERENCE

the Financial Services Ministry, to ensure the Cayman Islands financial services industry’s voice was heard during the lead up to, during and following the then UK Prime Minister David Cameron’s anti-corruption summit.

Cayman Finance was a sponsor of this event and Mr Scott was in attendance, in partnership with Cayman Finance’s honourary member, STEP (Society of Trust and Estate Practitioners) Cayman.Cayman’s trust industry continues to stand out as a first class and leading aspect of our financial services industry as a whole. The industry continues to be at the forefront of this sector globally, with both private and public sectors continuously reviewing and updating legislation so it remains current and viable. The important STEP Caribbean Conference 2017 will be held in the Cayman Islands in May 2017.

MAY: LONDON SUMMIT

Mr Jude Scott, CEO Cayman Finance was in London representing Cayman Finance along with the Premier of the Cayman Islands, the Minister for Financial Services, Councillor McTaggart, the Chief Officer and other representatives of

Cayman Finance had a clear strategy for London: engage key London media influencers to inform their views and coverage about Cayman before the summit, drive messages that would insulate Cayman from anticipated attacks by NGOs during the summit and shape the media narrative after the summit to highlight Cayman’s best practices and the need for new standards to apply to all financial centres. Cayman Finance developed an aggressive media plan to drive our key messages around the London Summit. Mr Scott attended 15 meetings in total, meeting not only with key UK media, but also industry stakeholders including AIMA, IFC Forum, with UK members of parliament and Cayman Finance member firms.

We are pleased to report that we were able to organise five media interviews with senior reporters for premier London print and TV outlets, these included BBC, Financial Times, Wall Street Journal, Sky News and Sky New Tonight. Our media results were strong. The BBC posted its story on the BBC website and ran a video package of Mr Scott’s interview throughout the day of the Summit. The Financial Times ran a front page story the day before the Summit quoting both Mr Scott and Minister Panton giving our Cayman messaging substantial visibility among Summit participants and observers. I was interviewed live in prime time on Sky News the night before and the night of the Summit, bracketing the summit with key Cayman messaging.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

113


AUGUST

SEPTEMBER

AUGUST: CAYMAN PLACED ON ITALY'S WHITE LIST

SEPTEMBER: ASHRM

Interviews with the Italian media were undertaken by Jude Scott to discuss Cayman being placed onto their ‘White’ list, a significant development for Cayman’s financial services industry because it would allow Cayman Islands funds to invest in Italian securities such as bonds and securitisation instruments and receive interest payments gross of withholding tax, among other benefits. This decision was a positive step forward for Cayman’s financial services industry in Europe, particularly on the heels of the European Securities and Markets Authority’s (ESMA) recent deferral of its recommendation on the Cayman Islands’ application for the Alternative Investment Fund Managers Directive (AIFMD).

Above: Mr Scott attended ASHRM (American Society for Healthcare Risk Management annual conference) as part of a 30-strong Cayman delegation representing Cayman’s captive insurance industry.

SEPTEMBER: CAYMAN FINANCE STUDENT EDUCATION & WORK EXPERIENCE PROGRAMME Above Left: Students in the Cayman Finance Student Ed and Work Programme 2016 accepting their competition certificate.

Mr Scott joined representatives from the insurance managers, audit and law firms, financial institutions and the island’s regulator, the Cayman Islands Monetary Authority, as well as Hon Wayne Panton, the Cayman Islands Minister of Financial Services, Commerce and Environment. In addition to attending ASHRM, Mr Scott also made remarks at IMAC’s Cayman Islands financial services VIP Reception.

Above Right: Bryan Hunter, Chair of Cayman Finance Public Awareness Committee, Christen Suckoo, Chief Officer for the Ministry of Education, Employment & Gender Affairs, Hon Tara Rivers, Minister of Education, Employment & Gender Affairs and Dax Basdeo, Chief Officer for the Ministry of Financial Services, Commerce & Environment at the Cayman Finance Student Education and Work Experience Programme celebration event.

