For many years now Government and officials have worked closely with their counterparts from around the world to develop initiatives that impact our jurisdiction as a major international financial centre, including those designed to counter money laundering, terrorist financing and other financial criminal activity.
Over the past two years, the level of international engagement has sharply increased. The extent of this engagement may not be widely known as much of it is technical in nature and takes place between officials behind the scenes. However, this activity has become a part of the ongoing – and almost routine – work of the Ministry.
International engagement is crucial to the success of the Cayman Islands financial services industry for several reasons. First, by being at the table our interests are represented and we are afforded the opportunity to garner insight into the future direction of initiatives and the concerns that underpin them. Engagement allows us to meaningfully contribute to policy debates with colleagues from other government and supranational bodies and to help shape the ultimate decisions.
Perhaps most importantly, demonstrating that the Cayman Islands is a responsible stakeholder for the globally interconnected financial services industry and a cooperative partner requires that we build trust with our colleagues around the world which is best-done face-to-face and on an ongoing basis.
There are several key players with which we engage: the OECD and EU at the multilateral level and the US and the UK at the bilateral level, although this by no means represents the breadth of our activities in this regard.
Our engagement with the OECD dates back to the 1998 Report on Harmful Tax Practices which sought to include non-OECD countries in efforts to eradicate harmful tax practices and develop policies and mechanisms to support transparency and effective exchange of information. The Cayman Islands Government took an unequivocal position on harmful tax practices in 2000 with its advanced commitment to eliminate any aspects of the Cayman Islands financial services regime deemed to be harmful. You can read the full letter from 2000 outlining our commitment at the OECD website here.
Our engagement in the intervening years is demonstrable of our unwavering commitment to adhering to international standards relating to transparency and information exchange.
Today we participate in a number of OECD working groups and panels. We are Vice-Chair of the Peer Review Group in which we work closely with 30 international partners to conduct peer reviews of members against the international standard for the exchange of tax information on request. We also collaborate with partners in our capacities in the Automatic Exchange of Information (AEOI) Working Group, the Panel of Peers and the Exchange of Information on Request (EOIR) Ratings Panel. Since 2017 the Cayman Islands has been extensively involved in the OECD BEPS Inclusive Framework through our membership, alongside 134 other member jurisdictions.
Our participation and leadership in these various groups require the attendance of meetings and events between 17 and 24 times a year, in addition to ongoing informal calls and discussions.
Engagement with the EU has deepened significantly as the EU sought to develop its own initiatives to tackle tax fraud, evasion, avoidance, aggressive tax planning and money laundering at the global level. Our engagement has focused primarily, but by no means exclusively, on the Code of Conduct Group’s blacklist of uncooperative jurisdictions.
We are supported by advisors in key jurisdictions including Brussels, Paris and Berlin in monitoring policy and regulatory developments, which informs our position on the various initiatives and helps us to identify and address underlying concerns. Regular technical engagement supports our high-level engagement, which typically involves Ministers, Ambassadors and Permanent Representatives of Member States as well as key officials in the Commission.
Technical level engagement and intelligence gathering efforts ensure that our high-level engagements are informed by clear and compelling messages and as a result positively impact outcomes affecting our jurisdiction.
The Cayman Islands has a long history of engagement with policymakers and competent authorities in the United States on compliance and transparency matters.
This has allowed us to build and maintain relationships with colleagues in the Department of Justice, the Treasury Department and the State Department. These relationships provide us with valuable insight into current thinking and future developments and support high-level engagement with officials in Washington. These regular interactions also afford us the opportunity to highlight to our US colleagues how foreign direct investment from around the world flows into the US via Cayman, and also how US exports benefit from Cayman corporate structures and financing.
UK engagement is largely handled through the Cayman Islands London Office however the Ministry has also been directly involved both up-front and behind the scenes on several occasions, most notably at the annual JMC and the pre-JMC meetings. The Ministry has also sought to build wider connections through attendance of Party Conferences, allowing us to speak directly to those who shape the legislative agenda in Britain.
Benefits to Cayman
Our ongoing technical and political engagement, supported by our team of advisors located in key jurisdictions, puts us in an excellent position to have our voice heard and to shape the direction of initiatives that affect our financial services industry. By doing this we to stay ahead of developments, build trust with colleagues as a responsible and cooperative partner and ultimately remain compliant with international standards, therefore protecting the health of our leading financial services industry.