Cayman Bar calls for action

(CNS): Describing the Cayman Islands as outmatched in terms of its bargaining position regarding the attacks the country faces from onshore jurisdictions, James Bergstrom of the CaymanBar Association has said Cayman needs to be proactive in addressing the major initiatives through new legislation. 

"In the wake of the global financial crisis, ‘tax havens” and their bank secrecy laws and purported lack of transparency are again under attack,” Bergstrom said at the recent openingof the Grand Court. He said that at the heart of the forthcoming UK review of financial systems in its territories, the OECD’s “greenlist” of compliant jurisdictions and the “Stop Tax Haven Abuse Act”, co-sponsored by US President-elect Barack Obama, is the issue of exchange of information on tax matters. “Cayman must be proactive,” he said. “If we are, a substantial part of the basis for the attacks disappears.”

Bergstrom explained that Cayman needs to continue negotiations for bi-lateral tax information exchange agreements with all the jurisdictions that Cayman has significant business relations. He added that the recent changes to the Tax Information Exchange Law was a step in the right direction but Cayman should repeal the Confidential Relationships (Preservation) Law and replace it with legislation consistent with the previous common law and data protection regulations, more akin to the data protection legislation in the US and UK.

Bergstrom also said Cayman needed to push the results of the US Government Accountability Office’s report which recognised the Cayman Islands as a co-operative offshore jurisdiction that is willing to adopt international standards on cross-border exchange of information and is not a “secrecy jurisdiction” which assists US citizens in evading taxes.

“Cayman needs to build on this recognition and to differentiate itself from other offshore financial centres that might be characterised in this way,” Bergstrom said.

He explained that over the past three years, Cayman’s competitor offshore financial centres have significantly overhauled their laws and lightened their regulatory framework to attract more business. 

“Their primary target has been and remains Cayman and they are making ground,” he warned.”Our main competitors have ensured that there are commercial courts in place with internationally recognised judges with expertise in the particular types of financial products established in offshore financial centres.”

He said that the log jam on commercial and financial services legislation in Cayman must end and the draft bills submitted by the private sector sitting on shelves need to be acted upon. He acknowledged some recent progress but said it was not sufficient.

“The Attorney General and the government need to agree a fast track approach for critical bills and suggestions received from the private sector,” he added. “Both the Caymanian Bar Association and the Cayman Islands Law Society support this initiative and stand ready to support the attorney general and the government.”

He also said it was important that the Cayman Islands Monetary Authority’s regulatory oversight is sufficient to satisfy international standards but at the same time light enough to continue to attract business. 

“The government and the Monetary Authority should mount a sustained campaign with onshore regulators at least to open communication and at best obtain some favourable recognition,” Bergstrom noted.

He hoped the plans for the establishment of a commercial court which would have the duel effect of catching up with our competitors as well as alleviating the burden of cases on the main Grand Court would become a reality this year.

Bergstrom also joined the calls for an electedminister of finance. “The government must recognise the level of contribution of the financial industry to the economy of these Islands, which now significantly exceeds the contribution from tourism, and commit the necessary resources to sustain and grow the industry.  The first step in this process is to have an elected minister with the financial services industry as his or her primary portfolio,” he added.