114

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


OCTOBER

NOVEMBER

OCTOBER: UK MP DINNER FOR BARONESS ANELAY

NOVEMBER: CAYMAN FINANCE MULTINATION EUROPEAN TRIP

Above: In October 2016 the new UK Overseas Territories Minister, Baroness Joyce Anelay, visited the Cayman Islands as her first official visit to a British territory after assuming her role in July 2016. Cayman Finance hosted Baroness Anelay at a special dinner attended by Cayman Finance Chair, Mr Ian Wight, Cayman Finance CEO Mr Jude Scott, Cayman Finance board members and representatives from the Cayman Islands Ministry of Financial Services. During the dinner, the Baroness recognised the country’s leading role in international services and demonstrated track record on regulatory, anti-money laundering and tax matters. (L to R) – Mark Lewis (Cayman Finance Board Member); Her Excellency The Governor, Helen Kilpatrick; Jude Scott (Cayman Finance CEO); UK Overseas Territories Minister, Baroness Joyce Anelay; Henry Smith (Cayman Finance Board Member)

Above: Cayman Finance CEO Jude Scott completed a two week visit to Europe in November to promote the Cayman Islands financial services industry and its role within Europe, the United Kingdom and the global financial economy. Mr Scott’s visit coincided with the Joint Ministerial Council meetings held in London, as well as an EU debate about a potential new tax blacklist. Mr Scott met with representatives of the UK government. Meetings with industry advocacy groups such as British Bankers Association, IFC Forum and Alternative Investment Management Association, were also included. Cayman Finance also hosted an industry breakfast attended by the Cayman Islands Minister of Financial Services Wayne Panton and London-based representatives of Cayman’s financial services industry.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

115


Cayman Finance BOARD MEMBERS Our Board of Directors is comprised of the following dedicated, experienced and well-respected members of the Cayman Islands financial services industry. Their broad range of skills and experience provides our association with the strong and capable leadership our industry needs to continue to prosper in the ever-changing landscape of global finance.

IAN WIGHT, CHAIRMAN Ian served as Managing Partner of Deloitte in the Cayman Islands for over 20 years with overall responsibility for the operations of the firm. He has extensive experience in insolvency matters and a special expertise in the wind up of financial institutions, investment fund companies, and SPV companies. He has been an associate member of the Institute of Chartered Accountants in England and Wales since 1974 and a Fellow since 1981. He has been a member of the Cayman Islands Society of Professional Accountants since 1979. Ian retired from Deloitte in 2012 and now works as a consultant and has a consultancy arrangement with Deloitte. Most recently, Ian was appointed by the Governor as a member of the Commission for Standards in Public Life.

DAX BASDEO Dr. Dax Basdeo oversees the strategy, operations and administration of the Cayman Islands Ministry of Financial Services, Commerce and Environment. Entities under his leadership include the Department of Financial Services Policy and Legislation; the Department of International Tax Cooperation; the Department of Commerce and Investment; General Registry; and the Department of Environment. The Ministry also has responsibility for the jurisdiction’s financial services regulator, the Cayman Islands Monetary Authority, as well as the Auditors Oversight Authority; the Cayman Islands Stock Exchange; and the Maritime Authority of the Cayman Islands. Dr Basdeo’s background is in economics, finance, statistics and strategic management. He holds degrees from the Wharton School at the University of Pennsylvania, the University of Manchester and the University of Maryland.

RICHARD FEAR Richard Fear is a Partner in the Cayman Islands office of Conyers Dill & Pearman. His practice covers a broad range of corporate and finance transactions. Richard’s particular focus is on corporate finance, M&A, debt and equity issues, private equity portfolio transactions, stock exchange listings and corporate reorganisations. His clients include multinational banks, corporate groups and investment managers. Richard has been practising Cayman Islands law for more than 15 years and the laws of Bermuda and the British Virgin Islands for 7 years. He brings a commercial approach to transactions, having previously been managing director of the Cayman subsidiary of a London merchant bank and practised as a chartered accountant at a big four firm.

116

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


PETER HAYDEN Peter is the Managing Partner of the Cayman Islands office of Mourant Ozannes. Prior to joining Mourant Ozannes in 2008, he worked in London as a partner at Matthew Arnold & Baldwin and before that at Allen & Overy. Peter has extensive experience of financial services litigation and insolvency matters. He has worked in-house at UBS and Barclays. Peter was admitted as an English solicitor (currently non-practising) in 1996 and granted higher rights of audience in 2002. He was admitted as a Cayman Islands attorney in 2008. Peter is a member of the Chancery Bar Association, Insolvency Lawyers’ Association, INSOL and the Commercial Fraud Lawyers’ Association.

