US concerned over financial crime in Cayman

| 08/03/2011

(CNS): The United States government has raised concerns about financial crime in the Cayman Islands in volume two of the 2011 International Narcotics Control Strategy Report (INCSR) published this month by the State Department. The document says that in Cayman most “money laundering is primarily related to fraud and drug trafficking” but because of its status as a zero-tax regime, the State Department said, the jurisdiction is "also considered attractive to those seeking to evade taxes” in their home countries. The report further criticises the Cayman Islands about the very low number of successful prosecutions for financial crime and money laundering that have taken place here given the size of the financial sector.

"While the country has increased both its regulatory and law enforcement staffing, the number of prosecutions and convictions is extremely low, given the vast scale of the country’s financial sector," the report stated, adding that only six successful prosecutions for money laundering and only one in the last four years have taken place.

In addition, the report said, the "lack of penalties" for failing to report ownership and identity information "undermines the effectiveness” of these obligations. "This is a problem in particular for an estimated 3,000 unregulated mutual funds resident in the Cayman Islands," said the INCSR, which noted that there appeared to be no requirements for companies, trusts and partnerships to retain records for at least five years.

However, recent legislative changes to a number of the laws relating to the offshore sector have addressed the reporting issue, which was also flagged by the IMF in its recent review.

The report goes on to urge the Cayman Islands to continue computerising various registrations, such as those for mutual funds. There is "a need to pay greater attention to the risks and proper supervision of non-profit organisations," the report states.

Listing Cayman as a “jurisdiction of primary concern” alongside countries such as Afghanistan, Luxembourg, Nigeria, Switzerland, the United Kingdom and the United States, the authors of the report explain that countries are categorized based on transactions involving significant amounts of proceeds from crime and not the jurisdiction’s legal framework to combat money laundering.

Go to full report 

Print Friendly, PDF & Email

Category: Headline News

About the Author ()

Comments (40)

Trackback URL | Comments RSS Feed

  1. Anonymous says:

    Typical yanks, they’re wrong as usual. Cayman Islands has had over 8 convictions in as many months for money laundering including one today!!

    On a per capita basis we are one of the leading nations for restraining orders pending criminal investigation, the US is not even close – in fact neither is the UK.

    The predicate crime is invariably committed overseas (typically the US) yet the money seems to get past their KYC and allegedly to the Cayman Islands and all of a sudden the Caymans is somehow responsible for their domestic policing inadequacy.

    It’s like blaming a car dealership for not discovering that their customer got the money to buy the car illegally. If they know who is committing the crime, tell us – we will prosecute. In the last month alone the Cayman Islands recovered almost $200,000 in a single civil recovery but don’t let the facts get in the way of a good story.

    Give an example of where the Cayman Islands has failed to prosecute a money laundering offence. They can’t, because all that are reported we prosecute. When I raised a similar point with an US entity, I was told that they just regurgitate the same comments each year – he didn’t even know the source of his comment. On that point, note that they never provide reliable citations for their statistics and bearing in mind it took me less than 5 minutes to show that their conviction statistic alone was wrong. Perhaps they should get their facts from reliable sources instead of a John Grisham novel.

  2. Mike Hardy says:

    It seems Caymanians have same mind set as Bermuda. Hide your head in the sand if you wish, but the people of many nations have realised that they are paying too much tax, because the rich and international companies etc. are not paying their fair share. Its as simple as that.

    So Cayman if you are as clean as you say you are and these people and companies are not using Cayman for these purposes of either evading tax, avoiding tax or laundering money, you haver nothing to worry about!

    Just because the US is putting more resources towards correcting these issues in their own country, through the IRS, ICE, SEC and regulators generally does not mean they are picking on your tiny island. It means they have woken up to one of the key reasons the financial system is screwed up!

    You’ve had a good run and now the world has changed. The sooner you realize this and stop whining you will find a future for Cayman.

    As I said you are no different from Bermuda. They think added regulation does the trick..Smoke screen!

    You are now are going to show that your regulations are enforced and that anyone facilitating crime in another country should not be tolerated!


    Good Luck all you anonymous people!

    • Sachamo says:

      The only one whining here is you Hardy boy; a word of advice to you sir, do your home work before you come on this forum making false accusations. The reason the world is in a financial mess is because onshore governments seemingly cannot do something as simple as balancing their account books, they spend and waste like money grows on trees and when they get into trouble for it they blame offshore centres. Do me a favor, go research the concept of Tax avoidance, you should find this easily online; you will find that this is a very comon practice even onshore (I am sure you take advantage yourself) when you ajust your laws to close loopsholes then we will adjust ours accordingly, but for now my friend you are preaching to the wrong pew.

