The Cayman Islands should prepare for the unexpected when it comes to regulatory change, according to Gonzalo Jalles, CEO of Cayman Finance, the organisation representing the financial services industry in the Cayman Islands.
In a recent blog giving an overview of what can be expected in terms of regulatory initiatives, Jalles warned that the only certainty when it comes to regulation is that more is likely. “If there is something history has shown us over the last few years, it is that the pace and size of regulatory change has significantly increased, and industry players should continue to focus on remaining agile and responsive to these changes,” he said.
And he added: “What we know of the year ahead is that we can expect the continued implementation of certain initiatives that are already under way, particularly in the areas of sharing tax information across borders.
“We can also expect sectors of the media, NGOs, bureaucrats, regulators and politicians from several parts of the world to continue blaming IFCs for some of their challenges and to continue exercising pressure toward change, often through mischaracterisation of what IFCs do.”
Top of the list in terms of upcoming regulatory challenges is the Foreign Account Tax Compliance Act (FATCA), which he describes as the tip of the iceberg. “As technology improves and governments look for scapegoats for their fiscal challenges created by excessive spending, the support to develop the automatic exchange of tax and banking information across borders gains momentum.”
He also covers Base Erosion and Profit Shifting, describing this as “the latest attempt by OECD bureaucrats to curb legal tax avoidance” and believes the project has the potential to “change the way our industry looks by forcing companies to increase their presence in order to benefit from what Cayman has to offer. If Cayman remains flexible and welcoming, we have nothing to fear.”
He also said that the Cayman Islands needs to get better at communicating with the wider world. “Cayman has a great story to tell; but unfortunately, we have not been successful enough in communicating the reality of our business today.
“While many IFCs have, for many years, been complying in a way that exceeds what many major centers have done, they have failed to successfully communicate this at many levels.”
He went onto add: “While having your house in order in the form of legislation, regulation, transparency, infrastructure, competitive pricing, etc., is necessary, it is clearly not sufficient. The days of bankers sitting behind their desks waiting for the next customer to come in are over. Now banks look for their customers, or at least the successful ones do. It should not be any different for IFCs.”
regulation, Cayman Finance