Financial Crime World

Cayman Islands Crack Down on Tax Evasion with Stringent Laws and Global Compliance

The Cayman Islands, a renowned International Financial Centre, has taken significant steps to ensure tax transparency and compliance with global standards on information exchange. The jurisdiction’s financial services industry is committed to maintaining the highest levels of professional conduct, consistently meeting the expectations of regulators, lawmakers, and governing bodies worldwide.

Compliance Measures

To achieve this goal, the Cayman Islands has implemented various legislation, signed inter-governmental agreements, and adhered to international standards on tax transparency and information exchange. Some key measures include:

  • Tax Information Exchange Agreement (TIEA): Signed with 36 countries, providing for the automatic exchange of information related to criminal or civil tax investigations.
  • Cayman Islands Financial Institution Reporting Regime and Automatic Exchange of Financial Information: Agreements with the US and UK under FATCA and the OECD’s Common Reporting Standard (CRS).
  • Regulations requiring financial institutions to register, conduct due diligence, and report information on accounts considered “reportable” under these regimes.

International Cooperation

The Cayman Islands has also joined:

  • European Securities and Markets Authority’s assessment process for the Alternative Investment Fund Managers Directive passport: Aimed at facilitating the pan-European marketing of investment funds and managers connected to the EU.
  • Caribbean Financial Action Task Force: A regional body focused on combating money laundering, terrorist financing, and other financial crimes.
  • OECD Global Forum on Transparency and Exchange of Information for Tax Purposes: A global initiative promoting tax transparency and cooperation.

Agreement with the UK

The Cayman Islands has entered into an agreement with the UK to provide beneficial ownership information to UK governmental agencies, striking a balance between legitimate business expectations and international cooperation in combating money laundering, tax evasion, and other criminal activities.

Not a Tax Haven

Despite being a tax-neutral jurisdiction, the Cayman Islands is not considered a “tax haven.” Rather, it has implemented a raft of legislation and compliance measures aimed at preventing tax evasion and identifying “aggressive” tax avoidance transactions that may contravene domestic legislation.

Recognition from British Prime Minister David Cameron

British Prime Minister David Cameron recently acknowledged that the Cayman Islands, along with other overseas territories and crown dependencies, have taken action to establish fair and open tax systems. As such, the jurisdiction remains a respected and credible destination for legitimate financial transactions.

For Further Information

For further information or guidance on specific circumstances, please contact Chris Humphries, Managing Director at Stuart Law Firm, at: