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Cayman Islands
- Fifth Biggest Banking Centre
The Cayman Islands, one of dozens of small venues that have transformed themselves into international financial centers, has grown over the last 20 years to become the world's fifth-largest banking center and the global leader in mutual and hedge funds. The Cayman Islands is now widely recognized to be one of the world's leading offshore financial centres.
The Cayman Islands financial services industry encompasses banking, mutual funds, captive insurance, vessel registration, companies and partnerships, trusts, structured finance and the Cayman Islands Stock Exchange. As of December 2005, just over 70,000 companies were incorporated on the Cayman Islands including 430 banking and trust companies, 720 captive insurance firms and more than 7,000 funds.
Banking
Currently, there are just under 300 banks licensed under the Banks & Trust Companies Law (2003 Revision), including 40 of the world’s largest 50 banks. The majority of these banks are branches or subsidiaries of established international financial institutions conducting business in the international markets.
Cayman offers a full range of banking products for local and international clients. Other services readily available include letters of credit, foreign exchange, guarantees, safe custody, commercial loans, and mortgages. The banking sector is one of the largest employers on the Islands, and this status ensures an experienced work force well able to respond to clients’ requirements.
By law and by long-standing practice, banks adhere to “know your client” rules, and the Cayman Islands maintains a robust anti-money laundering regime. Regulatory oversight of the banking industry is conducted within the Basel Core Principles, and the Banks and Trust Companies Law covers both domestic and international banking business.
www.caymanfinance.gov.ky
Aircraft Registry
The Civil Aviation Authority of the Cayman Islands (CAACI) is the regulatory body controlling the aviation industry throughout the Cayman Islands. The CAACI operates in accordance with a statutory instrument that is predicated on UK legislation. These legislative requirements are found in the “Air Navigation (Overseas Territories) Order 2001,” AN(OT)O (and subsequent amendments) which contains regulations governing the operational and airworthiness requirements of Cayman registered aircraft. Also relative is the guidance contained in the Overseas Territories Aviation Requirements (OTARS) as published for all UK Overseas territories.
The Cayman Islands Aircraft Registry is a growing and attractive registry for foreign individuals and corporations. With approximately 115 planes registered in the private aircraft category, (such as Gulfstream, Boeing Business Jets, Airbus, Embraer, Dassault Falcon, Cessna, etc., etc) aircraft owners and brokers have voiced their pleasure at the processing of registration on the Cayman Islands Aircraft Registry. Functions of the amply qualified CAACI Air Safety Regulation (ASR) staff who manage this function include stringent safety and technical standards with rigid airworthiness inspections and validations of flight personnel licenses. The CAACI ASR staff also liaises with legal and financial professionals in the industry who are familiar with registering mortgages and finding adequate solutions to most clients’ questions and situations.
www.caacayman.com
Shipping Registry
Cayman offers stable, efficient, tax-neutral, with modern maritime legislation and an experienced global team.
There are several important reasons for registering a vessel – (1). To prove its nationality which is essential for overseas voyages. (2). To secure ownership title to a movable asset for the owner of that asset. (3). To use the ship as security to obtain a marine mortgage, which in turn is registered.
The original Cayman Islands Shipping Registry (CISR) maritime administration structure, which is the main forerunner to MACI, was first set-up in 1903 when George Town was established as a British Port of Registry. The CISR obtained British Registry Category 1 Status on July 25, 1991. The Category 1 Group of British Registries includes the UK, Bermuda, Cayman, Gibraltar and the Isle of Man. All of these can register vessels of any size and type provided that they meet international standards. The CISR is now a division of MACI.
The Maritime Authority of the Cayman Islands (MACI) is a statutory corporation formed as a separate legal entity under the Maritime Authority of the Cayman Islands Law (2005) which came into effect on July 1, 2005. The Authority is wholly-owned by the Government of the Cayman Islands but governed by a Board of Directors appointed by the Governor of the Cayman Islands. MACI reports to the Cabinet of the Cayman Islands through the Portfolio of Finance and Economics but is also responsible to the UK Secretary of State via the UK's Maritime and Coastguard Agency (UK MCA) for the effective implementation of the relevant international maritime and related Conventions that have been ratified by the UK Government and extended to Cayman. A number of critical responsibilities, in addition to the CISR as a division of MACI, have been added to the new Authority.
www.cishipping.comm
Cayman Islands Stock Exchange (CSX)
With the establishment of the CSX in 1997, the funds industry was further enhanced and Cayman is now a first-class listing facility for funds. The CSX has continued to grow, with more than 850 issues approved for listing, a large proportion of which are mutual funds, making it one of the fastest growing international stock exchanges.
