Cayman not only place rejected by US brokers

| 11/01/2011

(CNS): In the wake of a US based broker’s revelations that it would not be doing business with clients in the Cayman Islands in December, it appears that this jurisdiction is not the only offshore centre receiving the cold shoulder. Sources in the Bahamas have also revealed that TD Ameritrade is closing accounts registered there as well. It is understood that the broker is telling clients there that it is “to mitigate risk”. When the firm first revealed to a number of its Cayman clients that it would no longer being doing business with them, it indicated it was as a result of international requirements. Government told CNS on Monday that officials were still following up on the situation and would keep the public informed of developments.

TD Ameritrade wrote to a number of its Cayman based clients in December to inform them that they were placing restrictions on accounts in Cayman because of international requirements. “After assessing global requirements for doing international business, TD Ameritrade has decided that we will no longer open or maintain accounts in certain international jurisdictions,” the letter stated.

In a phone call to one member of Cayman Finance, the local industry body, the brokers reportedly said this was as a result of a directive of some kind from the US Office of Foreign Assets Control (OFAC). However, the US treasury office denied having issued any kind of order and pointed out that it does not block transactions with jurisdictions, but targets specific parties. It told Cayman’s Washington based attorneys, Sidley Austin LLP, that there were no orders, directives or other regulations that restricted US financial institutions or US citizens from doing business with the Cayman Islands, its financial institutions or residents.

"It is now clear that any action TD Ameritrade may have taken was made without the knowledge or approval of OFAC," government said in a statement. It is still unclear why TD Ameritrade and other related brokers have made the decision not to do business with Cayman based clients or, as has now been revealed, the Bahamas but government says it will follow up on the matter.

Cayman Finance said that TD Ameritrade is accepting alternate US addresses for existing clients and that TD Waterhouse in Toronto is still accepting Cayman clients, as is Charles Schwab. It too has said it will continue to pursue the reason why the brokers have made this decision and intends to keep its members informed.

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  1. Anonymous says:

    This is only the beginning of a broader shift coming in the years ahead.  The developed (taxed) economies are in genuine trouble.  I expect them to restrict cash and precious metals ownership in the years ahead.  It is a blessing to live in a free-er economy where you are not subject to the restrictions you’ll see in the US in times of crisis.  I can only hope that Cayman remains free as some unthinkable laws and rules get conjured up to deal with the social unrest which will follow the nextbig leg down in the US.  It will all become painfully clear what I am speaking of by 2015.  The modern financial machine is broke and broken.  The powers that be will deal with it the way they always do – by placing a yoke around their citizenry and trying to create a firewall between themselves and free economies.

  2. Anonymous says:

    Any one knows if they can request to remove your funds, as per some people from Panama, they cannot force you to close your positions until you do yourself, you cannot purchase any more equities, but they cannot force you to sell your positions is that true?

    Any one found another alternative to move our accounts with similar fees or close to it?

  3. noname says:

    Whatever happened to Globalization and the whole Free Trade Theory?

    Guess these brokers are not keeping up. Or are they just blocking competitive economies?



  4. Anonymous says:

    It is ovious becoming "White Listed" was another waste of time and goverment funds…..

  5. O'Really says:

    Despite what Cayman Finance suggests, I would be very careful about providing an alternative US address in order to attempt to keep a TDA account operating. Apart from the fact that such an action will fail if there remains any connection of the account to the Cayman Islands, it is very likely to trigger a change of tax status for the account holder, with some very unpleasant consequences in terms of  US withholding tax requirements. 

  6. Anonymous says:

    While everyone’s whining about being mistreated, why doesn’t some enterprising Caymanian start up an online brokerage for the local population. It ain’t all that complicated and there’s supposed to be all this financial acumen available on the island. Sounds like there would be a market for this in some other spots in the Caribbean as well.

    • Anonymous says:

      It is that complicated, very compicated. Do you have any idea of the costs involved in getting a company like that off the ground, not to mention the fact that all the trades have to be cleared witha US bank. All of that before you start a KYC department, and you going to be persoanlly responsible under cayman islands law for the clients? It is about risk, the risk that they dont know the customer and the source of funds, think about it! There are 50,000 people here, how many bank with TD, less than 1000 i would guess, a lot less, its not worth all the extra reporting they have to do on non US clients, i cannot believe they have let it go on this long…

  7. expat weirdo says:

    I was a bit surprised when I moved here that no bank/broker in the Caymans offers online trading…. when I inquired to Cayman National you still had to phone all orders in at astronomical rates… since I am Canadian I could not have a broker in Canada and I received the same cold shoulder from American brokers… maybe if we are such a ‘banking’ mecca we should have some type of trading platformfor residents and for other jurisdictions that cannot bank in North America.

    It’s sad when I have to bank in the middle east, and have my broker in Europe because the cayman banks are so incompetent yet I live in one of the largest banking centers in the world.


    • Anonymous says:

      Cayman is not a banking mecca for people who live in Cayman. The whole point is that it is a banking mecca for people who do not live here. Assuming there is a maximum of about 25,000 people here who could conceivably have a brokerage account, it is not difficult to see why companies would not think it worthwhile considering the extra regulatory burden it would entail. The local banking is going to remain at a level consistent with serving a town of 50,0000. It is what it is.

      • expat weirdo says:

        My point is why isn’t online trading offered? Don’t you think all those people who bank offshore would want the option to do this? Obviously if you are hiding money offshore you don’t want to use that same money with American brokers…

        And there’s a huge market for servicing people who move to offshore jurisdictions such as Bahamas, turks and Caicos, Caymans,Bermuda, Vanuatu, Anguilla, etc. Sounds like a nice little niche.


      • Anonymous says:

        Cayman banks who purchase shares for their clients only operates for the big boys. Broakage fees are hefty to trade stocks. TD ameritrade and Etrade and other discount brokers charge fee of $9.99 or less per trade and a minimum balance of $2000 and your account is insured by SIPC( Security Investment Protection Corporation). They don’t require a minimum number of trade per month. In Cayman trades can be anywhere from $50 to $75 per trade. You have to telephone or email your order. Maybe you loose the bargin before such trade can be executed, if at all.You do not get the priviledge of your own trade platform with your finger on the pulse from your lap top or blackberry So keep out "aspiring small investors" or investment clubs. Know you place you guys with little money who dare to harbour the ambition of managing your own stock portfolios.

    • Anonymous says:

      Behind the TD Ameritrade strange behaviour. Well Posters. I first opened my stock brokerage account at DATEK ONLINE 10 years ago. But guess what? Datek was bought out by TD Waterhouse Securities and became TD Ameritrade Ltd. Now, could the article below explain the sudden and abrupt end of TDA relationship with its Cayman Islands investors. Could their past coming back to haunt them?

      Online Brokers Fined Millions In Fraud Case                           

  8. Chris Johnson says:

    You may add to the list, the Turks and Caicos Islands where clients resident there are no longer welcome by TD Ameritrade.

    • Anonymous says:

      The way things are going around here, we may soon have even more in common with Turks & Caicos

      • Anonymous says:

        I was going to say that it isunderstandable why they would not want anything to do with customers in the Turks & Caicos Islands, but then on contemplation I wondered who on the outside could tell the difference between TCI and Cayman or Misick and McKeeva.

    • alison says:

      also Jersey, Channel Islands,