Cayman Islands: The Premier Global Financial Hub – Issue 5 by Cayman Finance

Cayman Islands THE PREMIER GLOBAL FINANCIAL HUB

The Importance of Asia

TO THE CAYMAN ISLANDS

Staci Scott

A YEARNING FOR LEARNING

CRYPTOCURRENCY

Risk or opportunity TO THE CAYMAN ISLANDS

FIFTH EDITION 2019

â&#x20AC;¢

WWW.CAYMAN.FINANCE

message FROM THE GOVERNOR

Having arrived at the end of October as Governor of the Cayman Islands, I am delighted to have been asked to write this message for the 5th annual Cayman Finance magazine. Let me start by thanking everyone for the hospitality and warm welcome I’ve received. In my short time here, I have enjoyed meeting many people within our financial services industry. I have already seen and heard much about the industry’s successes and its challenges. I have been impressed with the management and members of Cayman Finance and their readiness to collaborate with government on how to best position the jurisdiction for long-term growth. The continued success of the Cayman Islands relies on us not only being able to recognise and respond to change swiftly, but also for the financial services industry to anticipate market demands and respond with innovative products and services that meet the ever-changing needs of the jurisdiction’s clients. I believe the Cayman Islands has demonstrated these qualities and capabilities, and I look forward to continued cooperation with the financial services industry as that work continues.

Given the prominent role that the Cayman Islands plays in financial markets globally and in particular North American and Asian financial markets, we also appreciate that the Cayman Islands is well placed to assist the UK as it enters a new era outside of the EU. HE The Governor, Martyn Roper OBE

The United Kingdom is supportive of Cayman’s financial services industry and recognises the important role the industry plays in the global economy. As the United Kingdom leaves the European Union, the UK intends to work even closer with the Overseas Territories as part of a truly Global Britain. We will ensure their interests are protected and that our links can bring even more mutual benefits. We will seek to ensure that security, economic sustainability and legal certainty is preserved and strengthened. We believe it is important for the UK and the Cayman Islands to partner on helping Cayman’s businesses maximise the economic opportunities that our relationship presents. That is why I welcome the establishment of the new Ministry of International Trade, Investment, Aviation and Maritime Affairs. Colleagues from the Cayman Islands Government and my own office have formed a joint working group in order to take this significant initiative forward.

We also recognise the important role the industry plays domestically - as the main pillar of the country’s economy - as it strives to maintain and grow a self-sufficient economy to continue generating opportunities for Cayman’s people. The Cayman Islands’ record of cooperation and transparency in the financial services industry speaks for itself. The UK welcomes the Cayman Islands’ cooperation in international efforts to promote transparency and cross-border cooperation on tax issues and throughout this magazine you will see many examples of the industry’s commitment to this important work. Being on the front foot in responding proactively and constructively to international initiatives is key to success. I have been greatly impressed with the efficiency, size and quality of the financial services industry in the Cayman Islands. Our strong focus on rule of law and our highly respected judiciary supports our stability and prosperity. I look forward to working alongside the industry as it develops and evolves to adapt to meet the ever-changing global landscape.

message FROM THE PREMIER

Firstly, I want to congratulate Cayman Finance for this 5th edition of the Cayman Finance magazine. I am proud of the work Cayman Finance does and delighted that this edition will be launched at the Cayman New York breakfast. Because the audience of this magazine is global, I turn my attention to Cayman’s place on the world stage. My Government is committed to developing policies and enacting legislation and regulations that foster a commercially vibrant and well-regulated financial services industry. But we do not do it alone. Cayman Finance well represents the financial services industry and provides Government with insight through essential and important consultation, working closely with the Cayman Islands Monetary Authority. As we all know, the global landscape of commercial and regulatory financial services is ever-changing. As such we continually work to improve Cayman’s model so that we remain in position as a leading international finance centre while we continue to add value and stability in both the global and local economies. And it is one of the reasons that my Government will establish a new Ministry early this year to help shepherd

tourism, access to new markets and capital, economic diversification, intelligence gathering and generally “future-proofing” Cayman.

Premier Hon. Alden McLaughlin, MBE, JP, MLA

our enviable position on the global stage when it comes to international trade and investment, including financial services. Under my leadership, we will establish a new Ministry of International Trade, Investment, Aviation, and Maritime Affairs to help enhance the reputation of the Cayman Islands and to advance the economic and political interests of the government, the people and the business community. The new Ministry will take direct responsibility for the Cayman Islands Government Office in London and a limited range of existing government departments and entities. The Ministry will, more broadly, be charged with coordinating the jurisdiction’s activities internationally though many of those activities themselves would remain with existing Ministries. The benefits of the new Ministry include promotion of the Cayman Islands, mitigation of economic threats, increased inward investment,

In addition to the London office, the Ministry will develop a network of international offices in locations where their establishment would enable it to better achieve its stated purpose. Proposals for such offices will be considered on a case-by-case basis and the first business case for the establishment of an Asia Office, to be located in Hong Kong, has already been approved. The office will be opened later this year, subject to the necessary approvals from the Hong Kong authorities. The formation of this new Ministry, along with Government offices in key jurisdictions, is just one of the ways the Cayman Islands is working to remain a strong force within the financial services industry at home and abroad. We commend and stand behind the compliance and professionalism of our experienced financial services industry and the dependable arm of the Cayman Islands Monetary Authority as our financial services regulator. I have no doubt that the publication of this magazine will demonstrate why we, the Cayman Islands, continue to be a leading financial hub and the perfect choice for clients throughout the world.

message FROM THE CHAIRMAN

I am pleased to present the fifth annual Cayman Finance Magazine. It reflects the major events, trends and accomplishments in our industry and jurisdiction over the past year, while looking ahead to the coming year. This has been my first full year as Chairman and I am proud that during this time there have been many significant developments and accomplishments thanks to members of Cayman Finance and our partners. Despite the geopolitical and related challenges faced as a jurisdiction, we continue to adapt effectively and to grow as a significant participant in global financial services. We remain a top jurisdiction for Alternative Investment Funds with twothirds of global hedge funds worth over US$2.3 trillion in assets under management in the Cayman Islands, the number two jurisdiction for Insurance Captives and number one for Healthcare Captives and Group Captives.

proposed and we fervently believe this can be the new global standard. Connor Oâ&#x20AC;&#x2122;Dea, Chairman Cayman Finance

Reinsurance has been an area of growth and significant progress has been made in becoming an attractive jurisdiction for this sector. We expect to see good growth maintained in the year ahead. Through the work of our Public Awareness Committee, we continue to provide pathways for talented young Caymanians into the financial services industry. We are four years into our journey with the Cayman Finance Student Education and Work Experience Programme, giving insights into the industry to those who might not have otherwise had such opportunities, with over 200 students benefiting to date. The Cayman Islands kept pace with ever evolving international benchmarks and upgraded local regulations and legislation to ensure those standards are met. We remain committed to ensuring zero tolerance for money laundering and terrorism financing. We are proud of the work done on our verified ownership regime, which is far superior to other models being

As technology evolves, we must keep pace with such changes. The Cayman Finance Innovation Lab has been working diligently behind the scenes on a Certified Digital AML ID, which is another area that Cayman is leading the way internationally. Our CEO, Jude Scott, has promoted and supported our industry at events and meetings in the Cayman Islands and internationally. His work embodies the type of ambassadorship that the Cayman Islands financial services industry deserves. His trips to Asia, Europe, the United States, and the United Kingdom, among others resulted in positive media coverage and built new partnerships that auger well for the future. Throughout this publication, you will see the evidence of the hard work of Cayman Finance members, working groups and committees to ensure Cayman remains the premier global financial hub that has maintained its place as a top specialised International Financial Centre. Thank you to our incredible team of editors, authors, designers, photographers and others behind the scenes for pulling together this magazine that you now hold in your hands.

CONTENTS

Industry OVERVIEW

Financial Services Sector

Economic OVERVIEW

Achieving broad-based Economic Growth

Economic SNAPSHOT

Policy UPDATE

Changing Global Standards

20 22 24 26 28

FIFTH EDITION 2019

Regulatory UPDATE

Cayman Islands Leading Jurisdiction

Banking at a GLANCE Investment Funds & Asset Management at a GLANCE Insurance at a GLANCE Reinsurance at a GLANCE Trusts at a GLANCE

49 The Cayman Model

The Importance of Asia to the Cayman Financial Services Industry

52 G20 Plus Global Financial Agreements

60 The Future of Cayman Vehicles in Asian Structures 71 40 Years of the Cayman Islands Bankers Association

A glimpse into the future for Cayman Finance

74 What makes Cayman a strong location for cross border resolution? 78 Down but not out 82 The Cayman Courts: Respected and Robust 85 Foundation Companies: One Year On 88 How to Evaluate Your Risk 90 The talent challenge: Re-balancing skills for a digital age

Staci Scott a yearning for learning

54 Cayman Islands, A Strong partner of the UK through Brexit and beyond

94 Cayman Office Market 96 Mergers and acquisitions in the Cayman Islands 99 Life Reinsurance, Industry Challenges and innovation 113 Cryptocurrency Funds: Risk or opportunity? 7

contents continued

Cayman Islands THE PREMIER GLOBAL FINANCIAL HUB

30 Business friendly Hotels in Cayman 98 Keeping Cayman Connected 116 The Business Lunch, where to eat in Cayman

What’s locking women out of the boardroom

103

cayman FINANCE 118

Overview and Explanation

120 A year in review 127

2019 Cayman Events

128 Board Members

133

Members Directory

139

Guide to Advertisers

140

Useful Resources

107

WOMEN IN FINANCE

FIFTH EDITION 2019

•

WWW.CAYMAN.FINANCE

This image of a bronze statue of a woman grasping the world in her palm is part of a tribute called Aspiration in Heroes Square, George Town. The monument depicts two women, one young and one older, climbing up stairs as a tribute to the work and struggles of Caymanian women. The young woman is holding the world in her palm and the oldest a paper that could be the signed petition. On the sides of the stairway are written the words Faith, Perseverance, Vision, Strength, Determination, Equality. It was dedicated in 2009 to Caymanian women who have accomplished great things through their strength and determination. It also lists the names of 358 women who signed a petition in 1957 for equality in voting. An extract from the plaque on the monument reads: “Aspiration only as high as I reach can I grow only as far as I seek can I go only as deep as I look can I see only as much as I dream can I be.” Karen Ravn

ACKNOWLEDGEMENTS Produced on behalf of Cayman Finance and the Ministry of Financial Services and Home Affairs.

Fidelity Financial Centre Unit 20, 1 Gecko Link, West Bay Road PO Box 11048 Grand Cayman, KY1-1007 caymanfinance.ky | enquiries@caymanfinance.ky PRODUCED BY TOWER MARKETING LTD. Fidelity Financial Centre, Unit 20, 1 Gecko Link, West Bay Road PO Box 11048, Grand Cayman, KY1-1007 tower.com.ky | info@tower.com.ky CONTRIBUTING WRITERS Hon. Tara Rivers, Hon. Roy McTaggart, Cindy Scotland, Jude Scott, Anthony Webster, Kate Hodson, David Nelson, Marc Kish, William Jones, William Peake, Gráinne King, James Elliott, Bernadette Carey, Morven McMillan, Maxine Bodden, Dorothy Scott, Sandra Edun-Watler, Iva Rozinkova, Chris Bailey, Sloane Rhulen, Jacob MacAdam, Kristian Leese, Tanis McDonald, Ingrid Pierce, Wanda Mellaneo, Betsy Drummond, Carolyn du Toit, Wanda Ebanks, Caroline Heal, Tom Hagger. CONTRIBUTING PHOTOGRAPHERS Amy Strzalko, Healther Holt, Cayman Compass, DART, Getty Images. Cayman Finance would like to thank the following organisations for their contribution to this publication:  Alternative Investment Management Association (AIMA),   Cayman Islands Bankers’ Association (CIBA),   Insurance Managers Association of Cayman (IMAC), Society of Trust and Estate Practitioners (STEP).

