Thursday, May 14, 2009

OECD to look at Cayman

Following our publication of the startling Cayman letter, we note that Cayman Net News is reporting that

"The Cayman Islands is on the agenda at today’s (Thursday, 14 May) closing session of an Organisation of Economic Cooperation and Development (OECD) committee meeting, which will decide whether to allow Cayman off the international financial-services “grey list”.

The OECD might like to consider a number of things related to Cayman's efforts. One is this section in its Confidential Relationships Preservation Law, otherwise known as its secrecy law.

As a major commercial operator in Cayman notes:

"Section 5 of the CRPL prescribes criminal penalties on anyone who divulges (or threatens, offers or attempts to divulge) or wilfully obtains (or attempts to obtain) any confidential information with respect to business of a professional nature, which arises in, or is brought into, the Cayman Islands. The penalty for committing an offence under the CRPL is up to two years' imprisonment and a fine of CI$5,000.00."

Now most of this, perhaps, isn't such a surprise: Cayman doesn't like giving up its many dark secrets (though it does provide tiny 'gateways' through this law that foreign governments and lawmakers can occasionally fight their way through). But one part of section ("or attempts to obtain") will shock many people. You can go to prison in Cayman not only for divulging information, but also merely for asking for it! (And we have checked with people who know that this is a correct interpretation.)

Is this the kind of thing that will get Cayman on an OECD white list? We very sincerely hope not. But we also note that the Cayman government has launched an

"all-out lobbying effort, but remains tense. “We are all on standby because we want to know. It’s very political, but we have done everything one could possibly do,” said Director of Public Relations for the Portfolio of Finance and Economics Ted Bravakis.

We have called all the OECD member states that are going to be there, talked to Germany, Ireland and Japan, all those who have supported us in the past, even the US, although this is not so high on their radar. The UK has said they would step up to the plate for us. We have made a concentrated effort to pull in whomever we can,” he said. “We have exhausted every possible angle to help ensure a positive result.”

So the UK, it seems, is backing them in their quest to have their shocking secrecy provisions, among many other very unpleasant things, legitimised. What a surprise. Let's hope the OECD makes the courageous decision.


Anonymous Paul Muspratt said...

Ignorance is bliss and of course it makes a better story
You might be interested to know that if required by a court or the local regulator then local financial services providers are required to provide the stipulated information about clients and are no longer liable under the 'bank secrecy law' as you describe it
Cayman has very strong anti-money launder laws and regulations, which cover the proceeds of all crimes, and whereas the US and EU tend to pay lip service to they're own requirement these are rigorously enforced
as for being jailed for 'after for the information' are you kidding me - who are the local people that you quote as knowing. Think you need new sources!

6:55 am  
Anonymous TJN said...


None of what you say contradicts what we wrote, though some of what you say is wrong. As we said, "gateways" as you and we describe, exist. They are very narrow indeed. Information exchange on request is awfully difficult, and all manner of tools exist for preventing investigation of powerful customers. TJN has long said that a focus on "money-laundering" alone is hopelessly narrow. Tax and tax evasion must be considered. Cayman and so many other secrecy jurisdictions like it routinely claim to be rigorously enforcing AML legislation and it is certainly cleaner than Panama (!) - but first hand reports obtained by TJN suggest that underneath the spin, it is business as usual. As we will reveal in due course.

The source for that is a highly experienced Cayman financial sector practitioner - and as you can well imagine, given the political climate in Cayman, the source wouldn't want to be quoted. And even so, the law speaks for itself, doesn't it?. Few if any will have been jailed under this - but that is the main point of criminal sanctions - deterrence - everyone knows where they stand, and the effect is utterly chilling on transparency. Cayman is a secrecy jurisdiction, par excellence.

7:43 am  
Blogger Unknown said...

The US should be declared a tax haven what with Delaware, Wyoming and Nevada - these places really pay lip service to AML checks- there no need for secrecy there as they don't know who their clients are anyway.
If you're really confident about how lax Cayman is 'under the surface' then i challenge you to open a bank here - you'll fail hopelessly unless you provide full due diligence - i guarentee it.
As for tax evasion, as under dual criminality if it's not crime in Cayman then there's no requirement to report it locally - do they report it in Delaware by the way? Thought not.....

9:59 pm  
Blogger TJN said...


It seems you are responding to the output you think TJN puts out, not the output that TJN does put out. We go on about Delaware all the time. An example of this, and answers to your other points, here:

12:34 am  
Blogger bathmate said...

I liked it.

12:38 pm  

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