No “safe harbour” for criminals in Cayman
(CNS): In the wake of the arrest of Philip Eric de Figueiredo, a principal of accountancy firm Strachans, in Jersey earlier this month followed by the pronouncement that Raoul Weil, former head of UBS’ global wealth business,was now a US fugitive, there have been some concerns raised in the Cayman Islands about how far international law enforcement can reach. The Portfolio of Economics and Finance told CNS that the CI government would not offer protection to anyone here who broke the law.
Figueiredo was arrested as part of an ongoing operation by Australian Authorities into tax evasion, and the US has declared Weil a fugitive for his failure to surrender to US authorities on charges of conspiring to help wealthy American citizens hide assets from US tax authorities.
Ted Bravakis, Director of the Public Relations Unit in the Portfolio of Finance and Economics, told CNS this week that depending on extradition treaties — and Cayman has one with the United States — the government here would not offer safe haven to anyone who is engaged in criminal activity. “There will be no safe harbour for anyone who has broken the law with regards our international co-operation agreements,” he added.
Given the local industry’s wide experience and its proximity to the US, professionals based in Cayman say they have for many years been extremely careful in scrutinising the business they accept with US connections. As a result, most local experts don’t expect to see similar situations to that of Weil, who faces charges in the US. However, it is possible that some professionals in Cayman may have inadvertently broken US law by assisting US taxpayers to avoid their obligations, and given the climate, Cayman may see the US making use of the extradition treaty in its heightened frustration with and campaign against offshore service providers.
In a recent presentation to Cayman’s second annual International Fund Conference, Tim Ridley, former chair of the Cayman Islands Monetary Authority, warned that after years of avoiding litigation for their actions the offshore director may no longer be able to preserve his unscathed position when things go wrong. He said directors and auditors should sit up and take note of the wake-up calls as they may no longer be able to avoid the fallout.
“There is a school of thought in the US — likely to grow under the Obama presidency — that offshore service providers that supply directors and other services to structures that enable US taxpayers to evade taxes should be sanctioned and put out of business by their home regulators, e.g. by the revocation of their licences on the grounds they are carrying on business contrary to the public interest or in a manner that is not fit and proper,” Ridley warned.
As Barack Obama begins his presidency, the campaign against offshore financial centres is expected to intensify after his campaign promise to reduce the effectiveness of tax havens. It is thought that the US Treasury Department will be given more manpower to investigate what can be done to stop American citizens’ money leaving the US for offshore jurisdiction with new legislation, likely to be passed this year.
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Category: Business
Dear Anonymous,
If our role as a tax haven is so vital to the world economy then why is it that we are constantly under attack? How long must we keep defending ourselves? I understand that being a tax haven is not illegal for us to have in place in the Cayman Islands, but we are constantly under attack from individuals, countries etc. How long can we take the blows in this industy?
As it stands we would be better off being the gambling mecca of the Caribbean with casinos etc. instead of being blacklisted as a tax haven and constantly subjected all the the negative press we receive from being tossed from one blacklist to another.
I have no problem if this Government were to impose taxes on say personal gains or otherwise, because it wil help with the stabilizing of the economy. However, too many special interest groups and individuals would have a fit if they are challenged to give something back for making so much more.
Tax Havens as far as I am concerned can all close down including us here in the Cayman Islands.
Pay your taxes, it is the right thing to do. Those who oppose are simply greedy and evasiveindividuals who will do whatever it takes to secure their bottom line or making an all out attempt to slip through the loopholes. I say plug the loopholes and stop the bleeding.
Pay taxes we should impose them here as well.
I indeed meant "evade", i.e. acts or omissions that are illegal under US law. Tim
The US needs to take a LONG HARD LOOK at themselves before even begining to ‘bully’ off-shore jurisdictions such as Cayman.
Under their very nose, the world Financial crisis, and the highest levels of Fraud are playing out right in the good-old USA, not here.
It is their lack of ability to enforce and regulate thier own Financial sectors and investors that they should be concentrating on. Nowhere else on this planet can one Launder money more quickly and effectivly than on Wall-street. Heck, when persons such as Mr. Made-off (with $50b no less), can operate at the highest levels of the US financial industry, and it takes more that 40 years to discover his deceit, you KNOW you have serious problems.
We need to say to the US, ‘fix the log in your own eye first, we have our speck under control’.
Interesting. We’ll see how this pans out.
Surely Tim intends the word "avoid" rather than "evade"- they are crucially different in their meaning…
If Knal is referring to the following quote I would hope that Tim meant what he said. on the other hand, "avoiding" taxes involves tax planning that complies with the law which is exactly what we do. If that is what he meant we are in deep trouble since that is precisely what we do.
"There is a school of thought in the US — likely to grow under the Obama presidency — that offshore service providers that supply directors and other services to structures that enable US taxpayers to evade taxes should be sanctioned and putout of business by their home regulators"
"President Obama has the right idea, shut down the tax havens for American Citizens. Let them pay taxes in their own country, or renounce their American Citizenship and move out and live permanently in a tax haven. The time has come when Americans will no longer have their cake and eat it too".
You are clearly pretty naive about the subject. We all "avoid" tax by planning our finances. Nobody pays more tax than he has to; that would be rather stupid. As long as there are tax rules there will be tax ‘loopholes’; it is a like a continual arms race. The issue is not primarily about individuals paying tax but instead corporations that create structures offshore so as to minimize or defer taxes. These vehicles are used to accumulate capital and invest where otherwise no one would invest. We therefore play a vital role in the world economy.
Yep, about time the Americans pay their taxes. Why should we allow them to hide it here, it isn’t benefiting us in anyway. With the exception of a few dollars of annual company license fees, we don’t earn a dime on any of the huge deposits.
President Obama has the right idea, shut down the tax havens for American Citizens. Let them pay taxes in their own country, or renounce their American Citizenship and move out and live permanently in a tax haven. The time has come when Americans will no longer have their cake and eat it too.