All rights reserved. No part of this publication may be reproduced in any form of advertising without permission in writing from Cayman Finance. No responsibility for loss occasioned to any person acting or refraining from acting as a result of material in this publication can be accepted. The views and opinions of the writers of articles in this supplement are those of the authors and do not necessarily represent the views and opinions of any organisation that they are employed by, or otherwise associated with.

preface FROM THE MINISTER

In the world of global finance, the Cayman Islands is a significant and successful jurisdiction having a strong economy and a robust offering of financial services. Such a position of strength, developed over the years, did not occur through passivity. Rather, the Cayman Islands worked diligently on its legal framework to foster a commercially vibrant, well-regulated sector that cements Cayman’s standing as a leading international financial centre (IFC). Much of that good work centres on the Cayman Islands Government’s active consultation with its key stakeholders, such as its financial services regulators, local industry practitioners and international bodies. The result is our ability to keep pace with global initiatives while making policy decisions for the greater good of all stakeholders.

Hon. Tara Rivers, Minister of Financial Services and Home Affairs, Cayman Islands Government

Take for instance, the positioning of the Cayman Islands with regards to the European Union list of non-cooperative tax jurisdictions exercise. Throughout the EU’s process, the Ministry has cooperated with EU officials by responding to multiple requests for written information, phone calls, and face-to-face dialogue. In addition, local industry members and regulators were consulted to reach the best solutions for all parties concerned. I encourage you to read the policy update in this publication to learn how Cayman’s work with the EU is happening alongside our efforts to address two key standard-setting financial services initiatives, namely the Caribbean Financial Action Task Force review and an upcoming assessment by the

OECD’s Forum on Harmful Tax Practices. You’ll also read about our latest commercial and regulatory legislation, as well as the Government’s and the Ministry’s international engagement efforts. As we plot the way forward in relation to these matters, there are indications that the unique views of these diverse voices – including our voice – are being heard. That is an encouraging development, and it bodes well for the future. Government welcomes the fact that global standard-setters, such as the OECD, recognise that legislative frameworks among financial services jurisdictions are bespoke, and require some customisation in the assessment methodology. While Cayman always employs a collaborative approach to international initiatives, the consultation on these matters is more complex because financial services are at a pivotal place, globally. Thankfully, our local stakeholders share a similar mindset; namely to ensure the Cayman Islands retains and continues improving its competitive edge in the global market.

For the Cayman Islands, then, international standards are the key barometers of our footing in global finance. This jurisdiction has always adapted to, adopted and aimed to abide by global standards. The legal and regulatory framework of the Cayman Islands has evolved as these standards have evolved over time. Indeed, Cayman is moving forward with additional commercial and regulatory legislation, including legislation related to limited liability partnerships, banks and trusts, companies, wills, non-profit organisations and FinTech. I will speak to these legislative measures in further detail in this editionâ&#x20AC;&#x2122;s policy update. Looking ahead, we hope and expect that the assessment and application of international standards are applied in a truly global manner; one that lev-

els the playing field while recognising and appreciating the differences between jurisdictions, systems of taxation and economic models. Given our history over many decades of committing to and adopting these evolving standards, we are also confident that the Cayman Islands can successfully address whatever challenges lie ahead, and capitalise on future opportunities. We know we are an attractive jurisdiction for a wide array of business thanks to attributes such as our stable political framework and respect for the rule of law, sophisticated judiciary, tax neutrality, high quality service providers, significant infrastructure advancements and an enviable standard of living. In addition, investors and clients can also rely on the robust engagement between Government and industry to help maintain the attractiveness of the Cayman Islands.

Thanks to these features, we have seen growth in our industry and our clients, who have consistently shown their confidence in the Cayman Islands over the years. Come what may in 2019, we expect much of that optimism to endure and for sound business to continue to thrive. On behalf of the Government and the Ministry for Financial Services, we are pleased to support Cayman Finance in bringing this publication to fruition once again this year. Readers will gain a greater insight into and an understanding of why we are confident in our commitment to adapt to change and embrace global standards. Such commitments underscore the progress we have made over the years. No matter how the landscape shifts, the Cayman Islands will continue to move forward and build upon the foundation of a strong and vibrant financial services industry.

Cayman Islands Financial Services Sector inancial Se ry of F rvic nist es i M

Reinsurance

Trusts

CIM A

nce ina F an m y a

Investment Funds & Asset Management

ing nt ou

Fid uc iar

al Services, P , Leg ub s e lic vic r Ac e c yS

C Clients are at the centre of the Cayman Islands financial services industry. They are at the core of everything we do, and this approach has been central to our success as a leading international financial centre. Our industry is led by first rate service providers within our investment funds and asset management, banking, insurance, reinsurance and trust sectors and world class

fiduciary, legal and accounting service providers across the industry. The combined efforts of Cayman Finance, the Government and the Cayman Islands Monetary Authority (CIMA) ensure that the financial products and services are consistently delivered to meet or exceed our international clientsâ&#x20AC;&#x2122; expectations through excellence, innovation and balance.

Are you ready to move from marginal gains to total reinvention? Navigate the Transformative Age with the better-connected consultants. ey.com/cayman

ey.com/consulting

industry OVERVIEW

Financial Services Sector Jude Scott CEO, Cayman Finance

The Cayman Islands has long been regarded as a premier global financial hub, efficiently connecting law-abiding users and providers of investment capital and financing around the world.

Industry OVERVIEW

As a trusted, efficient and neutral hub, the Cayman Islands supports efficient free flow of trade, capital, investing, financing and services around the world. The Cayman Islands is a nimble jurisdiction, continuously evolving in the face of constant global regulatory changes in order to maintain the highest international standards.

A top international financial centre

fiduciary, legal, and accounting service providers across the industry.

The Cayman Islands has been consistently ranked as a leading international financial centre and has received numerous prestigious awards over the years, including nine consecutive years as the Top Specialised Financial Centre by The Banker Magazine.

The combined efforts of the Cayman Islands Government, the Cayman Islands Monetary Authority, and Cayman Finance, ensure the financial services products and services are consistently delivered to meet or exceed international standards through excellence, innovation and balance.

Such awards reflect the recognition from our clients, peers, and the industry, our high quality and experienced service providers, innovative capabilities, and legislative and regulatory balance. The Cayman Islands’ sustainable competitive advantages include: • the quality and experience of our professional service providers • our appropriate legislative and regulatory balance • the commitment of the Cayman Islands Government and the Cayman Islands Monetary Authority to work with our industry • our diversified industry with several strong and distinct world-class sectors.

Strong and diverse industry sectors The Cayman Islands financial services industry is led by first rate service providers within investment funds and asset management, banking, insurance, reinsurance, capital markets, and trusts sectors, and world class

Protecting the global economy Both the Cayman Islands Government and the Cayman Islands financial services industry have been recognised for decades as a strong international partner in combatting corruption, money laundering, terrorism financing and tax evasion. The Cayman Islands has gained a reputation as a transparent, cooperative jurisdiction by meeting or exceeding all globally-accepted standards for transparency and cross border cooperation with law enforcement. The Cayman Islands cooperates with international authorities through three platforms: • Regulatory matters – Cayman Islands Monetary Authority (CIMA) • Tax matters – Department of International Tax Cooperation (DITC) • Anti-Money Laundering matters – Financial Reporting Authority (FRA).

The Cayman Islands has adopted at least as many global standards for transparency as any G20 country - and more, when agreements specific to International Financial Centres (IFCs) and UK Overseas Territories are included.

Supporting international jobs and economic activity Investment mediated by Cayman Islands companies support economic activity, jobs, and income around the world. A recent study performed by Capital Economics estimates that foreign investment mediated through the Cayman Islands was around US$4.5 trillion and supports in the region of five million jobs globally. Additionally, the research found that investment through the Cayman Islands supports estimated tax revenues for the United States government of approximately US$60 billion.

Best in class ownership standards The Cayman Islands has had a world class verified ownership regime in place for more than 15 years. All companies established in the Cayman Islands must be formed using a licensed Cayman Islands corporate service provider, and annual maintenance costs for a basic company are in the region of US$2,000 per annum. There is no ability for the general public to form Cayman Islands companies online. The information in the Cayman Islands ownership regime is collected

Industry OVERVIEW

and verified by these licensed Cayman Islands corporate service providers under existing anti-money laundering and know-your-customer laws and regulations. Those same licensed Cayman Islands corporate service providers are responsible for submission of beneficial ownership registry information to the Cayman Islands Government. The information Cayman requires to be collected is available to overseas authorities making proper requests to Cayman Islands authorities through existing information sharing channels between the Cayman Islands Government and other countries.

The Cayman Islands does not permit bearer shares or anonymous numbered bank accounts. Not a tax haven The Cayman Islands is a transparent, tax neutral jurisdiction and is not a tax haven. International policymakers continue to recognise the vital role Caymanâ&#x20AC;&#x2122;s financial services industry plays as a strong international partner in combatting corruption, money-laundering, terrorist financing and tax evasion. The Cayman Islands meets or exceeds all globally-accepted standards for transparency and cross border cooperation with law enforcement. This commitment to global transparency standards makes the Cayman Islands a very unattractive destination for would-be tax evaders.

A review of the definitions of a tax haven used by leading transparency organisations contrasted with the real legal, regulatory and legislative basis for the Cayman Islands financial services industry clearly demonstrates Cayman is a transparent, tax neutral jurisdiction and not a tax haven.

Tax neutral platform While the Cayman Islands adds no additional tax to financial services transactions in its jurisdiction, investee entities as well as investors are still subject to their home jurisdictions’ relevant taxes. In addition, the Cayman Islands meets or exceeds globally-accepted standards for transparency and cross border cooperation with tax authorities and law enforcement. The importance of maintaining the Cayman Islands’ tax neutral status can be illustrated by considering what would happen for example, were the jurisdiction to introduce direct corporate tax on profits of Cayman Islands alternative funds. This would reduce returns to investors in those funds and, consequently, reduce the taxes those investors would in turn be liable to pay in their home jurisdiction. It would also unfairly disadvantage the many investors in Cayman Islands alternative funds who are private and government pension funds, charities and not-for-profit organisations that are not subject to tax in their home jurisdiction. The Cayman Islands has adopted automatic exchange of tax information with relevant authorities in other countries. Under the OECD’s Common Re-

porting Standard (CRS) and US FACTA regimes, both of which have been implemented in the Cayman Islands, the jurisdiction proactively shares tax information with other governments – a level of transparency which essentially assists them in the collection of their own taxes, regardless of what their unique tax laws are.

A globally responsible tax regime Like all other jurisdictions, the Cayman Islands has the right to establish a tax regime that collects the right taxes from the right people at the right time within its jurisdiction. Unlike other jurisdictions, Cayman has chosen to use fees and other taxes instead of an across-the-board corporate income tax. The Cayman Islands globally responsible tax regime meets or exceeds the revenue targets used by other leading countries around the world, generating government taxation revenue equal to approximately 22% of the Cayman Islands’ GDP (2016). It’s a taxation revenue raising system that works well for the jurisdiction and very adequately funds government operations and keeps the country’s debt-to-GDP ratio modest.

Tax evasion is unlawful and the Cayman Islands does not support it. The Cayman Islands does not have any double taxation agreements (or treaties) that could be used to unfairly shift tax base from another country to the Cayman Islands. It should be

noted that, technically, the Cayman Islands has signed a DTT with the UK, but it is merely the form in which the UK preferred to have the tax information exchange agreement executed and the agreement provides no tax benefits to the Cayman Islands, as the jurisdiction does not have any taxes covered by the agreement. This responsible approach to taxation is a distinguishing feature of our jurisdiction among international financial centres, many of which have extensive double tax treaty networks.

Commitment of the Cayman Islands Government and the Cayman Islands Monetary Authority As an industry, the relationship between Cayman Finance, the Cayman Islands Government, and CIMA, the country’s financial services regulator, has been the hallmark of the jurisdiction’s success as it has allowed us to respond swiftly to changes in the marketplace. Working together, Cayman Finance, the Cayman Islands Government, and CIMA provide insight into Cayman’s current endeavours, as well as into the future services that will increase our commercial appeal and our reputation as a well-regulated jurisdiction.