BRYAN HUNTER Bryan is the Managing Partner of Appleby ’s Cayman office and the Corporate and Commercial practice group head in Cayman. He has extensive experience in the structuring and formation of hedge funds, funds of funds and private equity funds. He regularly advises on various operational and regulatory issues in relation to these funds. His practice also includes general corporate matters, corporate finance and merger and acquisition transactions. Bryan is a notary public in the Cayman Islands. He has served as a board member of the Civil Aviation Authority, the Caymanian Bar Association (of which he is a past president) and the Chamber of Commerce and has served as a member of the Financial Services Council. Bryan has contributed to various legal publications, including Legal Week and the Cayman Financial Review.

MARK LEWIS Mark is Senior Investment Funds Partner at Walkers. He has in excess of 30 years of post-qualification experience, the last 20 of which have been with Walkers in the Cayman Islands, specialising in all aspects of mainstream corporate work, particularly hedge funds. Mark is founding board member of the Cayman Islands branch of Hedge Funds Care, and was elected Chairman of the Executive Committee of AIMA Cayman in September 2008. He is also a member of the Cayman Islands Monetary Authority’s E-Reporting Working Group.

KEVIN LLOYD Kevin is Managing Partner at KPMG in the Cayman Islands, joining the office of the firm in 1991. He became a partner in 1997 and was appointed as Regional Head of Audit in 2004 and then Managing Partner in 2012. He has led the audit practice through significant growth and regulatory change, driving industry specialisation, collaboration, leadership and engagement. Kevin’s responsibility as Partner in charge of People, Performance and Culture was critical in ensuring that KPMG recruits, develops and retains high performers who are passionate about delivering real value to our clients. Kevin’s client base focuses on entities in the Insurance and Banking sectors and he served as Lead Insurance Partner for many years.

MICHAEL MCWATT Michael McWatt is the Managing Director for Butterfield Bank (Cayman) Limited with responsibility for the Butterfield Group’s Cayman operations as well as overall responsibility for Community Banking functions in Bermuda and Cayman. He is a career banker with more than 25 years’ experience in Canada, Bermuda and the Cayman Islands. He has been with Butterfield for the past 17 years and was previously Group Chief Credit Officer in Bermuda and Executive Vice President and Deputy Managing Director in Cayman. He previously held positions in Corporate Banking and Risk Management in Canada. Michael holds a BA in Economics from McMaster University, an Honours Commerce Degree from University of Windsor and is a graduate of the Executive Program from the Ivey School of Business at Western University. He is a Director and past president of the Cayman Islands Bankers’ Association.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

117


DAVID ROBERTS, TREASURER David Roberts is the Managing Director of Cayman Management joining the firm in 1982 and has the overall responsibility for the diverse range of services provided by Cayman Management and its affiliated companies. He specialises in the establishment and operation of a variety of corporate structures and holds numerous executive and non-executive directorships, including hedge funds, insurance and reinsurance companies, investment companies, international holding company structures, along with general operating and asset holding companies. David has an extensive background in business administration, investment and international corporate matters. He took up residency in the Cayman Islands in 1982, prior to which he gained international experience to a senior level with an international publicly quoted company based in the UK. He is a Fellow of the Institute of Chartered Secretaries and Administrators in the United Kingdom and is a registered Trust and Estate Practitioner. David is a long standing Director of Cayman Finance Ltd., is a founding member of the Cayman Islands Directors Association and is currently sitting on a number of other financial sector representative boards and committees.

NICK ROGERS Nick joined Ogier as a partner in 2010. He advises on a wide range of corporate matters with a focus on hedge fund and private equity fund formation, joint ventures, acquisitions, and venture capital financing transactions. His principal areas of practice are investment funds, corporate and commercial business and trust law group and listing services.

JUDE SCOTT Jude Scott is a former Partner of Ernst & Young and former Global CEO of Maples and Calder. He retired as an Audit Partner in 2008 after spending over 23 years with Ernst & Young where he specialised in the audits of investment funds, banks and insurance companies. As the Global Chief Executive Officer of Maples and Calder, he took an active role in the strategic growth and development of the firm. Jude is well respected in the local community and internationally, having served on various Cayman Islands Government and private sector committees, including the Cayman Islands Society of Professional Accountants, the Cayman Islands Financial Services Council, the Education Council, the Insolvency Rules Committee and the Stock Exchange.

