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Published 8th February 2002, 2:42pm

Longstanding Channels for Information Exchange Available to U.S. and Other Government Authorities

George Town, Grand Cayman - The Government of the Cayman Islands confirms its ability to respond to requests for assistance from the United States government in its ongoing Enron investigation. Through established regulatory, law enforcement and treaty channels, information exchange occurs frequently between the U.S. and the Cayman Islands governments on a range of issues. To date, no formal request has been made by U.S. criminal authorities for information on the Enron matter through the Mutual Legal Assistance Treaty.

Since 1990, the Cayman Islands government has provided information on criminal matters to the U.S. Department of Justice in excess of 200 times. That exchange has taken place through the Mutual Legal Assistance Treaty. The Cayman Islands was the second jurisdiction in the world to sign such atreaty with the U.S.

The Cayman Islands Monetary Authority (CIMA) has a well-established working relationship with the U.S. Securities and Exchange Commission, which has facilitated mutual assistance. Any request in the Enron matter would be treated in accordance with Sections 30 and 43 of the Monetary Authority Law (2001 Revision), which provides for full cooperation with overseas regulators. One of the principal functions of the Authority is to provideassistance to overseas regulatory authorities and it is always ready to carry out that responsibility.

The Cayman Islands Financial Reporting Unit (FRU) has an ongoing relationship with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). The FRU receives suspicious activity reports and provides international law enforcement cooperation on money laundering matters. On 13 June 2001, the Unit was admitted to the Egmont Group, an international organisation that includes over 50 similar agencies, and is the worldwide standard setting body among financial reporting units.

As a major financial centre, the Cayman Islands takes its international obligations seriously. It has kept pace with international standards in terms of anti-money laundering regulations and has been recognized for that by the Financial Action Task Force, and the U.S. Treasury in particular last year. In a speech last November, U.S. Treasury Secretary remarked, "The Cayman Islands has a long-standing relationship with the United States, including partnering with the United States in a mutual legal assistance treaty effective since 1990 under which we've already been cooperating in the hunt for terrorist assets." Secretary O'Neill added, "We commend the Cayman Islands for emphatically demonstrating that those who seek to engage in tax evasion or other financial crimes are not welcome within its jurisdiction."

As in the U.S. and the United Kingdom, the Cayman Islands respects the rights of law-abiding citizens to financial privacy. However, the Mutual Legal Assistance Treaty, the Confidential Relationships (Preservation) Law, the Proceeds of Criminal Conduct Law and other legislative provisions are designed to ensure that the Cayman Islands are able to provide assistance to U.S. and international authorities during a criminal investigation. This track record of international cooperation is well-established with those authorities.

CIMA is responsible for regulating those engaged in the business of company management and the provision of corporate services. The Cayman Islands has required company managers to be licensed since 1984. It is only one of a few jurisdictions in the world to regulate these services.

Under the laws of the Cayman Islands, any person conducting "relevant financial business" - including bankers, lawyers, accountants, securities brokers, company managers and corporate service providers - is subject to the Money Laundering Regulations. Therefore, company management and corporate service providers are required to conduct know-your-customer and due diligence procedures for each corporate entity they provide services for.

In matters of trans-border insolvency supervision, the Government of the Cayman Islands makes appropriate appointment of provisional or official liquidators. This is to ensure that Cayman corporate entities affiliated to foreign companies in bankruptcy or liquidation proceedings are properly supervised or liquidated in the interest of their creditors, employees and shareholders.

Two Enron Cayman subsidiaries are already in process of provisional liquidation.

Notes to Editors:

The Cayman Islands has had 'all-crimes' anti-laundering legislation since 1996, following the introduction of the Proceeds of Criminal Conduct Law.

Under this Law, the Cayman Islands has cooperated through its FRU on an "all crimes" basis, exchanging information with other jurisdictions in the fight against international crime. To date the FRU has provided assistance to the Bahamas, Brazil, Canada, Germany, Hong Kong, Mexico, Peru, Russia, South Africa, the United Kingdom and the United States.

The laws of the Cayman Islands allow the freezing of assets during theinvestigative stages of a wide variety of criminal offences. In a recent example, in February 2001, the Attorney General of the Cayman Islands received several requests from the Peruvian government regarding funds held in various accounts at banks in Grand Cayman. The Peruvian government sought the freezing of these funds on the basis that they were the proceeds of crimes under investigation in Peru, in the Montesano’s matter. Further investigations by the Financial Reporting Unit (FRU) using powers available under the Proceeds of Criminal Conduct Law resulted in the funds being frozen by the Cayman Islands Grand Court; these funds have since been returned to the Peruvian Government.

CIMA has ensured that all financial service providers are examining their records in the light of information issued by the U.S. Authorities and other reliable sources on individuals and organisations suspected of terrorist involvement. Any information gleaned as a result will be automatically and immediately reported to CIMA and law enforcement agencies, for immediate transmission to the relevant Authorities in the U.S.

Key elements of the OECD 'Advance Commitment' made in May 2000:

The effective exchange of information for criminal tax matters shall become effective for the first tax year after December 2003 and for civil and administrative matters for the first tax year after December 2005.

The implementation of this commitment shall require that information be provided only pursuant to a specific request, and where such request is relevant to a tax examination or investigation conducted in accordance with the laws of the requesting state.

Requests will be submitted by foreign tax authorities to the authority in the Cayman Islands who will act in a capacity similar to that in which the Cayman Islands Chief Justice has acted pursuant to other nternational exchange agreements.

Confidentiality provisions will ensure that information that has been exchanged is adequately protected from unauthorised disclosure.

U.S. - Cayman Islands Tax Information Exchange Agreement

On 27 November 2001, the Cayman Islands, concluded a tax information exchange agreement with the U.S. The agreement provides for exchange of information, upon request, for criminal tax evasion, civil and administrative tax matters relating to U.S. federal income tax. It provides for confidential treatment of information exchanged, and, in accordance with U.S. law, any such information may not be disclosed to any third party. It applies to criminal tax evasion for taxable periods commencing 1 January 2004, and to all other tax matters for taxable periods commencing 1 January 2006.


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