Stability The Cayman Islands is a British Overseas Territory that has maintained a very stable economic and political climate throughout its history. The country has its own democratically elected Parliament, which has consistently maintained responsibility for domes-

Industry OVERVIEW

tic affairs including fiscal matters. The Cayman Islands also operates its own judicial system, including a separate division of the Grand Court to deal with commercial disputes, which is based on English common law principles. The Cayman Islands Government prudently manages its affairs and operates with a budget surplus.

INDUSTRY OVERVIEW The Cayman Islands is the leading jurisdiction for international hedge funds, the second largest domicile for captives, the number one domicile for healthcare captives and group captives, and a leading jurisdiction for banking, trusts, capital markets and fiduciary services.

Funds The Cayman Islands is home to approximately 70% of global hedge, private equity, and venture capital funds, with over 20,000 investment fund vehicles. As the top jurisdiction for alternative investment funds, Cayman is home to two-thirds of global hedge funds with over US$2.3 trillion in assets under management (AUM).

Banking The Cayman Islands has a well-established, robust, banking regime supported by world class anti-money laundering regulation and appropriate and effective cross border cooperation.

Insurance The Cayman Islands’ insurance service providers are known for their responsive, inclusive and collaborative

approach to developing and supporting new client driven products, including captives, insurance-linked securities, hedge fund and private equity backed re/insurance companies. We are the leading jurisdiction for healthcare and group captives.

Reinsurance The Cayman Islands has seen distinct growth in the reinsurance space over the past year. Due to the close working relationship industry has with the Cayman Islands Government and CIMA, the jurisdiction has positioned itself as a more attractive jurisdiction than its competitors. The Cayman Islands continues to enhance its regulatory framework by engaging with international standard setters such as the IAIS and regulatory associations such as NAIC.

Capital markets The Cayman Islands is a preferred jurisdiction for issuers and borrowers in the capital markets as a result of our exceptional professional infrastructure, creditor friendly insolvency regime, and a robust legal system that upholds the rule of law and provides certainty.

Trusts On the trusts side, the Cayman Islands continues to reinvest in new products, growth and innovations to efficiently meet the needs of global clients and increasing global regulatory requirements. The Cayman Islands also supports many of our clients growing focus on philanthropy and charitable efforts, as well as research and development.

Jude Scott Jude is well respected locally and globally having spoken internationally on financial services topics and featured on a number of occasions in international media. He retired as an Audit Partner in 2008 after spending over 23 years with EY. As the Global CEO of Maples and Calder, he took an active role in the strategic growth and development of the firm. Jude has served as the CEO of Cayman Finance since 2014.

banking AT A GLANCE

The banking sector in the Cayman Islands continues to make significant strides in ensuring compliance with international standards and embracing best practice. Strong performance in 2018 The Cayman Islands’ banking sector shared strong performance over the past year, largely due to robust and improving economic fundamentals, locally and internationally. Financial Soundness Indicators continue to highlight the health and safety of the sector, characterised by strong capital, liquidity, earnings and asset quality. The Cayman Islands has long been recognised as having a comprehensive regulatory and compliance framework. The banking sector in the Cayman Islands continues to make significant strides in ensuring compliance with international standards and embracing best practice, led by the Cayman Islands Monetary Authority (CIMA), the governing body responsible for supervision and regulation of the banking industry. CIMA continues to develop a robust regulatory and supervisory framework. CIMA continued its efforts to enhance this framework based on the Basel Accord and tailored

Cayman Finance AT A GLANCE

to the unique nature of licensees and the jurisdiction.

Unique nature of the banking sector The Cayman Islands banking sector provides highly specialised products and services for both international and local residents and companies. Specific offerings include tailored cash management and credit products for the funds and insurance sectors to a full range of retail and commercial products offered through a modern branch network and robust electronic delivery channels.

Category ‘A’ Banks Within the Category ‘A’ bank licence, there are two subcategories of institutions: banks that provide services to non-retail clients and those that provide services to both retail and non-retail clients. Category ‘A’ banks may carry out business within and outside the islands without any restriction on the type of clients. There are currently six retail banks that provide service to both clients: Butterfield Bank (Cayman) Limited, Cayman National Bank Limited, Fidelity Bank (Cayman) Limited, FirstCaribbean International Bank (Cayman), RBC Royal Bank (Cayman)

Limited and Scotiabank & Trust (Cayman) Limited; and five non-retail banks: Cainvest Bank and Trust Limited, CIBC Bank and Trust Company (Cayman) Limited, Deutsche Bank (Cayman) Limited, Merrill Lynch Bank and Trust Company (Cayman) Limited, MUFG Alternative Fund Services (Cayman) Limited. At the end of December 2017, the Retail and Non-Retail Banks reported assets of US$15.3 and US$8.62 billion respectively. They are all well capitalised and maintain sound financial positions as highlighted in Tables 1 & 2.

Category ‘B’ (International) Banks Category ‘B’ banks primarily serve clients that are outside the jurisdiction. These banks are owned by shareholders in North and South America, Europe, Asia and the Pacific region, Latin America and the Caribbean as well as the Cayman Islands. Category ‘B’ banks can be subsidiaries or branches of foreign banks or may be private or affiliate banks. At present, there are 139 banks holding Category ‘B’ licences. These international banks may not accept deposits, invest in any assets or grant loans to any Cayman Islands’ resident, except to another exempt or an ordinary non-resident

company which is not carrying on business in the Islands.

Banking sector developments ACH (Cayman) Limited was established in 2017 to facilitate the Cayman Islands Automated Clearing House (CIACH). CIACH is an electronic payment and cheque imaging system that is shared by participating retail banks in the Cayman Islands. Payments and clearing between commercial banks in the Cayman Islands were previously done manually via a multilateral agreement. The Cayman Islands Bankers Association (CIBA) led the project to establish an automated payment and clearing system domestically that would provide two critical functions: electronic funds transfers (EFT) and cheque image exchange (CIE) to speed up the payments and clearing process. With the introduction of the payment and clearing system, the clearing/ payment system will become much more efficient with a reduction in the cheques being used as well as faster clearing and settlement. It is expected that the system will reduce interbank transactions from two to three business days to same-day. The CIACH adopted a phased approach to implementation. The first phase brought the introduction of EFT which facilitates the electronic movement of direct debit and credit transactions in both Cayman Islands

dollars and United States dollars to personal and corporate accounts held in the Cayman Islands. The second phase of the project is the implementation of the Electronic Cheque Image Exchange (CIE). The CIE phase is anticipated to take effect in the third quarter of 2019.

investment funds and asset management AT A GLANCE

As Artificial Intelligence (AI) and Machine Learning Strategies (MLS) are further developed and improved, it is inevitable that managers will incorporate this into their investment and operational decision-making processes. Where the industry is at The following table shows that the number of Registered, Administered, Licensed and Master Funds operating in the Cayman Islands under the Mutual Funds Law has increased for the first time since 2013.Â The total number of alternative investment funds in the jurisdiction will have grown even further, given the strong fundraising records set in 2017 and 2018 for

closed-ended alternative investment funds (ie. private equity funds). Hedge funds continue to lead the alternative asset space in the short to medium term, although asset allocations in this class have remained stable over recent years. Private equity is in the ascendance. Increased demand for private equity seems to be derived by their willingness to offer new, customised

Mutual Funds1 Period

Registered

Master

Administered

Licensed

Total

2012

8,421

1,891

408

121

10,841

2013

8,235

2,635

398

111

11,379

2014

7,835

2,685

386

104

11,010

2015

7,654

2,805

380

101

10,940

2016

7,293

2,840

363

10,586

2017

7,331

2,816

331

10,559

2018

7,582

2,911

321

10,889

1 Source: Statistics provided by the Cayman Islands Monetary Authority as at 30 September 2018.

Cayman Finance AT A GLANCE

solutions to investors which leads to improved, bespoke products being offered in response to changing investor demands.

Strategic priorities The top two primary strategic priorities for managers are asset growth and talent management. Fundraising has never been as challenging or competitive for fund managers as investorsâ&#x20AC;&#x2122; demands for customised and outcome-specific products evolve and grow. Primarily, investors have demonstrated an increasing desire to influence the investment and operational decisions of the manager. Fund managers are expanding their horizons with respect to next-generation talent, looking at those with capabilities suitable to the digital age, with investors in full support. As Artificial Intelligence (AI) and Machine Learning Strategies (MLS) are further developed and improved, it

is inevitable that managers will incorporate this into their investment and operational decision-making processes. Eighty-eight percent of managers predict that AI and MLS will be of greater importance by 2023. Interestingly, 60% of hedge fund managers either use, or expect to use AI versus 26% of those in private equity, which indicates that hedge fund strategies may be better suited to utilise AI and MLS over private equity. While 76% of investors believe AI will be somewhat or critically important to support their investment process, and one in four would pay more for a manager utilising AI, very few have been able to quantify the benefits of doing so. Cryptocurrencies have had a turbulent year and their extremely high volatility means managers and sophisticated investors will continue to remain sceptical of investment potential in the short to medium term. Ninety percent of funds have no plans to invest and only 3% currently invest, which is consistent with investors as 88% do not plan to invest and 6% are currently investing. Where funds are investing in cryptocurrencies, their preference is to invest in securities of companies whose primary activities

relate to cryptocurrencies rather than the currencies themselves or products tied to their value.

Outlook Investors will continue their current trend to further diversify their portfolios and develop their sophistication by increasing their exposure to illiquid strategies. The total capital invested into private equity is expected to surpass that in hedge funds by 2023 to $4.9 trillion, a growth of 58% on current levels, to become the largest alternative asset class. Total hedge fund capital is expected to grow by 31% to $4.7 trillion during the same period, which is the smallest growth in percentage terms of all alternative asset classes.

but 42% believe that capital from North America will decrease, leading to a stabilisation or slight shrinkage in the number of active hedge funds. Fund managers are of the view that changing investor preferences, regulatory risk and talent attrition pose the greatest risks to the industry, which is broadly supported by investors although they have fewer concerns regarding regulation. How fund managers respond to these risks, particularly evolving investor demands for active partnership, and how they utilise AI to reduce operational cost will affect their ability to succeed in the future.

North America has long been the leading region for alternative asset investment, however, more investors in Europe and Asia-Pacific are increasing their allocations to the space and emerging markets are becoming increasingly involved, with the Middle East primed to be the largest contributor of new capital. A majority of managers predict that capital from Europe and Asia-Pacific will increase by 2023

insurance AT A GLANCE

The use of captive insurance by companies can prove to be a profitable endeavour – particularly when coupled with effective loss control. Quickly moving towards the better alternative Now the Insurance Managers Association of Cayman (IMAC) has announced the launch of its new brand identity, name, and logo, things are moving quickly into place. While this new initiative took a great deal of behind the scenes work, the additional value attained by the captives it serves is likely to be exponential.

New brand, farther reach, clearer focus – better results For more than three decades, IMAC has had a mission of promoting the Cayman Islands’ captive insurance industry. It does so via engagement with local government, regulators, media and other organisations.

The use of captive insurance by companies can prove to be a profitable endeavour – particularly when coupled with effective loss control. With nearly 700 captive insurance companies presently domiciled in Cayman, it has been estimated by IMAC that the captive industry alone contributes roughly $85 million annually to this economy.

Some of IMAC’s key initiatives include promoting the integrity and intellect of the industry, as well as encouraging sustainable growth through innovation, education, and international competitiveness. For instance, through its Educational Scholarship Fund, IMAC has raised nearly $3.9 million since 1994, which has been used for assisting more than 40 young Caymanians to attend university overseas.

This is a substantial figure in any climate, and particularly given there are less than 300 people employed in this particular niche in Cayman at the present time. Yet, even with such a high rate of success, there are some important changes to look for on the horizon.

The association has also worked to promote Cayman as a quality domicile for captive insurance companies, and it does so via a variety of different avenues – one being the Cayman Captive Forum, which attracts nearly 1,500 insurance

Cayman Finance AT A GLANCE

professionals to the island each year to discuss the most pressing issues in the captive insurance arena. Yet, while IMAC’s efforts have worked exceedingly well throughout the years – essentially placing the association as the face of the industry – there are still only a select few in the industry who recognise its name, as well as the true value it provides.