DON SEYMOUR Don is the Founder of DMS Offshore Investment Services and is recognised by the Financial Times as one of the most influential men in the global hedge fund industry. He was directly responsible for the creation of the Investment Services Division of the Cayman Islands Monetary Authority (CIMA),  where he is credited with the development and implementation of its market-friendly and responsive regulatory framework for regulating hedge funds that propelled the Cayman Islands to become the leading hedge fund jurisdiction in the world. After his tenure as Heads of Investment Services, he served as a member of the board of directors of CIMA. A Notary Public, he holds a Bachelor of Business Administration degree in Accounting from the University of Texas at Austin and a Certified Public Accountant certificate from Illinois.

ROHAN SMALL Rohan is a partner in the Bahamas, Bermuda, British Virgin Islands and Cayman Islands (BBC) region of Ernst & Young’s Financial Services Organisation. He has more than 20 years of audit experience in the financial services sector serving numerous large hedge funds, private equity funds, special purpose vehicles and banks. He is currently the IFRS leader for the BBC. Rohan received Bachelor Degrees in accounting and computer science from the University of Texas located in Austin. He is licensed as a CPA in the State of Illinois, a member of the American Institute of Certified Public Accountants (AICPA) and a member of the New York State Society of CPAs. Rohan has served on various government, statutory and service organization boards and committees. Rohan is a past Chairman of the Cayman Islands’ Chapter of the Alternative Investment Management Association (AIMA), past president of the Cayman Islands Society of Professional Accountants (CISPA) and the first chairman of its Licensing Committee.

118

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


HENRY SMITH Henry Smith is a partner at Maples and Calder in the Cayman Islands, having previously served as the Global Managing Partner for six years. He has extensive experience in all aspects of offshore finance transactions, focusing on private equity funds, hedge funds and structured finance transactions. Henry joined Maples and Calder in 1994 and was elected as a partner in 1999. He previously worked for a major international law firm in London, New York and Tokyo. Henry has been named as a leading banking and private funds lawyer by Who’s Who Legal and Legal 500, and ranked as an Eminent Practitioner by Chambers and Partner’s global guide.

GRAEME SUNLEY Graeme Sunley is PwC Cayman’s territory leader as well at the asset management leader for PwC Cayman and the wider network of PwC firms across the Caribbean. He was admitted to the PwC Cayman partnership in 2006. He has more than 20 years of professional experience with PwC, the last 18 of which have been with PwC Cayman. His client portfolio comprises alternative investment funds with a variety of different investment strategies and legal structures. He works with major fund administrators, legal counsel and fund governance firms.

STUART SYBERSMA Stuart is Deloitte’s Cayman Islands’ Office Managing Partner and has over 25 years’ experience in public accounting, the last 18 of which have been based in the Cayman Islands where he has been a partner since 2000. Stuart specialises in insolvency, forensic accounting and dispute consulting. He is a Canadian qualified Chartered Accountant, as well as a Chartered Insolvency and Restructuring Professional and Certified Fraud Examiner. He is a member of the Cayman Islands Society of Professional Accountants and founding board member of the Cayman Islands chapter of the Alternative Investment Management Association. In addition to his local responsibilities, Stuart is the lead partner for Financial Advisory Services in the Deloitte Caribbean & Bermuda Cluster, as well as a member of the America’s Financial Advisory Services board.

WILLIAM WALMSLEY William is a Partner of Rawlinson & Hunter and has responsibility for the firm’s trust and corporate services department. He has over 25 years of experience and specialises in private client services including international trust structures, private trust companies and purpose trusts. William is a director of The R&H Trust Co. Ltd. and The Harbour Trust Co. Ltd., duly licensed Cayman Islands trust companies owned by Rawlinson & Hunter in the Cayman Islands. He advises on the establishment and ongoing administration of Cayman Islands trusts and companies including acting as a director of a number of private trust companies, other regulated entities and other client companies. He is a Fellow of the Institute of Chartered Accountants in Ireland, a member of the Society of Trust and Estate Practitioners (STEP), Vice Chairman of the Cayman Islands branch of STEP and a member of the Cayman Islands Society of Professional Accountants.

