Global Transparency

Global Transparency Wednesday, February 22, 2017 The strong record of the Cayman Islands, in its efforts to cooperate in matters of tax information exchange, has been highlighted with the visit of an OECD assessment team, which should demonstrate compliance with international standards and increase the attractiveness of the jurisdiction as a destination for capital and international investment. The team of assessors from the OECD Global Forum on Transparency and Information Exchange for Tax Purposes visited the Cayman Islands in January to undertake a peer review, which assesses how Cayman applies the Global Forum’s international standards to the exchange of tax information. The in-depth Peer Review process is one way in which the OECD monitors and measures that the standard of information exchange has been implemented. The Cayman Islands is already recognised as a highly willing and cooperative partner in this area, following a wave of transparency initiatives, many of which have seen Cayman act swiftly and decisively to adhere to global standards. These include the enactment of FATCA legislation with the US, as well as the equivalent regime for the UK’s Overseas Territories and Crown Dependencies. Additionally, Cayman was among the early adopters of the Common Reporting Standards (CRS), which provides a specific framework for automatic exchange of tax information, developed by the OECD. To comply with FATCA, a Model 1 Intergovernmental Agreement was established with the US, with tax information collected by a central body, in this case the Tax Information Authority, which then transmits the information to the Internal Revenue Service. As for CRS, Cayman was among the first countries to agree to implement automatic information exchange, known as the ‘early adopter group’, with further guidance as to this year’s first reporting to be provided imminently. Cayman has also made considerable progress in the area of transparency by securing a large number of Tax Information Exchange Agreements, in the form of bilateral arrangements, with 36 nations, including many of the world’s leading OECD countries, such as France, Germany, Australia and Japan. These agreements provide a mechanism for the flow of information as well as a strong commitment to transparency from both sides. Further underlining Cayman’s commitment to transparency has been its approach towards the issue of beneficial ownership, which has been a priority issue for the OECD in recent years and was a cause célèbre for former UK Prime Minister, David Cameron, when the UK held the OECD presidency in 2013. Demands from Cameron had originally required Crown Dependencies and Overseas Territories to fall into line with a proposal for a public register of beneficial ownership information. After considerable negotiation, the UK government accepted Cayman’s position that its method of collecting beneficial ownership information through licensed corporate service providers – which had been in effect for a number of years – was seen as an equivalent standard. This meant that Cayman would continue collecting beneficial ownership information in this way and Cayman’s register of information would not be publicly accessible, instead being available only to law enforcement officials. This development is viewed as being extremely welcome for the financial services sector in the Cayman Islands, where many trust structures have been established over the years for wholly legitimate reasons. These include, for example, efforts to preserve a family’s wealth across generations, protecting such assets as a family business interests, with a tax neutral structure. Quite understandably, the parties involved would prefer to maintain a level of privacy in their business affairs. The everyday threat of kidnap exists in certain countries in South America, for example, where wealthy individuals will go to great lengths to avoid drawing attention to themselves. With the client base in the Cayman Islands typically from the institutional side, the jurisdiction has not been disposed to the secrecy structures that would be found elsewhere and has been highly focused on meeting agreed international standards.  However individuals are still entitled to expect a high level of privacy and confidentiality, while remaining in compliance with these high standards. This combination results in a strong and robust jurisdiction, that is also dynamic and solution oriented, meeting the needs of international high net worth and institutional clientele. Sterling Global Financial offers specialist advice and expertise in international banking, lending services, trust and corporate services, director services, family office and fund management.   Sterling Global Financial’s head office is based in Nassau, Bahamas where it is licensed by the Central Bank of the Bahamas and Sterling Financial is licensed by the Securities Commission of The Bahamas. As one of the largest providers of fiduciary services in the Cayman Islands, Sterling Trust (Cayman) Limited has been providing trust and corporate services for over 40 years with a team of dedicated professionals committed to providing our clients with prompt and professional service.  For further information on our services and to find out how we may assist you further, please go to our website By: Tom Mylott | Director