But that is all about to change It was recently determined that the time is right for expanding IMAC’s reach internationally – and along with that, modifying the IMAC brand to better promote Cayman’s multipronged insurance industry; keeping pace with other highly valued entities. The ‘international’ element of the name serves as a recognition to an expanded scope of the already established insurance industry. 2018 statistics by year end will reflect an exponential growth in reinsurance entities emerging from Solvency II equivalency in Bermuda, and

Cayman’s continually evolving regulatory regime; though still proportional more and more sophisticated in stature, commerciality and outlook.

What to look for in the months ahead In light of IMAC’s new developments, just some of the innovations that will take place include:

updated IMAC website – in order to provide a more in-depth look at IMAC’s expanded offerings and reach, a new website is in process, and is anticipated to be complete this year. updated identity – for a clearer statement on what the association does – as well as who it is – a new outward facing brand has been established, which includes the use of Cayman In-

ternational Insurance as its key namesake. Due in large part to increasing competition, and thus the need to communicate with new targets, this name should resonate well with those who are unfamiliar with both IMAC and Cayman (note, the IMAC name will still be maintained when referencing the association itself). more fitting tagline – similarly, and for the purpose of establishing even further reach, Cayman International Insurance will also sport a new tagline, “The Better Alternative”. This of course is a nod to the alternative risk elements of a captive as a risk management and risk financing tool, but will also emphasise that Cayman serves as a legitimate and well-established alternative to other jurisdictions. new logo – given the new name, look, and feel of the association, it was necessary to tie all of the branding together with the creation of updated and eye-catching logos. These logos represent Cayman International Insurance directly, as well as IMAC, and the Cayman Captive Forum. With the scope of all these changes, it is anticipated that IMAC’s mission will continue to provide value to those whom the association serves.

reinsurance AT A GLANCE

The Cayman Islands is known for a balanced regulatory regime which is robust but also progressive and risk based.

History and evolution of the Cayman Islands reinsurance industry The Cayman Islands has traditionally been perceived as a captive domicile with its international insurance industry consisting of circa 700 captives. Over recent years, Cayman has seen an influx of reinsurance companies and has sought to position itself as a genuine offshore alternative to Bermuda. Cayman Finance remains bullish about the prospects of the reinsurance industry. As an example, in 2018 CIMA licensed over 20 new formations with a significant proportion being reinsurance companies assuming third party risks. Cayman now has nearly 60 commercial reinsurers offer-

Cayman Finance AT A GLANCE

ing a wide variety of strategies which evidences its innovative composition. On the property and casualty (P&C) side, United Insurance Company is an A rated open market reinsurance company with over 40 years of history in Cayman. Greenlight Re was established in 2004 and is a NASDAQ listed company offering a multi-line P&C strategy. In more recent years, Oxbridge Re a collateralised property catastrophe company established in Cayman along with Top Sail Re. In 2018 Barents Re, a leading independent reinsurance group decided to redomesticate their offshore reinsurance vehicle to Cayman. On the life side, Cayman has seen a flurry of activity with Aureum Re establishing in late 2016 as a Class D reinsurance company (the largest type in Cay-

man). Aureum currently focuses on fixed and indexed annuities and offers a conservative and fully collateralised solution to US clients. Knighthead Annuity and Nassau Re have also launched similar strategies and we continue to see a healthy pipeline of new entrants who are considering Cayman.

Why Cayman? The Cayman Islands is known for a balanced regulatory regime which is robust but also progressive and risk based. The Cayman Islands Monetary Authority (â&#x20AC;&#x153;CIMAâ&#x20AC;?) is typically highly accessible and has created a culture of transparency and openness which has been well received by Cayman licensees.

We note that over 80% of the insurance risk ceded to the Cayman Islands originates in the United States. CIMA are mindful of this concentration and have recently approved risk based capital (“RBC”) and US statutory reporting as an additional basis for reporting financial results (which is not the case for certain other offshore domiciles). A number of new reinsurance companies have cited this factor along with Cayman not seeking Solvency II equivalency and the competitiveness of RBC vs Bermuda Solvency Capital Requirement (“BSCR”) as some of the main determinants in their domicile decision. Cayman also offers a desirable location and lifestyle, easy access to US markets, qualified workforce and very stable political environment.

Next steps CIMA recently signed an MoU with the NAIC and has been active in seeking closer collaboration with their US counterparts. Cayman Finance is supportive of these continued discussions as our membership see material benefits from domestic regulators developing a better understanding of Cayman entities and its regulatory framework. In order to ensure that these gains continue and are well sustained into the future, the Cayman Finance reinsurance subcommittee is working closely with government and CIMA to make the Cayman Islands as attractive as possible to potential reinsurance businesses.

trusts AT A GLANCE

The jurisdiction is home to some of the most talented and forward thinking trust professionals and advisors.

The Cayman Islands is one of the leading international centres for the creation and administration of trust structures, and its continued development and growth is due to a number of important factors. The Cayman Islands has a comprehensive Trusts Law, well known for its innovative Special Trusts Alternative Regime (STAR), provides for the registration and licensing of Private Trust Companies (PTCs), and offers a range of innovative wealth structuring vehicles including the new foundation company.

the Perpetuities Law also have a role to play in the administration of trusts. Cayman Islands’ trust law continues to evolve through robust judicial decisions relating to issues that are at the forefront of legal development in this field. The jurisdiction’s long-established trust legislation is supported by a strong and independent local judiciary. Private and public sectors are continuously working collaboratively to review and update legislation so it remains current and viable.

Trusts law

The Cayman Islands is a tax neutral jurisdiction. There has never been any direct taxation in the Cayman Islands, the only fiscal impositions being stamp duty and import duty. An exempted trust can obtain exemption from the risk of future taxation for 50 years.

In the Cayman Islands, as in England, the law of trusts is not statute-based but primarily grounded in rules of common law and equity. These are supplemented by local statutes including the Trusts Law (2018 Revision), which incorporates the previously separate statutes the Trusts (Foreign Element) Law, STAR Law and the Trusts (Amendment) (Immediate Effect and Reserved Powers) Law. Other local statutes such as the Fraudulent Dispositions Law and

Cayman Finance AT A GLANCE

Tax neutrality

Categories of trusts The discretionary trust is the most common trust vehicle used in the Cayman Islands, but strict settlements and charitable trusts are also widely

used. In addition to traditional wealth planning, where exempted trusts, reserved powers trusts and forced heirship planning trusts are often used, Cayman Islands’ trusts are used extensively in capital markets transactions and structured finance deals.

STAR trusts A STAR trust can be established for any purpose, provided it is lawful and not against public policy. It can create innovative trust planning opportunities, and advocates of STAR continue to find new uses for this regime in their planning. There are a number of features that distinguish the STAR provisions from the purpose trust legislation of other jurisdictions

Features The objects of a STAR trust may be persons or purposes, the persons may be of any number and the purposes may be of any number or kind, charitable or non-charitable, provided they are lawful and not contrary to public policy. The STAR provisions stipulate that a STAR trust is not ren-

dered void by uncertainty as to its objects or mode of execution. It allows the trust deed to give the trustee or any other person power to resolve and uncertainty as to its objects or mode of execution. The rule against perpetuities, which limits other types of trusts in the Cayman Islands to the statutory perpetuity period of 150 years, does not apply to a STAR trust and therefore a STAR trust can have perpetual existence. The STAR provisions deal comprehensively with the issue of enforcers. They provide that the only persons who have standing to enforce a STAR trust are such persons, whether or not beneficiaries, as are appointed to be enforcers by the terms of the trust deed, or in certain circumstances by order of the court. Therefore beneficiaries who are not enforcers have no right to enforce the trust or to obtain information regarding the trust.

Regulation Trust Companies in the Cayman Islands are regulated by the Cayman

Islands Monetary Authority (CIMA) through the various licenses granted and registrations required. Generally, there are two types of licenses granted to trustees carrying on a trust business in Cayman: â&#x20AC;˘ a full trust license entitles the holder to provide trustee services to the public generally; â&#x20AC;˘ a restricted trust license is issued subject to the condition that the trust business is limited to certain named clients. All directors and senior officers of a trustee holding such a licence (including any changes after licensing) must be approved by CIMA. Trustees and protectors of Cayman Islands trusts must also adhere to the registration requirement of beneficial ownership legislation now in force, and with the reporting requirements provided for in local legislation as part of the international tax information exchange framework established by virtue of FATCA and CRS. The Cayman Islands has a record of enacting innovative and far-sighted legislation in the wealth management sector, and

a wide offering of expert service providers in the Cayman Islands who can assist stakeholders with an efficient and effective strategy to establish or move structures to the jurisdiction. Contributing to the ongoing evolution of the jurisdiction, new legislation modernising aspects of local trusts and estates statutes is under consideration for implementation in 2019. The government continues to demonstrate responsiveness to the needs of the financial services industry, and there is a broad on-going commitment to enact further legislation as needed in the trust arena both in consultation with local professionals and in response to global transparency and substance initiatives as necessary.

where to stay? Working with businesses based in the Cayman Islands might call for a visit to the islands, which means staying in some of the finest, award-winning hotels in the Caribbean, each featuring Cayman-kind hospitality you just can’t find anywhere else.

Business-friendly hotels in the Cayman Islands

The Ritz-Carlton, Grand Cayman features all the amenities of home right at your fingertips including boutique shops, tennis courts, a golf course and hair studio, to help cater to your every need. The resort also features more than 13,000 square feet of meeting space including the island’s largest ballroom.

Ritz-Carlton, Grand Cayman

Westin Beach Resort & Spa

Book it: seafireresortandspa.com

Kimpton Seafire Resort + Spa

Dinning in: The hotel features three main restaurants - Coccoloba, showcasing coastal Mexican cuisine with ocean views; Ave, serving Mediterranean steaks and fish accompanied by fresh local produce; and Avecita, the only Chef’s Counter on the island, offering a Spanish tapas-style tasting menu and wine pairing experience.

Fresh-faced, after undergoing a $50 million renovation, the Westin Beach Resort & Spa is the perfect place to stay for business travel. The conference facilities feature a total of 7 breakout areas that can accommodate meetings of up to 400 participants. The Resort features two executive boardrooms - the Governor’s Ballroom can seat up to 650 theatre-style, and the Galleon Ballroom can seat up to 300 theatre-style. There is also a spectacular outdoor event area overlooking the beach.

Marriott Beach Resort

The latest addition to the world famous Seven Mile Beach is a boutique-chic luxury lifestyle resort, the Kimpton Seafire Resort + Spa. Having received a multitude of high profile awards and accolades since opening in late 2016, including being named among the top 10 resorts in the Caribbean, it provides the perfect space to relax, unwind, or even continue working if you really have to.

Dinning in: Whether you are looking for Caribbean-fusion, seafood specials, burgers fresh off the grill or just tapas and a cocktail to wind down the day, you will certainly find something to please your palate here. Book it: westingrandcayman.com

Located on the cusp of the financial district, the Marriot Beach Resort has become one of the preferred places to stay while doing business in Grand Cayman. The hotel features five meeting rooms, four restaurants, personalised concierge services and a newly renovated spa.

Dinning in: There are six different dining experiences to try at the resort including Blue by Eric Ripert and the Silver Palm lounge.

Dinning in: Both the Veranda on Seven Mile Beach, and Anchor & Den have become favourites of the Cayman restaurant scene and are not to be missed while visiting.

Book it: ritzcarlton.com

Book it: marriottgrandcaymanbeachhouse.com

ogier.com

9 locations. 5 laws. 1 firm.

We act for leading global financial institutions, international law firms, investment managers and corporate entities, as well as providing expert services to businesses in the Cayman Islands. Active in Cayman for more than 25 years, the services offered by our market-leading and experienced team include: • • • • • • • • • Legal services in British Virgin Islands Cayman Islands Guernsey Hong Kong Jersey London Luxembourg Shanghai Tokyo

Banking and Finance Cayman Islands Local Legal Services Corporate Administration via Ogier Global Corporate and Commercial Digital, Blockchain and Fintech Dispute Resolution Investment Funds Private Client and Trusts Restructuring and Insolvency

economic OVERVIEW

Achieving broad-based

Economic Growth Hon. Roy McTaggart Minister of Finance and Economic Development Cayman Islands Government

For 2018, Caymanâ&#x20AC;&#x2122;s GDP is projected to grow by 3.0 percent, due largely to the on-going and expected construction of private and public sector projects, and the continued strengthening in tourism-related services.

