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Excerpts from U.S. Government Accountability Report

Cayman Islands: Business and Tax Advantages Attract U.S. Persons and Enforcement Challenges Exist

p. 4 "Factors that attract U.S. related financial activity to the Cayman Islands include its reputation for stability and compliance with international standards, its business friendly regulatory environment and its prominence as an international financial center." (see also pp 26-28)

p.5 "U.S. officials from multiple agencies said that the Cayman Islands government has been cooperative in responding to U.S. requests and shared useful information at their initiative related to questionable financial activities that involve U.S. connections."

p.5 ",U.S. officials consistently report that cooperation by the Cayman Islands government in enforcement matters has been good. In addition to collaborating in support of U.S. efforts, the Cayman Islands government has also taken steps to address illegal activity by U.S. persons. For instance, the Cayman Islands was cited by the Caribbean Financial Action Task Force (CFATF), an international task force, as having a "strong compliance culture" related to combating financial crimes and terrorist finance and has implemented a regulatory regime that the International Monetary Fund (IMF) has deemed to be generally in compliance with a broad range of international standards."

p.11 "Cayman Islands law requires company services providers that establish entities and provide registered office services to adhere to specific Anti-Money Laundering (AML) and Know Your Customer (KYC) requirements….In contrast, state laws which govern the creation of corporations in the United States generally do not require company formation agents to collect ownership information on the entities they register."

p.26 "The Cayman Islands regulatory regime has also been deemed by the International Monetary Fund to be well-developed and in compliance with a wide range of international standards. Pursuant to a 2007 on-site evaluation, the Caribbean Financial Action Task Force (CFATF) also cited the Cayman Islands as having a strong compliance culture related to anti-money laundering and terrorist-financing activities. IRS officials cited the Cayman Islands’ reputation for regulatory sophistication as potential factor in attracting legal financial activity from the United States."

p.32 "As with other foreign jurisdictions and OFCs, some persons have conducted financial activity in the Cayman Islands in an attempt to avoid discovery and prosecution in the United States….Still, as we state later in this report [see pp 40 -42], IRS officials said that criminal activity was comparatively lower in the Cayman Islands than in other offshore jurisdictions."

p. 46 "A senior official from DOJ’s Office of International Affairs indicated that the Cayman Islands is the busiest United Kingdom overseas territory with regard to requests for information, but also the most cooperative. She also said that the Cayman Islands is one of DOJ’s "best partners" among offshore jurisdictions."

 

For more information, please contact the Financial Services Secretariat at (345) 945-5819 or via email at financepr@gov.ky.