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

119


MEMBER FIRMS

19 Degrees North Fund Services Ltd. 19northfs.com 1 345 749 1919

AON Risk Solutions (Cayman) Ltd.

aon.com/caymanislands 1 345 949 0002

Apex Fund Services

apexfundservices.com 1 345 747 2739

Appleby (Cayman) Ltd.

applebyglobal.com 1 345 949 4900

Artex

artexrisk.com 1 345 949 5263

BDO

bdo.ky 1 345 943 8800

Butterfield Bank (Cayman) Ltd.

ky.butterfieldgroup.com 1 345 949 7055

Carne Global Financial Services Ltd.

carnegroup.com 1 345 769 9900

Cayman Management Ltd.

caymanmanagement.com 1 345 949 4018

Circumference

Circumference FS (Cayman)

circumferencefs.com 1 345 946 4091

120

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


Codan Trust Company (Cayman) Ltd. conyersdill.com/pages/codan 1 345 949 1040

Collas Crill

collascrill.com 1 345 949 4544

Conyers Dill and Pearman

conyersdill.com

(Cayman) Ltd.

1 345 945 3901

Crestbridge Cayman Ltd.

crestbridge.com

Reversed out

1 345 814 9380 B/W

CMYK

Deloitte

deloitte.com/ky 1 345 949 7500

RGB

Dillon Eustace

dilloneustace.com 1 345 949 0022

DMS Governance

dmsgovernance.com 1 345 949 2777

EY

ey.com/ky 1 345 949 8444

Fidelity Bank (Cayman) Ltd.

fidelitygroup.com/caymanislands 1 345 949 7822

Greenlight Reinsurance Ltd.

greenlightre.ky 1 345 943 4573

Harney Westwood & Riegels

harneys.com 1 345 949 8599

HF Fund Services

hffunds.com 1 345 949 9900

Highwater

highwater.ky 1 345 640 2295

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

121


MEMBER FIRMS KPMG

kpmg.com/ky 1 345 949 4800

Maples and Calder

maplesandcalder.com 1 345 949 8066

Marsh Management Services

marsh.com

Cayman Ltd

1 345 949 7988

MG Management Ltd

mgcayman.com 1 345 749 8181

MINISTRY OF

FINANCIAL SERVICES, COMMERCE & ENVIRONMENT

Ministry of Financial Services,

caymanfinance.gov.ky

Commerce & Environment

1 345 945 5819

Morval Bank & Trust Cayman Ltd.

morval.ch 1 345 949 9808

Mourant Ozannes

mourantozannes.com 1 345 949 4123

Ogier

ogier.com 1 345 949 9876

Premier Fiduciary

pfscayman.com

Services (Cayman) Ltd.

1 345 936 6789

PwC Cayman

pwc.com/ky 1 345 949 7000

Queensgate Bank &

queensgate.com.ky

Trust Company Ltd.

1 345 945 2187

Rawlinson & Hunter

rawlinson-hunter.com 1 345 949 7576

122

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB


RBC Dominion

rbcds.com 1 345 949 4066

Sackville Bank

sackvillebank.com 1 345 749 6100

Summit Management Ltd.

sml.ky 1 345 945 7676

US Bancorp Fund Services Ltd.

usbank.com/usbfs 1 345 946 2630

Vistra Cayman Trust Ltd. (OIL)

vistra.com 1 345 769 9372

Walkers

walkersglobal.com 1 345 814 4667

ASSOCIATE MEMBERS BravaComm

bravacomm.com 1 345 928 6161

IFINA (Cayman) Ltd.

ifina.com 1 345 949 5263

Maritime Authority of the

cishipping.com

Cayman Islands

1 345 949 2883

Silver Wheaton (Caymans) Ltd.

silverwheaton.com 1 345 945 3584

Audit services provided pro bono by EisnerAmper

eisneramper.ky 1 345 945 5889

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

123


INDUSTRY PARTNERS

100 Women in Hedge Funds

100womencayman.com

The Cayman Islands Bankers’

cibankers.org 1 345 949 0330

Association

Managers Association (CICMA)

cicma.net 1 345 916 2445

Cayman Islands Compliance

cica.ky

Cayman Islands Company

Association (CICA)

Cayman Islands Directors Association

CIIPA Professional Accountants (CIIPA) Cayman Institute Islands Cayman Islands of Institute of Professional Accountants