Economic OVERVIEW

The global stimulus Caymanâ&#x20AC;&#x2122;s highly globalised services industries benefited from an uptick in global economic activity in 2017. According to the International Monetary Fund, global output further grew by 3.8% in 2017 following the softened performance in 2016. Strong recovery was seen among advanced economies led by the US, Caymanâ&#x20AC;&#x2122;s main trading partner. The US economy benefited from a change in fiscal policy which raised disposable income and sharply pushed aggregate demand by 2.3%. Strong global demand is expected to continue over the medium term which should reflect positively on Caymanâ&#x20AC;&#x2122;s economic performance. The US is expected to show stronger growth of 2.9% in 2018 and 2.7% in 2019; these forecasts may warrant upward revisions given the 3.2% growth posted in the first six months of 2018.

Broad-based domestic growth Against the upbeat global backdrop, the Cayman Islands sustained another year of robust economic performance in 2017, with growth of gross domestic product (GDP) estimated at 2.9%. In the first quarter of 2018, GDP grew by an estimated 4.0% with leading indicators suggesting positive contribution across all sectors and further corroborated by the fall in unemployment rate to 3.4% in the first half of the year. The heightened demand for services dominated economic growth in 2017, led by tourism-related services and construction services. Financing and insurance services and the related

business activities (mainly legal and accounting) remained the largest combined sectors in terms of percentage contribution to GDP.

the period. The sector is estimated to have increased by 19.8% in the first quarter of 2018 as tourist arrivals posted double-digit growth rates.

Growth in restaurant and accommodation services increased by 8.5% in 2017 as the Islands capitalised on higher global demand for tourism. Tourist arrivals to the Islands were also boosted by the displacement of a number of neighbouring tourist destinations due to the passing of hurricanes Irma and Maria during the year. Further, the sector benefitted from increased capacity with the completion of a number of hotel projects during

Economic growth in 2017 was also stimulated by an expansion in infrastructure projects in response to the sustained growth in local population and tourist arrivals. Consequently, the construction sector reported another year of sharp growth in 2017 of 7.2%. A number of infrastructure projects have been completed, such as the first phase of the Linford Pierson highway and the Esterly Tibbets highway. The expansion of the Owen Roberts

International Airport is on-going. These projects have contributed to economic activity while also providing the necessary facilities to enable continued development within our economy. Construction activity in the first quarter of 2018 accelerated further, registering a growth rate of 8.5% as indicated by the importation of building materials. The overall growth forecast for the sector for 2018 is 8.4%.

The financial and insurance services sector which accounted for approximately 40.5% of GDP was estimated to have expanded by 1.4% in 20171. Growth of the sector was impacted by declines in the registration of banks and insurance companies; however it was boosted by the growth in domestic credit. In the first quarter of 2018, the sector is estimated to have grown

by 1.2% as domestic credit to businesses and households further expanded. Economic activity in the business activities sector, which mainly comprises legal and accounting services, had an estimated growth of 3.6% in 2017. This was fueled by recoveries in new partnership registration by 12.5% and in new company registrations by 16.8%. For the first quarter of 2018, growth in the sector accelerated to 4.5%. Notably, this was supported by new company and new partnership registration which surged by 41.7% and 28.7%, respectively, notwithstanding issues related to the proposed regulation on the public registry of beneficial ownership of companies. For 2018, Caymanâ&#x20AC;&#x2122;s GDP is projected to grow by 3.0%, due largely to the on-going and expected construction of private and public sector projects, and the continued strengthening in tourism-related services. Stable growth is projected in the financing and insurance sector while legal and accounting services is likely to be bolstered by record growth in new company registrations. Growth of 2.7% is forecasted for 2019 as the multiplier effect of some global growth initiative permeates the economy while some infrastructure projects are completed. Sustained efforts to diversify the economy which has already generated the emergence of new growth sectors is expected to further support the forecast for 2019.

Domestic inflation A rebound in global fuel prices coupled with higher demand for goods

Economic OVERVIEW

and services induced upward inflationary pressures during 2017. As a result, the general price levels in the Cayman Islands increased by 2%. The uptrend followed two consecutive years of deflation in 2015 and 2016 of -2.3% and -0.7%, respectively. Inflation for the year was largely reflected in higher transportation costs as the price of fuel and airfare increased by 5% and 10.8%, respectively. Prices of other household consumptions goods were also impacted by the US consumer price trends.

in the unemployment rate to 4.9% in 2017. A reversal was seen in the first half of 2018 with total employment growing at a sharper rate of 2.3% to reach 42,717, while labour force grew by 1.5%. This resulted in the fall in the unemployment rate to 3.4%, the lowest since the spring 2007 survey when the rate fell to 3.0%. The unemployment rate among Caymanians slid from 6.2% in the first half of 2017 to 5.3% in the corresponding period of 2018.

Fiscal prudence as anchor of macroeconomic stability The government has remained resolute in its commitment to provide an enabling environment for broadbased growth in these islands, mainly by maintaining macroeconomic stability anchored on fiscal discipline. This strategy continues to minimise the potential negative impact of changes in taxation (and

For the first half of 2018, inflation accelerated to 4% as fuel cost and imported inflation continued to increase. The rise in inflation was heavily influenced by higher costs in the transport sector as the cost of air transport spiked by 52.3%. Airfare prices reflected a rise in jet fuel prices as well increased demand from stayover visitors. Inflation is projected to remain strong for the remainder of 2018 to average 3.5%. Average inflation is forecasted at 2.6% for 2019, partly reflecting the consumer price forecast for the US, as well as the impact of higher domestic demand.

Employment growth The broad-based growth economic activity in 2017 and thus far in 2018 has contributed to the sustained improvement in the labour market. Total employment increased by 1.1% to reach 40,856 in 2017. The growth in employment was, however, outweighed by stronger growth in the labour force which resulted in a rise

24.0

24.5

24.2

24.1

23.8

23.5

24.0 23.5 23.0 21.9

22.5 22.0 21.5 21.0 20.5

2012

2013

2014

2015

2016

2017

Figure 7.

Expenditure-to-GDP (%) 23.9 24.0

22.3

23.0

21.6

22.0

21.6 20.8

20.6

21.0 20.0 19.0 18.0

2012

2013

2014

2015

2016

2017

Figure 8.

Central Gov’t Debt (CI$M) 586.2

559.9

600.0

534.0

511.0

483.9

449.1

500.0 400.0 300.0 200.0 100.0 0.0

2012

2013

2014

2015

2016

2017

Source: Treasury Deprtment and Economics and Statistics Office

indirectly in foreign exchange regimes) on investment returns that may arise from sharp changes in fiscal policy. Cayman is one of the few jurisdictions that has legislated fiscal discipline by way of the Public Management and Finance Law which is considered best practice by global credit rating agencies. Our success in achieving fiscal prudence was confirmed by Moody’s Investors Service in their report released on 23 April 2018 which affirmed the Cayman Islands’ Aa3 Government bond rating along

Economic OVERVIEW

with a stable outlook. This credit rating applies to all bonds issued by the government in both foreign and local currencies. The Aa3 sovereign rating remains in the top tier of Moody’s ratings matrix, and is only three notches below the highest rating of Aaa. The central government’s overall surplus in 2017 reached $140.6 million (4.5% of GDP) compared with $99.6 million (3.4% of GDP) in 2016. The larger surplus resulted from higher revenue (24.2% of GDP) relative to total expenditure (20.8% of GDP). In

the first quarter of 2018, the fiscal surplus further increased to $186.8 million as an increase in revenue outweighed a rise in expenditure. The central governmentâ&#x20AC;&#x2122;s total outstanding debt continued to decline, settling at $449.1 million (14.5% of GDP) at the end of 2017, lower by $34.8 million compared to the level at end 2016. A further reduction to $447.2 million was achieved by the end of the first quarter of 2018.

1. The direct contribution of 40.5 percent of GDP by the financial and insurance services sector does not include the direct contributions by legal and accounting services. Inclusive of the latter, the direct contribution is approximately 55%..

Hon. Minister Roy McTaggart Hon. Minister Roy McTaggart, Minister of Finance and Economic Development, is a Certified Public Accountant, whose career spanned some thirty years in public accounting, retiring as Managing Partner of KPMG in the Cayman Islands and British Virgin Islands in 2012. Throughout his career, he has been active in many roles in the community, serving in several posts with the Cayman Islands Chamber of Commerce (including two years as President), Chairman of the Board of Cayman Airways and the Young Caymanian Leadership Foundation, member of the Board of the Cayman Islands Stock Exchange and a member of the Commission for Standards in Public Life. He enjoys mentoring Caymanian accounting students in need of positive role models. First elected to the Legislative Assembly in 2013, he served as Councilor to the Ministry of Health and Temporary Minister at times from 2013-2017. For the 20172021 term he is serving as Minister of Finance and Economic Development.

cayman islands economy: SNAPSHOT The Cayman Islands’ economy has continued to grow at a steady pace over the past five years.

Inflation

2.0

Imported Labour

GOODS & PRICES

The vast majority of the country’s locally consumed goods are imported and most of this comes from the US as the primary trading partner. As a result of this and the nature of the country’s monetary system, inflation rates in the Cayman Islands tend to track closely with that of the US. In 2017, the Cayman Islands experienced an increase in its inflation rate to 2% which is an increase over the drop in prices (-0.7%) experienced in 2016.

Unemployment Rate

4.7

LABOUR & EMPLOYMENT

The Cayman Islands economy is labour intensive. Due to its relatively small population and the impressive economic growth over the past 4 decades, the Cayman Islands relies heavily on imported labour to meet the skilled and unskilled human capital requirements for sustaining the economy. Imported labour comprises just over 50% of the entire labour force, this is likely to remain a key fea-

ture of the economy for the foreseeable future given the relatively small population. The average unemployment rate in the country has declined since 2013 reflecting a steady improvement in economic conditions. In 2017 the unemployment rate rose slightly to 4.7% over the 4.2% experienced in 2015 and 2016.

6.3

4.7

4.2

4.7

2013

2014

2015

2016

2017

Steady: Unemployment in the Cayman Islands* (2013-2017) 2.2

2013

2014

2015

2016

2017

-07. -2.3

Inflation of the Cayman Islands* (2013-2017)

TAXES & FISCAL STABILITY

2.0

1.3

Cayman Islands Economy: SNAPSHOT

There are no direct personal income, corporate or property taxes in the Cayman Islands. The government relies on a system of indirect taxation focused primarily in the following areas: • • •

Banks, trust, insurance, company and mutual funds fees Land or property transfer fees Work permits

• • • •

Travel and cruise ship taxes Tourist accommodations taxes Business licenses Customs and import duties

Estimated Real GDP growth of 2.9% in 2017 is only a slight decline compared to the 3.1% growth rate in 2016. Average growth rate since 2013 is an impressive 2.6%. The Government expects a growth rate of around 3% in 2018 due to anticipated growth in construction and tourism related services.

3.1

2.9

2.4

1.5

2014

2015

2016

MONEY MATTERS

2017

Real GDP growth in the Cayman Islands* (2013-2017)

63,415 POPULATION

The countryâ&#x20AC;&#x2122;s population is estimated at around 63,415 according to the last census. The country is very cosmopolitan with over 100 different nationalities represented in the Cayman Islands.*

Diversity: Estimated Cayman Islands population as at 2017*

The main economic sectors are financial services and tourism. Various economic impact studies puts the financial services sector at approximately 50 to 60% of GDP, while the tourism sector contributes between 25 to 30% of GDP. Other major sectors include construction and real estate. Like many of the smaller islands in the Caribbean, the Cayman Islands economy is a service based economy. The natural resources of the Cayman Islands have not enabled it to pursue traditional industrial development. Historically the economy was relatively small until four decades ago when the country began to pursue tourism and financial services as a path to economic development.

2.0

2013

KEY INDUSTRIES

The Cayman Islands uses the Cayman Islands dollar and the local currency is backed by US dollar denominated securities. This system is managed via a full currency board system and there is no equivalent of a central bank in the country.

