Financial services on the Cayman Islands
In the last two decades, the financial services sector on the Cayman Islands has become a major industry and it is considered to be a major international financial services center. Known for its focus on banking as well as captive insurance, hedge fund formation as well as structured finance and securitization, this is regulated by the the Cayman Islands Monetary Authority.
The banking industry on the Cayman Islands
A less known fact to all the tourists who visit the Cayman Islands is that it is the fifth largest banking center in the world. There are 279 banks on the Cayman Islands of which 19 are licensed to deal with both local and international clients, while the remaining backs are licensed to operation on an international basis only.
It is estimated that the banking sector contributes 50 percent to all government revenue and as at 2010, the Cayman Islands is ranked 5th in terms of value of liabilities and 6th in terms of assets booked.
Offshore banking specifically is big business on the Cayman Islands. This means that you are able to store your funds in a country that provides minimal or no tax on foreign investments. One of the reasons the Cayman Islands has strong appeal in this arena is because they provide a politically and economically stable platform that is beneficial to investors.
In addition, there are confidentiality clauses that the Cayman Islands endeavor to comply with as long a it does not contravene their international regulatory obligations. This guarantees that your private information will be kept in good faith unless the source of funds requires investigation by an external body.
Many individuals who place their funds on the Cayman Islands are drawn by the fact that internationally qualified and experienced personnel will be involved in the handling of the funds and investments. The quality of services provided therefore is very high and the risk substantially reduced.
Hedge funds on the Cayman Islands
Forty of the world’s fifty largest banks have branches on the Cayman Islands.
In terms of hedge fund registration, the Cayman Islands is the leading offshore hedge fund jurisdiction. As of 2008, it had 10,000 hedge fund registrations with an estimated growth of 12 percent per annum in this area.
The Cayman Islands compliance with international regulatory frameworks
In support of its booming financial services center, the Cayman Islands has committed to regulatory reform in compliance with the OECD and therefore participates in information exchange with other OECD members around the world. In addition, bearing in mind that the Cayman Islands are part of the United Kingdom, it has also implemented the European Union Savings Directive on the islands. While the Cayman Islands are not subject to the laws of the European Union, its compliance with the European Union Savings Directive ensures equitable financial dealings with the other countries of the European Union.
The IMF has had good things to say about the Cayman Islands and recognizes that there is a well-experienced and qualified workforce that handles the financial services sector and that there is overall compliance with the international regulatory frameworks including those related to anti-money laundering responsibilities (excluding tax offences).
Opening a bank account on the Cayman Islands
If you are considering opening a bank account on the Cayman Islands, there are literally hundreds of banks to choose from, both local and international. Usually to open a bank account, reference from your home bank or the bank in your country of origin is required. Funds are usually deposited in US Dollars or other currency and can be done by check from your home bank. It takes an estimated two weeks for the checks to clear. Alternatively fund can also be transferred via banker’s draft or wire transfer.
Because of the excellent rates that are offered, most international visitors open fixed-interest accounts. There require a minimum of US$5,000 deposit and you can negotiate the interest rates based on the duration you plan to lock in the amount deposited.
If you are planning to open a normal banking account, a minimum of US$1,000 will be required and the account can be maintained in any international currency.
Banking on benefits on the Cayman Islands
There are several key advantages of banking on the Cayman Islands. Quite apart from the tax free structure, the fact that there is no capital gains fax or any other asset or income based tax, and ultimately that there are no exchange controls therefore allowing free movement of funds in and out of the Cayman Islands in any currency.
The scope of the banking services is also very wide and coves everything from investment management, trust administration and asset management and protection, company formation and commercial banking as well as private banking. Not only individuals but corporations as well establish banking facilities on the Cayman Islands because of these benefits.
While it is not possible to list every bank on the Cayman Islands, a guide to the major ones include :
| Bank | Telephone No | Fax No | |
| Alexandria Bancorp Limited | 945-1111 | 945-1111 | bancorp@candw.ky |
| Banco Do Brasil S A | 949-5907 | 949-8872 | grandcayman@bp.com.br |
| Banco do Estado do Rio Grande do Sul S A Banrisul | 949-6604 | 949-6604 | banrisul@candw.ky |
| Bank Danamon Indonesia | 946-0046 | 946-0047 | BankDanamon@candw.ky |
| Bank of America Trust & Banking Corp | 949-7888 | 949-7883 | Not available |
| Bank of China | 945-2000 | 945-2200 | Not available |
| BCN International Bank Ltd | 949-9647 | 949-9651 | Not available |
| BHD Cayman International Bank | 949-0243 | 949-2439 | Not available |
| Cayman Islands Development Bank | 949-7511 | 949-6168 | Not available |
| Dextra-Bank & Trust Co Ltd | 949-8455 | 946-9717 | dextra@candw.ky |
| Dresdner Bank Lateinamerika AG | 949-8888 | 949-8888 | Not available |
| Gerfiner Bank | 946-2078 | 946-2079 | Not available |
| Gulf Union Bank Ltd | 949-5398 | Not available | Not available |
| IBJ Whitehall Bank & Trust Co | 949-2849 | 949-5409 | Not available |
| LGT Bank ln Liechtenstein (Cayman) Ltd | 949-7676 | 949-8512 | maria-dolores.sabiano@LGT.com |
| Mercury Bank & Trust Ltd | 949-0800 | 949-0295 | Not available |
| Midland Bank Trust Corporation (Cayman) Ltd | 949-7755 | 949-7634 | Not available |
| Morval Bank & Trust Cayman Ltd | 949-9808 | 949-9794 | Not available |
| Piguet Bank & Trust Ltd | 946-1378 | 946-1379 | Not available |
| PT Bank Niaga | 945-2003 | 945-2004 | Not available |
| Queensgate Bank & Trust Co Ltd | 945-2187 | 945-2197 | info@Queensgate.com.ky |
| Unicorp Bank & Trust Co Ltd | 949-6800 | 949-6801 | Not available |
| United Mizrahi Bank | 949-9639 | 949-9639 | Not available |
| Venecredit Bank 7 Trust Ltd | 949-6917 | 949-8017 | vib@candw.ky |
| Wachovia Bank & Trust Company (Cayman) Ltd. | 949-0873 | 945-1295 | Not available |
| Wing Hang Bank (Cayman) Ltd | 949-6509 | Not available | Not available |
Conclusion
If you are looking for a platform to make international investments and have the funds to set up an international bank account, one of the locations that you should seriously consider for this option is the Cayman Islands. Professional run, internationally well regarded, economically and politically stable, not only will setting up such an account give you the opportunity to make wise financial investments under the guidance of experts, but will give you a reason to holiday in the sun on thy beautiful Cayman Island beaches as you check on your investments!