CIIPA CIIPA CIIPA

CIIPA

Cayman Islands Institute of Professional Accountants

Cayman Islands Institute of Professional Accountants

Cayman Islands Institute of Professional Accountants

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

caymanlawsociety.org 1 345 815 7400

Cayman Islands Institute of Professional Accountants

Caymanian Bar Association

124

ciipa.ky 1 345 749 3360

Cayman Islands Institute of Professional Accountants

Cayman Islands Law Society CIIPA

cida.ky 1 345 814 2343

caymanbar.org.ky


C AY M A N I S L A N D S

CFA Society of the Cayman Islands

cfasociety.org/caymanislands 1 345 815 7604

Chartered Alternative Investment

caia.org 1 413 253 7373

Analyst Association (CAIA)

of Cayman (IMAC)

imac.ky 1 345 949 4622

The Society of Trust & Estate

step.org

Insurance Managers Association

Practitioners (STEP)

Cayman Islands Fund

cifaa.org.ky

Administrators Association (CIFAA)

Association

ciia.ky 1 345 949 8699

Alternative Investment Management

Chairman: Alan Milgate

Association (AIMA)

cayman.aima.org

Recovery and Insolvency

Chairman: Hugh Dickson

Specialists Association (RISA)

risa.ky

Cayman Islands Insurance

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

125


USEFUL RESOURCES Cayman Islands Chamber of Commerce The Cayman Islands Chamber of Commerce is the country’s largest not-for-profit organisation established to support, promote and protect the interests of its more than 700 member businesses across all industry sectors. Visit the Chamber’s business directory for up-to-date information on airlines, hotels, condominiums, restaurants, attractions, tours, real estate, investment opportunities and financial services in Grand Cayman, Cayman Brac and Little Cayman.

__________________________________ caymanchamber.ky

Cayman Islands Ministry of Financial Services The Ministry of Financial Services creates an environment in which financial services can flourish, to the benefit of all stakeholders. Its departments include the Department for Financial Services Policy and Legislation; Department for International Tax Cooperation; and General Registry. The Ministry also oversees six government authorities: the Cayman Islands Monetary Authority, Cayman Islands Stock Exchange, Maritime Authority of the Cayman Islands, Cayman Islands Development Bank, the Auditors Oversight Authority and the Special Economic Zone Authority.

Cayman Islands Monetary Authority (CIMA) CIMA began operations on 1 January 1997. It was established as a body corporate under the Monetary Authority Law, which was brought into force on that date. CIMA protects and enhances the reputation of the Cayman Islands as an international financial centre by fully utilising a team of highly skilled professionals and current technology, to carry out appropriate, effective and efficient supervision and regulation in accordance with relevant international standards and by maintaining a stable currency, including the prudent management of the currency reserve. C-0% M-18% Y-100% K-27% C-100% M-57% Y-0% K-40%

MINISTRY OF

Cayman Islands Economic and Statistics Office (ESO) The ESO produces the Cayman Islands’ official national economic reports and socio-economic statistics which are released to the public online. Among the statistics are the National Accounts (Gross Domestic Product), Balance of Payments, Consumer Price Index, Labour Force Surveys, Household Budget Survey and the Population and Housing Consensus.

________________________________ eso.ky

126

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

FINANCIAL SERVICES, COMMERCE & ENVIRONMENT

________________________________ caymanfinance.gov.ky

________________________________ cimoney.com.ky


Cayman Islands Stock Exchange (CSX) CSX is a stock exchange based in Grand Cayman, Cayman Islands. It started operations in July 1997, and is fully owned by the Cayman Islands government. The CSX was recognised by the London Stock Exchange as an approved organisation in July 1999. The CSX was originally set up to provide a listing facility for the specialist procedures of the Cayman Islands – mutual funds and specialist debt securities. The CSX’s capabilities now exten to sophisticated vehicles and structures including the listing of derivative warrants, depositary receipts, Eurobonds, preferred shares and international equity.

Department of Commerce and Investments The Department of Commerce and Investment is the central point for the coordination of resources and information for investors, entrpreneurs and developers seeking business opportunities in the Cayman Islands. Our vision is to contribute to Cayman’s economic development by encouraging investment and entrepreneurial ventures that generate income, employment, innovation, linkages and domestic competitiveness. The department’s mission is “to lead in promoting and facilitating appropriate long-term foreign and local investment in the Cayman Islands.”