NonCaymanian

43 %

Caymanian

FINANCIAL SERVICES

50-60% of GDP

*Source: Cayman Islands Economic and Statistics Office

Tax Transparency & Cooperation

Regulatory Compliance & Cooperation

AML/CFT (Beneficial Ownership)

Anti-Corruption

MM with

IMF

Financial Reporting Unit (FRU)

Companies Law Banks & Trust Companies Regulations Law The Trusts Law

Banking Inspectorate

Imp Agre

Audit Office (Independent of Executive & Legislature)

Advance Commitment, International Transparency & EOI Standards

CIMA granted operational independence

Mutual Legal Assistance Treaty with the US

Member, Global forum EOI Working

OECD Working Group: Produced Model TIEA

1960s 1970s 1980s 1990s

Insurance Law

Money Laundering Regulations, including Beneficial Ownership Data Collection

Cayman Islands Monetary Authority (CIMA) Cayman Islands Stock Exchange Proceeds of Criminal Conduct Law

2000

2001

2002

First tax information agreement with the US

Guidance Notes, Prevention & Detection of Money Laundering

Securities Investment Business Law

Terrorism Law Criminal Justice (international Cooperation) Law

2003

Basel II implementation Began Freedom of Information Law FRU becomes Financial Reporting Authority

2004

IMF Review Tax Information Authority Law EUSD Implementated IMF Assessment

Mutual Funds Law

For more than 50 years, the Cayman Islands has taken definitive actions to build and maintain a globally compliant financial services regime. This timeline demonstrates all the legislative and regulatory measures taken by the Cayman Islands in its continuous cooperative efforts to adhere to all agreed international standards. These actions allow the Cayman Islands to be self-supporting, and to provide economic value to other jurisdictions worldwide. 40

2005

CFATF Third-round Evaluation Completed

2007

2008

OECD Anti-Bribery Convention Anti-Corruption Law

Rest Glob Stee PRG

IMF

Gra Ope Serv

2009

First Ph of Bas comple

Glo For Phas Rep

Significant Enhancements in Financial Services

MMOU Signed with IOSCO IMF Assessment Mutual Administrative Assistance Convention in Force

Implemented International Agreed Tax Standards

l II ementation n

dom of mation Law

TF d-round uation pleted

2008

ibery ntion

ption Law

Restructured Global Global Forum, Steering Group & PRG Membership IMF Report Grand Court Opens Financial Services Division

2009

2010

First Phase of Basel II completed Global Forum Phase 1 Report

Global Forum Rating: Largely Compliant Global Forum Supplementary Report UK Bribery Act Extended to Cayman

2011

Auditor Oversight Authority

2012

CRS Early Adopter Multilateral Competent Authority Agreement Signed

MOUs with ESMA members FSB: Cayman Strongly Adheres to International Standards

2013

Vice-Chair, Global Forum’s Peer Review Group

2014

1st OT to support UK’s G8 Agenda on tax and transparency 1st OT to sign UK FATCA Mutual Administrative Assistance Convention Extended to Cayman 1st OT to Announce Model 1 IGAs for US, UK FATCA 31 Tax Agreements Global Forum Phase 2 Report

2015

Revamped Accountants Law 36 Tax Information Exchange Agreements

OECD Forum on Harmful Tax Practices applied to Cayman

2nd Bilateral AEOI, UK IGA

BEPS Country-by-Country Reporting commences

Bearer Shares Abolished

Cooperating with the EU on fair taxation

2016

2017

2018

1st Bilateral AEOI, US FATCA

Joined BEPS Inclusive Framework

CRS Regulations in Place

BEPS Country-by-Country Reporting by 2017

Cayman AEOI Portal Opens

112 EOI Partners

Amended Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing

Global Forum Rating: Largely Compliant First CRS Exchanges EU commitment on fair taxation Enhanced Beneficial Ownership Legislation Commenced Revamped Anti-Money Laundering Regulations Non-Profit Organisations Law Commenced

policy UPDATE

Changing Global Standards Hon. Tara Rivers Minister of Financial Services and Home Affairs Cayman Islands Government

The Cayman Islands Government aims to maintain its commercial and jurisdictional competitiveness, and its adherence to global financial services standards to further solidify our standing as a major international financial centre.

Cayman Finance and our financial services regulator, the Cayman Islands Monetary Authority, speak in unison about Cayman’s collective strength. 42

Policy UPDATE

Taking this jurisdictional position helps the Government, practitioners in the financial services industry, Cayman Finance and our financial services regulator, the Cayman Islands Monetary Authority, speak in unison about Cayman’s collective strength. While recognising the necessary tensions that exist between these various financial services stakeholders, we nonetheless promote a cohesive environment – an important feature for our clients that underpins Cayman’s competitive advantage. Another important feature of Cayman’s success as a jurisdiction is the willingness to adopt global standards. This willingness can be observed in multiple areas, including that of taxation. The work of the Ministry of Financial Services has allowed

the Cayman Islands to have a strong tax regime that balances tax neutrality, privacy and the need to share tax information with international authorities, in appropriate circumstances. The Ministry’s work also has been important in addressing the European Union’s (EU) concerns in relation to their list of non-cooperative tax jurisdictions. On 5 December 2017, the EU issued a list of 17 jurisdictions that it considered to be non-cooperative in tax matters with EU Member States. The Cayman Islands was not included on that list of non-cooperative jurisdictions. However, the EU noted that another 47 jurisdictions could enhance their regimes to prevent tax misuse in a variety of ways. Cayman was among 13 jurisdictions (commonly referred to as the “2.2 jurisdictions”) that the EU asked to make commitments to review its respective regimes in the area of fair taxation during 2018. The work done by the Cayman Islands to address the EU listing process has also formed the basis for our response to an aspect of the OECD’s Base Ero-

sion and Profit Shifting (BEPS) initiative, namely the countering of harmful tax practices outlined by the OECD Forum on Harmful Tax Practices (FHTP). In November 2018, the OECD extended the FHTP substantial activities requirement to “no or only nominal tax” jurisdictions, which includes the Cayman Islands. Throughout the entire process with the EU and then more recently with the OECD, the Ministry engaged with local financial services industry and commerce stakeholders to develop a jurisdictional approach to our legislative package. The result is a package that considers our long-held stance of cooperation, our economic resiliency, and our ability to appropriately adapt our legislative framework in order to continue to function and thrive as a well-regulated, global financial services jurisdiction. As a result, legislation was put forward in December 2018 that recognises the changing global standards, and Cayman’s commitment to adopting and adapting to these standards. Like all other jurisdictions that are assessed by these initiatives, the challenge is and has been the need to affirm (and gain acknowledgement of) the fundamental view that a country can maintain its tax sovereignty, while also reflecting its global responsibilities. As a member of the BEPS inclusive framework, the Cayman Islands, along with over 120 other jurisdic-

tions, is now within the scope of FHTP requirements and, as such, we will comply with the FHTP’s requests with regard to tax transparency and preferential tax regimes. Government views the FHTP requirements as the latest global standard to be met. Compliance with these international criteria will involve some changes to Cayman’s regulatory and legislative frameworks. As we have done previously, in complying with international measures such as the Common Reporting Standard and BEPS, including a key transparency aspect called Country-by-Country Reporting, Government has sought the valued input of our financial services industry members, our regulators and other stakeholders as part of its robust consultative process. Similarly, a collaborative approach was taken as part of Cayman’s preparations for 2017’s Caribbean Financial Action Task Force (CFATF) evaluation of its anti-money laundering and counter-financing of terrorism regime. Cayman Islands representatives recently attended the plenary meeting on this assessment, and steps have already been taken to begin to address the areas of concern identified. In addition to engaging with the EU and the OECD, the Government and the Ministry have been extremely busy in our engagements with other important international stakeholders throughout the course of the year.

Several trips were made to Washington, DC in the Spring and Summer of 2018 to explain the Cayman Islands financial services industry and the legislative framework governing our regulatory and tax transparency standards with high-ranking and influential US Senators, Members of Congress, senior Congressional staff, and other US lawmakers and regulators. As Minister for Financial Services, I also made several trips as part of Government delegations led by the Premier, the Hon. Alden McLaughlin, to address a number of jurisdictional matters such as the ongoing constitutional talks with the UK Government in London, current and potential business with the Asian markets at the UK GREAT Festival of Innovation in Hong Kong in March 2018 and the expansion of our maritime business with the European markets at the Monaco Yacht Show in September 2018. In addition to speaking at the Monaco Yacht Show, I was later invited to speak and present an award on behalf of the Cayman Islands at the Ft. Lauderdale International Boat Show in November 2018. While in Hong Kong earlier in the year I took the opportunity to meet with a number of service providers and clients of the Cayman Islands to discuss topics pertinent to the burgeoning Asian markets. One of the running themes throughout all of the engagements is the dynamic nature of international business and best practices. As commercial

opportunities and global regulatory standards continue to evolve, the Cayman Islands continues to solidify its commitment to these standards through the adoption and/or further revision (where necessary) of relevant financial services legislation. In particular, in November 2018 we modified our laws governing limited liability partnerships (LLPs), banks and trusts, wills, companies and non-profit organisations (NPOs); in addition, the Government’s formal position regarding FinTech was articulated. • An amendment to the LLP Law was passed in the Legislative Assembly to require LLPs incorporated in the Cayman Islands to establish and maintain beneficial ownership registers to allow a local competent authority to access beneficial ownership details when needed. This latest legislative amendment further enhances our already robust beneficial ownership regime. • An amendment to the Banks and Trust Companies Law (2018 Revision) empowers the Cayman Islands Monetary Authority (CIMA) to supervise Cayman banking groups on a consolidated basis. Specifically, there is now a legal obligation for parent entities of Cayman banking groups to adhere to capital requirements and other prudential measures set by CIMA or face sanctions for noncompliance. • With regard to wills, the Formal Validity of Wills (Persons Dying Abroad) Law, 2018 provides for the transfer of property upon death of persons who die while abroad. This legislation is in keeping with The Hague Convention and replaces the private internation-

Policy UPDATE

al rules that govern this area of succession, and provides greater certainty and clarity for industry practitioners in the estate planning sector. • Two amendments address charities, referred to as NPOs, operating in the Cayman Islands. An amendment to our Companies Law allows the Registrar General to process and approve applications under Section 80 of the Companies Law (2018 Revision), in place of Cabinet. The result will be a more efficient and less costly process, with a shorter turnaround time for applications, by eliminating the need for Cabinet approval. • An amendment to the NPO Law provides clarity on the organisations in scope of the law; provides the NPO Registrar with the power to periodically assess Cayman’s NPO sector in order to identify any potential jurisdictional vulnerabilities to terrorist financing activities; and clarifies what information, maintained by the NPO Registrar, is publicly available. • With regards to FinTech, the Ministry is proposing legislation to facilitate an adaptable, technology-neutral regulatory sandbox-type framework. The regulatory sandbox, while welcoming new and existing innovative and pioneering companies, would provide sufficient oversight and monitoring to ensure the activi-

ties taking place are compliant, fair and transparent. We are also open to, and actively exploring how, regulated digital ID systems could help revolutionise and streamline AML compliance locally and globally. Ultimately, the overall pursuit of international standards is not a reactive one for the sake of compliance. Rather, we have taken a measured approach over a significant period of time to ensure that the Cayman Islands is best positioned for the future. As part of that process, we have proactively assimilated global standards into our way of doing business. The overall result of the work undertaken throughout 2018 is an enhanced legislative framework that meets financial services standards while facilitating sound business. We believe the adoption of and adherence to global standards is vital to the Cayman Islands retaining its status as a leading international financial centre and as a premier jurisdiction for all types of legitimate business. Our commitment to doing so over the years has resulted in Cayman’s financial services industry growing from strength to strength, year after year. Even given the changing global dynamics, we see opportunity and potential for growth. As our history has taught us, the future of the Cayman Islands is bright!