The CSX's capabilities also extend to the listing of derivative warrants, depository receipts, eurobonds, preferred shares and international equity. The CSX also provides a secondary listing facility and on offshore trading venue in the North American time zone for companies listed and traded on another recognized exchange.
The international recognitions that the CSX has received have helped drive the growth in listings, particularly since the UK’s Inland Revenue named it as a ‘Recognised Stock Exchange’ in March 2004, which greatly enhanced its commercial appeal to UK investors. The CSX was also admitted as an affiliate member of the International Organisation of Securities Commissions (IOSCO) in 2003. In 2001 it became the first and is still the only offshore exchange to join the Intermarket Surveillance Group, which is committed to information sharing and enhancing market surveillance, while in 1999 the CSX became the first offshore stock exchange to be registered with the London Stock Exchange.
Exchange of Information
Cayman’s anti money-laundering (AML) and combating the financing of terrorism (CFT) regime operates through a partnership of institutions and authorities which includes the FRA. Others include the Cayman Islands Monetary Authority, the Financial Crime Unit of the Royal Cayman Islands Police, the Mutual Legal Assistance Treaty Central Authority, Customs and the Attorney General’s Chambers. The Cayman Islands also has an Anti-Money Laundering Steering Group, which is a statutory body charged with policy and implementation oversight in relation to the anti money-laundering regime.
image: FRA-Australia MOU signing I - Left to right: Mr. Neil Jensen - Chief Executive Officer - AUSTRAC & Mr. Lindsey Cacho - Director of the FRA
June 2007 - The Cayman Islands Financial Reporting Authority (FRA), the country’s financial intelligence unit, signed a memorandum of understanding (MOU) to facilitate the exchange of information with the Australian Transaction Reports and Analysis Centre (AUSTRAC). While an MOU is not a prerequisite for FIUs to seek assistance from the FRA, they do facilitate greater detail in information sharing between counterpart agencies. The MOU with AUSTRAC is the eighth that the FRA has signed and five are pending. Current MOUs cover a broad range of countries, including the U.S., Canada, Chile, Guatemala, Indonesia and Thailand.
Since 1996, there have been five successful prosecutions for money laundering in the Cayman Islands, the last being in December 2006. The predicate offences underlying these charges ranged from advance fee fraud, theft, frauds and conspiracy to defraud. Prison sentences ranged from 12 months to 5 years and fines levied ranged from CI$6,000.00 to US$1,000,000.00. In addition, forfeiture amounts of CI$143,000.00 and US$500,000.00 were also ordered against two of the defendants.
Arabic Language Facility
March 2007 the General Registry of the Cayman Islands Government introduced an Arabic language facility, to enable registration and other certificates to be issued bearing the company name in both Arabic and English.
Charles Quin, QC, President of the Cayman Islands Law Society comment: “The ability of the Cayman Islands to quickly implement service enhancements such as the Arabic language facility is a clear indicator of the jurisdiction’s swiftness in responding to commercial opportunities, such as the growth of Islamic finance. Enhancements such as these also help contribute to the worldclass quality of financial services providers that exist in the Cayman Islands.”
Sukuks
The Cayman Islands is fast becoming the leading offshore jurisdiction for Islamic finance structures, which have a current estimated market size of between $250 billion and $500 billion1. Specifically, Cayman Islands institutions have become experts in structuring “sukuks,” bond issues that comport with Shari’a law, which prohibits interest payments and requires tangible assets or equity to be used as collateral.
Sukuks that are developed and marketed in the Middle East predominantly use Cayman Islandsdomiciled issuers over other jurisdictions. Cayman’s established legal regime, competitive costs, efficient turnaround and professional infrastructure are strong incentives for financial institutions to structure finance vehicles in Cayman. In addition, the Cayman Islands’ strong reputation in the world of global finance is a significant advantage in securing the desired bond listings and ratings.
A ground-breaking $600 million sukuk, structured in Cayman, was successfully closed in February 2007. The sukuk was established for the Dar Al Arkan Real Estate development company, a leading residential real estate developer in the Kingdom of Saudi Arabia. The landmark three-year issue marks the first sukuk issued by a Saudi corporate in the international capital markets. The issue was heavily subscribed, with many western investors, particularly hedge funds, attracted to the diversification and strong asset backing provided by a rated Islamic bond.
Laws and Regulations
Cayman Islands Links
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