New signs that Cayman might dismantle its secrecy law

Cayman: From the tax haven book The Heavens

Cayman politicians love to pretend that they aren’t living in a tax haven. No, they’re part of a responsible international financial centre. And, as we’ve remarked ad nauseam, they all say that. It’s almost a defining feature of tax havens (or, if you prefer to emphasise one important aspect, secrecy jurisdictions.)

Now Cayman has a particularly pernicious piece of secrecy legislation, known as the Confidential Relationships (preservation) Law, under which you can go to jail for up to four years, not only for divulging confidential information, but merely for asking for it. (See Sections 5(1) and 5(2) here if you don’t believe us, then ponder what it would be like to sit in a Cayman jail for four years. Nasty.) We should also add that this is just one aspect of Cayman’s secrecy offerings: scroll down to the bottom here for more details.

Well, now some interesting developments. From Cayman News Service:

“Opposition Leader McKeeva Bush has accused the financial services minister of failing to protect Cayman’s financial services sector because of what he claims are agreements made with the UK and plans to dismantle Cayman’s secrecy law.”

Something is shifting in Cayman. And some more telling details:

“In the latest spat in the ongoing war of words between Bush and Panton, Bush accused the minister of being ‘hell bent’ on destroying the offshore industry.”

The logical conclusion from this, of course, is that Cayman’s offshore industry is based upon financial secrecy. (There’s far more to Cayman than secrecy, of course: see this nasty can of worms, for instance.) But now here’s another, arguably more important, point:

“Bush has accused Wayne Panton of shifting his loyalty from his own country to the British government, as both he and the PPM appeased ‘their London masters’ with detrimental changes to the financial services laws.”

That use of “their London masters” is interesting, for it hints at what is ultimately the main point of all this.  For many years, successive British governments have sought to argue that Cayman is, well, outside of their control, and that (*wring hands wistfully*) there is really nothing they can do. TJN and, more recently, some others, have rumbled the UK government.

For more details, see this report we co-authored last November, demonstrating the Overseas Territories’ continued role in providing financial secrecy, and also our earlier post Britain can force its tax havens to curb secrecy. But will it?.

Now we repeat the question. Will it?

For a history of how Cayman emerged as a secrecy jurisdiction, please read this.