Hon. Minister Tara Rivers The Honourable Tara Rivers, JP, MLA was given ministerial responsibilities for financial services and home affairs following her re-election to the Cayman Islands Legislative Assembly in May 2017. Prior to her first election Minister Rivers was a structured finance and corporate lawyer, having practiced law at a Magic Circle firm in the city of London (UK) as well as at a leading local law firm. Agencies under her remit are the Department of Financial Services Policy and Legislation; General Registry; and the Tax Information Authority. Minister Rivers also has responsibility for the jurisdiction’s financial services regulator, the Cayman Islands Monetary Authority (CIMA), as well as the Auditors Oversight Authority; the Cayman Islands Stock Exchange; and the Maritime Authority of the Cayman Islands. Minister Rivers is a qualified attorney eligible to practice law in multiple jurisdictions. She holds a Bachelor of Arts degree in psychology from Brandeis University in Boston, Massachusetts, and a law degree from Osgoode Hall Law School, and an MBA from the Schulich School of Business, both at York University in Toronto, Canada.

regulatory UPDATE

The Cayman Islands

A Leading Jurisdiction Cindy Scotland, Managing Director Cayman Islands Monetary Authority

Given its successful global presence and performance within the financial services world over the years, the Cayman Islands continues to be a leading jurisdiction in this regard. As the principal regulator for the local financial services industry, the Cayman Islands Monetary Authority (CIMA) is committed to developing and maintaining a regulatory structure which emphasises adherence to international standards through contemporary legislation, rules, procedures, guidance and other legal mechanisms in order to stay abreast with the ever evolving dynamic nature of the global financial industry.

Regulatory UPDATE

Industry update The industry remains highly competitive in several areas, as of 30 September 2018. Industry reports, in relation to investment funds, indicate that investor demands and expectations, in terms of performance and returns, are both on the increase. This is reflected in the overall numbers of funds registered with/licensed by the Authority where the total number of funds, as at 30 September 2018, was 10,889 compared to 10,624 at the end of the same period 2017. The growth in hedge fund assets, during the period since the last update of approximately 7.6% to US$6.1 trillion, is also indicative of a sector that remains strong, while the increase in the number of multi-fund structures, such as segregated portfolio companies, additionally conveys a drive towards diversification by managers of the risk and return

strategies across the fund structures in order to meet such demands and expectations.

licensed trust companies in recent years has remained steady.

The Authority has also seen an unprecedented growth in the related area of securities investment business. Total number of entities within this sector, supervised by the Authority as at 30 September 2018, was 40 licensees and 2,908 registrants.

There are 836 entities with licences issued under the Insurance Law (2010) as at 30 September 2018. These licences are broken down as follows: 726 insurance providers, 26 insurance brokers, 44 insurance agents, 26 insurance mangers and 14 portfolio insurance companies. The Cayman Islands continues to be a leading jurisdiction for healthcare captives, representing almost one-third of all captives, where medical malpractice liability and professional indemnity continue to be the primary line of business.

The Cayman Islands remains committed to maintaining, as well as enhancing as required, the appropriate regulatory framework to address both existing business and emerging service lines within this space to ensure the jurisdiction remains as the domicile of choice for fund registration and securities investment business activities. The Cayman Islands is a prime international location for the provision of trust and corporate services, with 147 trust companies, 116 company managers and 24 corporate service providers licensed to provide these services in and from the jurisdiction. The number of

The banking sector continues to contribute to the overall success of the financial services industry, with 148 licensed banks at the end of the third quarter of 2018. As at June 2018, total international banking assets and liabilities were reported as US$809.6 billion and US$765.8 billion, respectively. This is as a result of overall reductions in international banking assets and liabilities of 21% and 24%, respectively, corre-

sponding with the fall in the number of bank licences, primarily from the European and North American regions. During 2017, the Cayman Islands Bankers Association established the Automated Clearing House (Cayman) Limited to plan and implement the Cayman Islands Automated Clearing House (CIACH), an electronic payment and cheque imaging system to speed up the payments and clearing processes in the islands. The participating banks include: Butterfield Bank (Cayman) Limited, Cayman National Bank Ltd., CIBC FirstCaribbean International Bank (Cayman) Limited, Fidelity Bank (Cayman) Limited, RBC Royal Bank (Cayman) Limited and Scotiabank & Trust (Cayman) Limited. The CIACH is designed to clear and settle electronic transactions and provide a secure, cost-efficient exchange and settlement mechanism for domestic payments in KYD and USD currencies that adheres to international standards.

Conclusion CIMA will continue to promote strength and stability within the financial sector. Key partnerships with the Government, the regulated sectors and other stakeholders play a part in developing a regulatory infrastructure that promotes a stable and prosperous financial sector. Given its proven track record, the Authority is confident the Cayman Islands will continue to thrive as a leading financial services centre, and CIMA remains devoted to contributing to the ongoing success of this industry.

The regulatory framework As the Cayman Islands undergoes the mutual evaluation process in accordance with the Financial Action Task Force’s 40 Recommendations, there have been a number of revised changes to legislation and implementation of new enactments to aid the combatting of money laundering and terrorism financing.

New legislation During December 2017, the Anti-Money Laundering Regulations (AMLRs) were issued repealing and replacing the Money Laundering Regulations (2010). The regulations came into force along with revisions to the Proceeds of Crime Law and, the Terrorism Law. Subsequently, the Authority issued new guidance for financial services providers by significantly amending the “Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands”.

Regulatory UPDATE

Cindy Scotland Cindy is the Managing Director of the Cayman Islands Monetary Authority. She oversees the implementation of policies to ensure the sound management of the Cayman Islands’ currency and the effective supervision of various regulated entities operating in and from the Cayman Islands. She also has responsibility for the development and maintenance of strong working relationships between the Authority and other international regulatory bodies including the Group of International Financial Centres Supervisors, the International Organisation of Securities Commissions, the International Association of Insurance, and the Financial Stability Board Regional Consultative Group.

The Cayman Model The Cayman Model demonstrates how an international financial centre (IFC) can make the greatest contribution to the global economy by supporting efficient free trade, capital, investing, financing and services while also helping to fight global financial crime.

In 2018 and into 2019, the international business environment became very unsettled. The UK and EU engaged in difficult and uncertain negotiations around Brexit. Dramatic changes in trade policy disturbed the relationships between the US and China, as well as among three North American countries. Political changes in Latin America, Africa and the Middle East presented new challenges to stable growth. In that kind of uncertainty, investors look for increased stability and a strong platform from which to pursue emerging opportunities. Over the last year, global investors have demonstrated that they are increasingly engaged in a flight to quality, looking for neutral hubs like international financial centres to more securely access the global investment marketplace. These investors are choosing to relocate their capital

based on sophisticated assessments of which jurisdictions offer the best combination of four critical elements: • a global network and diverse industry; • a neutral legal and tax environment; • high regulatory standards and respect for privacy; • world class professionals and credibility. Very few international financial centres meet those qualifications – and none meet them as well as the Cayman Islands. In fact, the exceptional combination of jurisdictional market leadership and the highest levels of multilateral cooperation define what is The Cayman Model. The jurisdictional market leadership at the heart of The Cayman Model centres on Cayman’s role as a premier global financial hub, efficiently connecting law abiding users and providers of investment capital and financing around the world.

Approximately two-thirds of the world’s international hedge funds are domiciled in the Cayman Islands. Recent reporting has estimated the assets under management in these structures alone to be at least US$2.3 trillion. The Cayman Islands is also home to a growing private equity sector as well, with more than 20,000 investment fund vehicles in the jurisdiction. Last year, the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes estimated that in just one recent year, Cayman attracted at least US$4.1 trillion in banking assets, direct investment and portfolio investment. These substantial figures represent Cayman’s unparalleled ability to enable parties from around the world who are domiciled in countries with differing laws, regulations, tax rules and customs to do business together in a neutral jurisdiction. Global investment capital is pooled in Cayman and then is invested into opportunities around the world, putting Cayman at the centre of the global financial system. Cayman’s role as a premier global financial hub makes it an excellent extender of value for developed countries. The global investment capital pooled in investment vehicles domiciled in Cayman allow it to provide inward investing, financing, and liquidity into economies during times of need, uncertainty or opportunity. Diversification is key to the success of The Cayman Model. The Cayman Islands is not only the leading jurisdiction for international hedge funds, but the second largest domicile in the

world for captives, the number one domicile for healthcare captives and group captives, and a leading jurisdiction for banking, trusts, capital markets and governance services. As a leading jurisdiction for captives and healthcare captives, Cayman is also a leader in the Insurance Linked Securities space, meshing expertise in securitisation, insurance and capital markets to create the most innovative structures, addressing complex risk scenarios.

The Cayman Islands is also developing into a premier choice for domiciling nontraditional reinsurance companies. Cayman’s insurance service providers are known for their responsive, inclusive and collaborative approach to developing and supporting new client driven products. Cayman can attract and support such a broad range of financial services because of its neutral legal and tax regimes. The Cayman Islands is an efficient neutral platform, enabling parties from around the world who are domiciled in countries that may have differing laws, regulations, tax rules and customs to benefit from doing business with each other. The Cayman Model’s foundation is a strong legal framework and a robust legal system underpinning its laws. The Cayman Islands maintains the use of UK common law and its judicial system’s ultimate appellate court

is the UK Privy Council. After decades as a leading international financial centre, Cayman’s legal and judicial practitioners have a level of expertise on complex financial services transactions, laws and regulations that are simply unsurpassed around the world. The focus on neutrality within The Cayman Model extends to tax policy as well. Like all other jurisdictions, the Cayman Islands has the right to establish a tax regime that collects the right taxes from the right people at the right time within its jurisdiction. Unlike other jurisdictions, the Cayman Islands has chosen to use fees and other taxes instead of an across-the-board corporate income tax. This tax-neutral policy means investors are still subject to their home jurisdiction’s tax requirements, but the Cayman Islands does not add an additional layer of taxation on to the proceeds from their investments. Cayman’s tax regime meets or exceeds the revenue targets used by other leading countries around the world, generating government taxation revenue equal to approximately 22% of our GDP (2016). It is a taxation revenue raising system that works well for the jurisdiction and very adequately funds government operations while keeping the debt-to-GDP ratio modest. The Cayman Islands meets none of the descriptions used by entities like the OECD or Transparency International to define a tax haven. The Cayman Islands purposefully lacks any laws or agreements to support the shifting of tax base by foreign entities to avoid corporate taxes in their home jurisdictions. This responsible

approach to taxation is central to The Cayman Model and a distinguishing feature of the jurisdiction among IFCs.

tion, the same rating the OECD gave to other G20 countries like the UK, Germany, Canada and Australia.

The Cayman Model pairs the jurisdiction’s leadership in the marketplace with the highest levels of multilateral cooperation on legal and regulatory standards. Cayman and its financial services industry have been recognised for decades as a strong international partner in combatting corruption, money-laundering, terrorism financing and tax evasion.

A foundational element of Cayman’s commitment to transparency is its verified ownership regime. The Cayman Islands is a leader in verified ownership standards, having had a world class verified ownership regime in place for more than 15 years.

The Cayman Islands has adopted more of the nearly 20 global financial standards than any other jurisdiction, including the European Union Savings Directive, US FATCA and the OECD Common Reporting Standard. Cayman also has signed onto the country-by-country reporting principles under BEPS and considered legislation in 2018 to keep the jurisdiction consistent with the emerging global standard on substance. Cayman has adopted automatic exchange of tax information to authorities in other countries. Through these agreements, the Cayman Islands proactively shares tax information with other governments, which assists them in the collection of their own taxes. As the Cayman Islands meets or exceeds the full range of globally-accepted standards for transparency and cross-border cooperation with law enforcement and tax authorities, as noted above, it is a transparent jurisdiction. In fact, Cayman was rated by the OECD’s Global Forum as “largely compliant” with the international standard for transparency and exchange of informa-

is home to the world’s top professionals in areas such as corporate and director services, legal services, public accounting, banking, wealth and asset management, insurance, reinsurance and captive markets. They are vital to the success of the industry and the culture of compliance.

What distinguishes the Cayman Islands regime apart from most others around the world is that the information in our system is collected and verified by licensed Cayman Islands corporate service providers under existing anti-money laundering and know-your-customer regulations.

The growth in Cayman’s financial services industry is a reflection of the quality of the jurisdiction’s professionals. In addition to attracting investment, the jurisdiction has also attracted the praise of its peers, ranking as the Top Specialised Financial Centre by The Banker for 9 years in a row. Cayman has also been voted Best Hedge Fund Services Jurisdiction and top Offshore Captive Domicile.

