Purposefully and methodically over many decades, the Cayman Islands has built a financial services industry, and in particular a funds sector, that is globally compliant, commercially responsive, and resilient, says the Honourable Tara Rivers, JP, MLA, Minister for Financial Services and Home Affairs.
Investors continue to utilise Cayman’s solid base, further distinguished by strong collaboration between the public and private sector, because of our proven stability and responsiveness during times of global challenges, such as that which the world now faces.
Each day of the COVID-19 pandemic requires renewed wisdom, reflection and analysis in managing it. In addition to financial services, I have ministerial responsibility for government agencies that are at the very core of Cayman’s COVID-19 response. Seeing the pandemic on a number of fronts, I extend to you and yours, and to your countries, absolute best wishes on behalf of the Cayman Islands government.
In managing the public health pandemic, we must also endeavour to manage its economic effects. Cayman is responding to COVID-19 with an assertively prudent, well supported, whole-community approach. As part of this approach, we continue to recognise the role of the financial services industry in both our local and the global economies.
We are therefore moving apace with our legislative development calendar; and moreover government is assisting the financial services industry by adjusting operational processes, making it easier to implement your vital business continuity plans.
So it is that, in keeping with our pre-COVID-19 focus and with the benefit of technology-supported diplomacy, we continue to address two vital financial services matters: the Financial Action Task Force’s (FATF) standards on anti-money laundering, counter-financing of terrorism, and counter proliferation financing (AML/CFT/CPF); and the recent EU listing of non-cooperative jurisdictions for tax purposes, on the subject of funds.
Cayman has made notable progress in addressing the March 2019 recommendations made by the Caribbean Financial Action Task Force, the regional body that monitors compliance with the FATF standard.
Today, our AML/CFT/CPF regime is stronger than ever. But as legislation alone insufficiently tells the full story, Cayman’s additional, expert human resources—in both the public and private sectors—and our reinforced operational policies and training programmes, complete it. In fact, our regime is already showing signs of improved effectiveness among our regulators and our industry.
Although the timeline for the FATF review of our actions has understandably been postponed, we continue to work on improving our regime in accordance with the recommendations made.
Similarly with the EU, there is a cooperative spirit in working towards our removal from its list at the earliest opportunity which, at the time this publication goes to print, is expected to be as early as this October. Government considers our removal to be completely achievable, based on the feedback the EU has provided in relation to our funds legislation.
In January the government passed the Private Funds Law, 2020 and the Mutual Funds (Amendment) Law, 2020. Both enhance the regulatory infrastructure for investment funds, including previously exempted funds, and bolster the oversight of open-ended and close-ended funds.
These laws were drafted in close consultation with our funds regulator, the Cayman Islands Monetary Authority (CIMA), and Cayman-based funds professionals—including those in accounting, audit, administration, governance and legal practitioners, for their practical operational perspectives.
In addition, last year the Cayman Islands formally introduced its economic substance regime in preparation for review by the EU and the Organization for Economic Cooperation and Development (OECD). Our cooperation and compliance were recognised when in July 2019 the OECD deemed our regime “not harmful”—the best assessment possible.
That said, Cayman has remained fully aware of further developments in economic substance and as a result, in January this year the International Tax Cooperation (Economic Substance) (Amendment) Law 2019 was brought into force. This law is designed to maintain alignment with international standards, particularly regarding the substantial activities requirement for no or nominal tax jurisdictions under the OECD’s BEPS Action 5 on Harmful Tax Practices.
Commercially, Cayman welcomes new technologies in the global financial services industry, and the innovation they bring. We’ve experienced rapid growth in fintech companies establishing here, and many of Cayman’s existing companies, including those in the funds sector, have evolved their business models to include digital tools, assets and delivery channels.
As investors have clearly requested the protection afforded by appropriate fintech regulation, Cayman’s government has taken significant steps to advance the financial technology capabilities of the jurisdiction through proposed legislation pertaining to digital assets. New technologies, including cryptographic digital assets and decentralised ledgers, make financial services more efficient and attractive; we are preparing for more growth in this area as we uphold global compliance standards.
As has been done from the beginning, the Cayman Islands continues to take a purposeful and methodical approach to financial services, and to funds specifically. It follows, then, that CIMA statistics over the last four years indicate the consistent performance of the funds sector.
Cayman was home to 10,857 mutual funds by December 31, 2019, a small dip as compared with the 2018 year-end total of 10,992 mutual
funds. In 2017 and 2016, the totals were 10,599 and 10,586 mutual funds, respectively.
The Cayman Islands expects to continue attracting direct investment to our shores. I am pleased to note that since 2018, the number of registered companies has exceeded the 100,000 mark, with 109,556 companies incorporated or registered as at December 2019.
While reflecting on this year’s achievements and enhancing our infrastructure for what may well be a significantly changed global economy in the future, the Cayman Islands government is even more committed to maintaining a legislative and regulatory framework that fosters competitive products and services for funds.
The Cayman Islands is a leading jurisdiction for investment funds by design; and the government is committed to continuing to work to ensure that remains to be the case well into the future.
At the heart of this commitment is frank, open dialogue among stakeholders. Government is incredibly appreciative of the quality of this dialogue, which allows all of us to optimise and enhance, in our respective roles, the funds sector’s performance.
As we collectively reflect on the solid past performances of our funds sector, we also confidently bring our experience and expertise forward, today and tomorrow. Thank you for being a key component of these achievements, as we prepare to build upon our mutual successes for years to come.
Cayman Islands Government, Funds, Coronavirus, Honourable Tara Rivers, JP, MLA, Cayman Islands