Recent developments in the United States, which may require companies to supply information with the same high standards as the Cayman Islands, has been welcomed by the Cayman Islands Financial Services Association (CIFSA).
CIFSA’s comments follow a 1 May statement by US Senator Carl Levin who was introducing the “Incorporation Transparency and Law Enforcement Assistance Act” in the United States Senate.
He said that “each year the United States allows persons to form nearly two million corporations and limited liability companies in this country without knowing – or even asking – who the beneficial owners are behind those corporations”.
“Most offshore jurisdictions already request this information as well, including the Bahamas, Cayman Islands, Jersey, and the [Isle] of Man. Our States should be asking for the same ownership information, but they don’t, and there is no indication that they will any time in the near future, unless required to do so,” Mr Levin said.
Eduardo Silva, Chairman of CIFSA, said the US Senator confirmed what Cayman has been saying for many years.
“We believe it is important that recognition of the higher standards of company incorporation in the Cayman Islands is recognised as this has been in place for many years,” Mr Silva said.
Unlike the United States, the Cayman Islands directly regulates all service providers who are responsible for incorporating companies as these are all licensed and regulated by the Cayman Islands Monetary Authority (CIMA). Such service providers are also subject to onsite inspections by CIMA. No such regulation exists in the United States for equivalent service providers and Mr Levin is now seeking to raise the standards in this area in the United States, CIFSA said.
Mr Silva said the comments made by Mr Levin are important because there is a common misconception that the regulatory standards of offshore centres like the Cayman Islands is of a lower standard than that which exists in OECD countries.
But closer inspections show there is a stark contrast in many areas and that in fact the standard applied offshore is much higher than the level applied in the onshore countries like the United States and in the UK, the CIFSA official said.
“Statements like Mr Levin’s, which reveal the higher standards in places like the Cayman Islands, are important in clarifying that we are still some way off from having a level playing field as far as regulation is concerned,” Mr Silva added.
“We hope that discussion of this bill promotes a more balanced discussion of the well-regulated, high quality work performed in the Cayman Islands.”