  3. Justice for all says:

    It is surely time for the major nations to shut down the tax dodging parasites that are the offshore tax havens. 

    • Anonymous says:

      Justice it is time for these major nations to first deal with their own local problems before bullying smaller countries.

      They have come to Cayman before and said this is what we want you to do. We do that and they come back next week with a new list.

    • Anonymous says:

      And how so the "offshore tax havens" dodge tax? why should they pay taxes to the major nations?

      Duh, nations don’t pay taxes individuals and companies do. Your just another person who understands nothing getting their knickers in a twist over something they don’t understand.

      My advice, educate yourself more it will work wonders

      • Justice for all says:

        I am exceptionally well educated thank you.

        Remind me what rate of income tax is paid in Cayman?  What rate of corporation tax?  What rate of capital gains tax?  That is why these micro jurisdictions are parasites.  They feed off sources of revenue that should be going to the jurisdictions where the wealth is really being generated.  Some call it tax arbitrage, I call it theft from the poor and needy of the world.

        These jurisdictions have no legitimate place in the financial services world.  They are just an elaborate fictional construct.  Their racketeering should be closed down and left to fend for themselves.

        • Anonymous says:

          you still have not addressed how these "offshore tax havens" avoid paying taxes.

          Only the individuals pay the low income and capital gains taxes and corporations the low corporation taxes.

          So what taxes do the actual tax havens nations avoid paying???


  4. Kaptain Kayman says:

     Chillax, look at the last two countries listed in the report as ‘jurisdictions of primary concern’.  It is not like they have their heads completely up their….


    "Listing Cayman as a “jurisdiction of primary concern” alongside countries such as Afghanistan, Luxembourg, Nigeria, Switzerland, the United Kingdom and the United States"


    Peace and Prospertity to All

  5. Anonymous says:

    It is easier to open an account as a foreigner in the USA than it is in Cayman, because in Cayman the account isn’t opened until you provide references and they check out, but in the USA, all you need is your passport and it’s done.  Yet, they were the ones talking about know your customer?  More crime and fraud likely occurs in New York in one day than in Cayman in 4 years.

    • Anonymous says:

      that is the best example of burying your head in the sand that I’ve ever been witness too.  Your statement is completely untrue, I opened my account here on Island not even 7 months ago, with nothing more than my passport and an agreement that I would return with my employer reference letter and utility bill as soon as I was set up – haven’t done either yet and I’m still doing transactions every single week.  Time to stop being so naive, the Cayman Islands didn’t get their reputation from films and books, no matter how much you’d like to believe it.

      • Anonymous says:

        I opened an account online in Delaware, with out a passport or promises and I did it all without leaving my house in the Cayman Islands!

        Which sounds easier, mmmmm

      • Anonymous says:

        Actually yours is a much better example of burying your head in the sand. The statement is not “completely untrue”. It is quite simply a fact that it is much easier to open bank accounts in the U.S. than it is here. A colleague of mine did not even need his passport to do it in one State. The fact is that you, and people like you, are hypocrites.

      • Anonymous For Cause says:

        If what you say is correct, the Bank staff handling your account are in clear breach of Cayman Law and their own internal procedures. I have worked in the Cayman Financial services sector for 25 years and even in the beginning of my career all of the institutionswhere I was employed would have closed your account by now.

        Then again, I just won several millions dollar on a lottery and you are no better position to verify that story than I am to verify yours. At least my story does not slander anyone.

        The bottom line, if you are going to slander an entire sector in a country you should be prepared to name names, otherwise you have no credibility.

  6. Anonymous says:

    the tax evasion industry sorry i mean the ‘ financial services’ industry’s days are numbered….u ready cayman????

  7. Anonymous says:

    i.e. “Cayman has a big financial industry and so we figured there must be a lot of money laundering and tax evasion happening there. Since it is axiomatic that we were right the few prosecutions must mean that it is simply not being uncovered or brought to justice”. LOL.

    • Anonymous says:

      Too true. Reminds me of the search for Weapons of Mass Destruction in Iraq, the pretext for the invasion.

  8. Anonymous says:

    All you have to do is bust a few of the Chinese/Russian/Maltese/Serbian or whatever crime syndicates who are running the proceeds of their activities through Cayman Islands accounts and the critics will shut up PDQ 🙂

  9. Me says:

    If the US had their way, they would have non US citizens and non US residents paying US tax.

    They have the monopoly on greed and corruption so they need to look in their own back yard – specifically Delaware

  10. lmao says:

    The yanks are amazing – look at them trying to reinvent the wheel again when this one’s been broken and proven wrong now so many times.  How bout they sort out their own act when there is ample evidence that they have a worse problem than us.  Undercover research has already proven how easy it is in the States and the UK, and how difficult it is here, yet they still try to flog dead horses! 

