Cayman: from obscurity to offshore giant
For those few of us who are offshore history nuts (and there a whole lot still to uncover), there's precious little research around on the subject (though there is some, notably on our history page, and, more specifically, here, if you can get your hands on the material.)
For those interested in the emergence of the Cayman Islands as a tax haven/secrecy jurisdiction, the Cayman Financial Review has run a long and useful history of its emergence as a tax haven. Reporting by Alan Markoff. The history comes in five parts, as follows:
Part 1 - The early years - the 1960s
Part 2 - The freewheeling 1970s
Part 3 - The Transitory 1980s
Part 4 - The Booming 1990s
Part 5 - Boom and Gloom in the 2000s
A useful historical account, with not excessive amounts of Cayman spin attached (though there is some of it, such as calling the United States a 'culprit' for trying to get information from it about U.S. taxpayers!).
All sorts of fine quotes such as from Financial Secretary Vassel Johnson, highlighting the historical attitude.
"We found that a system of confidentiality by statutory arrangement was essential for the purpose of strengthening the local operation because there were times when due to legal manipulation, foreign tax authorities could cunningly devise means of extracting the kind of information they needed,” Johnson said.
“Metropolitan countries seem to feel it is a form of dishonesty for offshore financial centres to maintain strict confidence in their financial operation, but the Cayman Islands view confidentiality differently: we treat it with kid gloves, for it is the prime support of the country, of promoting the tax haven business.”
And there's this gem from Anthony Travers, former chairman of Cayman Finance:
“The key to the success of the legislation was my belief that the only effective regulatory mechanism with respect to the sophisticated institutional business that Cayman attracted… was a caveat emptor system, where full information would be filed with the Monetary Authority, but – provided investors were sophisticated – without the Monetary Authority needing to review the investors’ determination.”
Safeguards were included in the law that provided for full investigative powers by CIMA in the event of a problem with any particular fund.
“So to the responsibility of the Cayman government was managed by avoiding the concept of prudential regulation,” Travers said.