________________________________ csx.com.ky

________________________________ investcayman.gov.ky

Maritime Authority of the Cayman Islands The Maritime Authority of the Cayman Islands (MACI) is recognised as a leading maritime administration, providing exceptional service to the global shipping community. MACI is a statutory corporation formed as a separate entity under the Maritime Authority of the Cayman Islands Law (2005), made effective on 1 July 2005. MACI is wholly owned by the Cayman Islands Government and it is governed by a Board of Directors appointed by the Cabinet. MACI reports to the Cabinet of the Cayman Islands through the Ministry of Financial Services, Commerce and Environment. It is also responsible to the UK Secretary of State via the UK’s Department of Transport to ensure effective implementation of relevant international maritime and related conventions that have been ratified by the UK Government and extended to the Cayman Islands.

________________________________ cishipping.com

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

127


ARNOLD SCHWARZENEGGER

ACTOR, BUSINESSMAN, AND THE FORMER GOVERNOR OF CALIFORNIA

SPECIAL GUEST SPEAKER

GEORGE WHITESIDES

CEO, VIRGIN GALACTIC AND THE SPACESHIP COMPANY

THE FUTURE OF ALTERNATIVE INVESTMENTS IN EXCEPTIONAL TIMES

CAPTAINS MARK & SCOTT KELLY

HIGHLY DECORATED NASA ASTRONAUTS & RETIRED U.S. NAVY CAPTAINS

DATE:

FE B RUARY 15- 17, 2017

LOCATION:

GRAND CAYMAN, CAYMAN ISLANDS

VENUE:

K I MP TO N SE AFIRE RE SO RT+ S P A

WWW:

C A Y M A N SU M M I T. C O M

SPONSORS Executive Platinum

Gold

SPECI A L G U E ST SP E A K E R S

@CaymanSummit

K E YN O T E S PEAKER

Platinum

Others

Bronze

IMS

128

CAYMAN ISLANDS: PANTONE 130

PANTONE 179

PANTONE 425

THE PREMIER GLOBAL FINANCIAL HUB

REGISTER NOW @ caymansummit.com


LIST OF ADVERTISERS Appleby 106 Butterfield Camana Bay Cayman Alternative Investment Summit Cayman Finance

inside front cover 2 128 33, 107

Cayman Management

40

Cayman Islands Bankers Association

68

Cayman Islands Ministry of Financial Services

47

Cayman Islands Institute of Professional Accountants

68

Conyers Dill & Pearman

94

Dillon Eustace

107

EY 12 Harneys 77 HF Fund Services Ltd

37

Insurance Managers Association of Cayman

68

International Management Services

51

Kimpton Seafire Resort & Spa

41

KPMG 77 Maples 107 PwC Rawlinson & Hunter

back cover 29

Walkers 51

CAYMAN ISLANDS: THE PREMIER GLOBAL FINANCIAL HUB

129


www.pwc.com/ky

Creating the edge you need

As a leading provider of assurance, tax and advisory services to the financial services industry, PwC Cayman helps create the edge you need. We bring a broader, deeper spectrum of skills across all segments of the industry, delivered with energy, passion, teamwork and the proven ability to develop customized solutions for you. We use the knowledge and experience of more than 200,000 people in the PwC global network of firms to help our clients not only to implement new standards and requirements, but also to prepare for the future.

Let’s talk... Graeme Sunley Territory Leader graeme.sunley@ky.pwc.com Tel +1 345 914 8642

Richard Irvine Tax Leader richard.e.irvine@bm.pwc.com Tel +1 441 299 7136

Simon Conway Advisory Leader simon.r.conway@ky.pwc.com Tel + (345) 914 8668

Š 2016 PricewaterhouseCoopers , a Cayman Islands partnership.All rights reserved. PwC refers to the Cayman Islands member firm, and may sometimes refer to the PwC network.Each member firm is a separate legal entity.Please see www.pwc.com/structure for further details.

Cayman Islands: The Premier Global Financial Hub  

Cayman Finance's third issue of their jurisdictional magazine about the financial services industry in the Cayman Islands. Cayman Finance is...

Read more
Read more
Similar to
Popular now
Just for you