  11. Anonymous says:

    now let’s see… who’s in charge of telling those phonies to back off?

  12. Shock and Awe says:

    This is just hilarious.  Wall Street tycoons were allowed by U.S. regulators to pull off the biggest Ponzi scheme in history and in doing so collapse the U.S. economy.  By the way if you go to Google Maps Wall Street is in the United States.  How many of those guilty of securities fraud and embezzlement have gone to jail?  One.  Bernie Madoff.  There is also overwhelming evidence Rating Agencies facilitated the fraud by colluding with the financial firms and giving AA or AAA ratings to the junk derivatives.  How many representatives of thosehave gone to jail? None.  We won’t even venture to talk about Arthur Anderson and Enron. 

    What has been the punishment for these dastardly characters?  Gigantic bonuses and elevation to positions of policy making in the Obama administration.

    Are we getting the picture?  Message to the U.S. : Watch INSIDE JOB. Interesting isn’t it?  If you squint…real hard the Cayman Islands and others are shaped like a scapegoat. Get lost.

    • Anonymous says:

      USA IS A BIG BULLY, and I have respect to all the peace loving and honest and upright citizens of that country living both here in the Island and on the contenental USA. USA has a burdensom welfare bill because of their capitalist and free enterprise system. They need all the money they can get to pay people for staying at home and not working and having children and feed off the state coffers. It actually hurt them to see a small country with a sometimes per capita income that rival theirs. So they have to search for ways to say there is mass illegalities going on in the Cayman Islands. Let them know they don’t have a monopoly on money. Fix you own economy. Maybe you have too much social programmes. perhaps you should cut some of them to save money. You involve yourselves in too many other countrie’s business. You are at war and tensions with so many countries, no wonder you want to dig out every last cent from your citizens and from the citizens of other countries under the guise of money laundering or some real or imagined financial crimes. It is documented that your agents such as the CIA and FBI sometimes gets too involved in other countries affairs up tho the point of being uncovered and disgraced and have to beat a hasty retreat from countries concerned. And you wonder why China is beating you at your own game? Isn’t it obvious?If you cut back on these expenses maybe you won’t need to look for a scapegoat to blame for you dismal financial performance and you year-over-year unbalance budgets. Get a life. buzz off.

      • Dreadlock Holmes says:

        Cutting Social Programs?  Does that include the hundreds of thousands of middle class Americans who have lost their jobs?  You have been misled.

        400 of the uber wealthy in America make more than 2/3 of the American workforce’s take home wages…..combined.  There is the problem.  They need tax breaks?  Sure they do.

        The billions of dollars spent on bonuses, the trillions of dollars given away in the bailout, the hundreds of billions spent on wars would adequately provide for every needy American.  With lots left over.

  13. anonymous says:

    usa NEED TO THINK about themselves and their own Financial crimes instead of picking on llittle places like the Cayman Islands, who buy every thing from USA from a bar of soapto Million dollar investments. USA is alway picking on people. That is why they are always at war with every country.

    • Anonymous says:

      sign your name and we’ll pick on you 

      • anonymous says:

        16:28 you sign yours, and you will see how fast a Caymanian Chicken can pick every grey hair out of your head and leave you bald in five minutes.

        • Anonymous says:

          I thought a ‘cayman  chicken’ was one of your prostitutes 

        • Anonymous says:

          you said 5 minutes… what’s this about seeing how fast you’re picking my hair (whatever that means) 

    • Live Free... says:

      You are absolutely right about USA picking on people (Picking on other Countries). That’s why they are in such a mess over there, now they want to clean Cayman backyard, why don’t they go and clean their own backyard instead. They have a lot problems over there to deal with, so leave Cayman financial crime to the UK, we belong to them, not the U.S.A, I agree also that we buy a lot of stuff from the USA, only if we had an alternative, they wouldn’t have got any business from us.

      • Anonymous says:

        what do you mean “if we had an alternative” go shop somewhere else

        • Live Free.... says:

          Yes, that’s what I mean, how hard was that to figure out?

          • Anonymous says:

            well mr "free". you got the whole rest of the big wide world… go shopping, and stay out of my country. 

            • Anonymous says:

              When Caymanians make statements like this they are branded as xenophobic.

              • Anonymous says:

                so what. stay on topic!  if you don’t want to spend your money on goods from the US… go get them somewhere else.  We can discuss our xenophobia later. 

  14. Anonymous says:

    If investors are being scrutinized with the same attention to detail as the proposed projects then it is probably worse than the USA believes.