Many beneficial ownership registries – including central public registers – rely on self-reported information, which can be less complete and accurate. The information Cayman requires to be collected is available to the authorities making proper requests through existing information sharing channels between the Cayman Islands Government and other countries.

To attract and retain the highest quality professionals, Cayman invests in them. The Cayman Islands provides outstanding quality of life for professionals and their families through world-class infrastructure, health care, education and culture. These investments pay off with a knowledgeable and committed workforce that shares the vision of The Cayman Model.

Adopting and implementing these standards is a key part of how Cayman contributes to global efforts to combat financial crimes while providing economic value to other jurisdictions worldwide.

The Cayman Model shows how an emphasis on individual jurisdictional leadership and multilateral cooperation can make the greatest contribution both to the global economy and to international efforts to combat financial crime. The Cayman Islands financial services industry is committed to maintaining and growing the strengths of our jurisdiction at the core of The Cayman Model to continue to make it the world’s leading international financial centre.

The cornerstone of the Cayman Islands financial services industry is the professionals working within it. Under The Cayman Model, extraordinary value is placed on business culture and professionals maintaining it. Cayman

“G20 Plus”

GLOBAL FINANCIAL AGREEMENTS Both the Cayman Islands and the Cayman Islands financial services industry have been recognised for decades as strong partners with other leading jurisdictions and industries in promoting transparency to combat corruption, money-laundering, terror-

ism financing and tax evasion. These leading jurisdictions – G20 countries and a few select International Financial Centres such as the Cayman Islands, Bermuda, Jersey and Guernsey – make up the G20 Plus.

The Cayman Islands has earned its place among G20 Plus jurisdictions because it is a premier global financial hub, connecting law-abiding users and providers of investment capital and financing around the world - benefitting both developed and developing countries. The Cayman Islands has also built a reputation for transparency by meeting or exceeding globally-accepted standards for transparency and cross border cooperation with law enforcement.

As the chart below shows, the Cayman Islands has adopted at least as many global standards for transparency and cross-border cooperation as any G20 country – and more, when agreements specific to International Financial Centres (IFCs) and UK Overseas Territories are included. The OECD’s latest assessment rated the Cayman Islands as “largely compliant” with the international standard for transparency and exchange of information – the same rating given to

other G20 Plus countries such as the UK, Germany, Canada and Australia. The Cayman Islands has been delivering on its prior commitments to cooperate with the EU as well as the OECD as one of the 120-member jurisdictions in the BEPS Inclusive Framework. That has included advancing legislation to meet an evolving global business framework in compliance with OECD global standards.

Staci Scott

AN ACCOUNTANT WITH A YEARNING FOR LIFELONG LEARNING

The Cayman Islands financial services industry is known for creating career pathways for bright young Caymanians into the industry and in turn, produces some of best, brightest and driven young professionals capable of leading on the world stage. Here we speak with Staci Scott, recipient of the Young Caymanian Leadership Award for 2018. A career in financial services was not on Staci Scott’s mind when she began her tertiary studies at Elon University in North Carolina, as literature was her first calling. Yet, she developed a love of accounting and went on to achieve not only a BS degree in Accounting, minoring in philosophy, she also achieved her CPA designation in a record-breaking month. Staci has gone on to carve herself a successful career in accounting at KPMG and is an audit manager within their asset management practice. She was also recently named as the recipient for the prestigious Young Caymanian Leadership Award for 2018, beating off stiff competition from four excellent fellow nominees. 54

Staci is from Cayman Brac, sister island to Grand Cayman, with a tiny population of just over 2,500 (when combined with Little Cayman), and it is her family and the broader community in which she grew up to whom she attributes much of her success today. “All of my family helped, but my mom was the biggest force in my life as far as education goes,” she said. “There is very little to do on Cayman Brac (no cinema, no mini golf!), so my sisters and I were encouraged to read. We would go to the US and come back with a suitcase full of books. I still rarely watch the TV today.”

”

“I fought against accounting for a while, but I found I was quite good at it and actually enjoyed it.”

”

I think we have the opportunity as mentors to really foster that love of learning; it’s almost a dual purpose – as a mentor you are that trusted adult and will hopefully journey with them through life, but then you can start planting that seed of lifelong learning and have them thinking about how they can make what they are passionate about into a career.

Her passion for reading and the mentorship she received from her teachers and other adult figures in her life growing up instilled a lifelong passion for learning, she said. “Growing up, we didn’t have any formal mentorship programmes or organisations, but people just naturally took on the role,” she said. “Cayman Brac is probably one of the best examples of a village taking a collective responsibility for bringing up a child. You are essentially a child of the island: people know you, they know your parents and they feel a responsibility to raise you. I had teachers, especially my debate coach and my math and English teachers, who invested way more time in me than their job necessitated.” Staci moved to the US to undertake her tertiary education, drawn to literature as her first instinct but then developing a love for accounting that grew. “I fought against accounting for a while, but I found I was quite good at it and actually enjoyed it,” she said. “I liked the logic of it, I liked the fact that you could learn the building blocks to understanding the subject and I liked

the methodical way in which you have to approach problem-solving.” After graduating from Elon in May 2013, Staci, along with her sister Suzanne (she is one of triplets – sister Kristi is a teacher on Cayman Brac), decided to launch straight into their CPA exams, with both young ladies passing all four sections within a month (the exams can usually take up to 18 months). Having secured a scholarship with KPMG in Cayman, Staci moved home to undertake her career as an accountant. Intelligent and hard-working, Staci said she embraced the long hours and the cut and thrust of a busy global firm, relishing the deadlines and the energy involved to complete the tasks at hand.

Pivotal moment Ambitious and creative, it was not long before Staci had won a community competition set within the firm involving the establishment of a pen pal system that saw students from Cayman corresponding with students in South Africa, organised through the KPMG umbrella. Her reward for her creativity was a trip to Uganda for a two-week placement working with

young people to improve the lives of children in that country. It was while she was in Africa that she got a call from her firm, asking her if she would work on secondment in New York. Hesitant at first, Staci agreed to six months in the Big Apple. “The most important lesson that I learned about myself from working in New York City was that I actually was good enough and able to operate on a par with some of the world’s best in a huge city known for its financial services industry – including graduates of ivy-league universities or with advantages I never had growing up. It’s easy to feel like a big fish in a small pond in Cayman and easy to doubt whether you are good enough to compete on a global scale, but I left there feeling I had proven myself worthy – to others and to myself. That gave me so much more confidence returning to Cayman,” Staci said. Staci felt this was an important message that should be shared with young Caymanians. “We think we are limited here. We sometimes think that we are not able to compete on a global scale – that we are good, but only in Cayman – and that’s not the case. You are just as good as anyone anywhere,” she said.

Giving back Her stint in New York was a turning point for the young Caymanian, and she was eager to “pay it forward” and take a more active role as a mentor to students or young people in Cayman. Appreciating the impact her own “village” and mentors made in her

growth and development, she devoted her spare time to helping youngsters foster the passion for lifelong learning she had found. For some years Staci was a part of the Literacy is for Everyone (LIFE) paired reading programme and became a ‘Big Sister’ in the Big Brother Big Sister (BBBS) programme to a young lady who subsequently moved to the UK.

“I came back to Cayman with a new affirmation: ‘I am capable, I am just as good’. I really wanted to share that message.” The BBBS programme became an extremely important focus for Staci, and saw her meet up with her young ‘sister’ once a week, firstly at school and then for longer periods outside of school, once the young lady went to high school. “When we first met, she was quite shy around me, but once she became relaxed and comfortable, I found her to be so curious and full of questions about anything and everything,” she said. “Even though she has moved away, I still check in weekly with her to see how she is doing.” The BBBS programme makes a huge difference in young people’s lives and Staci said it has a waiting list of youngsters who are awaiting the mentorship of a big brother or sister.

“At BBBS, we especially need men to step up and become ‘big brothers’ to young boys in the community,” she said. “Overall, my experience with mentorship organisations here in Cayman has been that boys are keen to have a male influence or mentor and there isn’t always access to that. It’s just as important that boys have that opportunity – there is a serious need for male mentorship.” When asked how she would make a difference to the community if she was the YCLA recipient, Staci said she would wish to combine her passion for lifelong learning with mentoring. Having received the award, she is currently embarking on a plan to do just that. “I think we have the opportunity as mentors to really foster that love of learning; it’s almost a dual purpose – as a mentor you are that trusted adult and will hopefully journey with them through life, but then you can start planting that seed of lifelong learning and have them thinking about how they can make what they are passionate about into a career,” she said. Staci’s fellow YCLA nominees – Kacey Mobley, Kimberley Conolly, Samuel Young and Wilbur Welcome – represent a cross-section of the community as far as their careers were concerned and Staci said she also hopes to work with them to pool resources and reach further into the community to help young adults fulfil their career objectives as well.

personal PERSPECTIVE

The importance of Asia to the Cayman Islands Financial Services Industry Anthony Webster, Maples and Calder

My first encounter with China was in 1991, en route to study Japanese at universities in Hiroshima and Tokyo. It was September and President Yeltsin had just replaced Mr Gorbachev - the world was changing and communism had lost the battle to capitalism.

I wanted to see what was going on in the world and so decided to travel overland to Japan from London by train and sea. I made stopovers in various cities, including Moscow and Beijing. Whereas Moscow was lethargic, miserable and directionless, Beijing was humming with energy, purpose and activity. I was confused to see the entrepreneurial, industrious side to the Chinese evident everywhere, despite growing up having been taught that China was communist and that communism killed innovation and hard work. I was amazed - China’s potential was clear wherever I looked.

In 1991 my contemporaries in London were taking up roles as trainee solicitors in the City law firms and told me I was wasting my time in Asia (I won’t give you their names, as they went on to manage large English law firms!). I told my friends I was investing in my own future and taking a wider and longer-term view of my career. If truth be told, I wanted to experience more of the world before settling down to the challenge of a career in law. Learning Japanese has opened many doors for me. My modest Japanese language ability was the reason the partners of Maples and

Calder asked me to come to Hong Kong in 2001 to help build the firm’s business in Asia. They didn’t have to ask twice. My two years in Japan had shown me that Asia would provide amazing career opportunities. Seventeen years later, many law firms practising Cayman Islands law now have a presence in Asia. For some, Asia is their fastest-growing market. Maples itself has grown its Hong Kong office from just six lawyers in 2001 to 46 today. Our clients ask us each and every day for Chinese-speaking lawyers who can advise on Cayman Islands law.

time - when you are young. Learn skills that make you attractive to Cayman’s business community. The Cayman Islands is strengthening its connections with China. Don’t be intimidated by the apparent difficulties of the language or culture. Attempting something difficult sets you apart and is good preparation for life. China is full of promise and opportunity for Cayman.

There aren’t enough of them - the growth in demand for legal services in China has fuelled explosive growth in the size of Chinese law firms, all of whom in turn are looking for support from Cayman. Asian markets are already huge contributors to Cayman’s financial services industry. That contribution in my opinion will continue to grow in leaps and bounds for years to come - provided that Cayman is willing to service Asia in ways that are efficient and convenient for Asian business culture. Cayman is used by many sectors of the Chinese economy - from asset managers, banks, securities firms and aircraft lessors, to private banks, corporates and corporate financiers. If any young Caymanians are reading this, I would encourage you to invest in your future by coming to China to learn the language, this country’s history, some law and its business culture. Do this at a time in your life when you can afford the

Anthony Webster Anthony is a Partner in Maples and Calder’s Hong Kong office, where he is the head of the firm’s private equity practice in Asia. He has acted for a wide variety of sponsors across the region, having advised on the Cayman and BVI aspects of over 300 funds (including many of the best-known private and state-sponsored Chinese promoters of offshore funds). Anthony also has extensive experience of downstream corporate and finance transactions backed by private equity managers. Anthony joined Maples and Calder in the Cayman Islands in 1998 and moved to the Hong Kong office in 2001. Anthony has been recommended as a leading funds lawyer in Who’s Who Legal, The Legal 500, Chambers Global and IFLR1000.

THE FUTURE

Cayman Vehicles IN ASIAN STRUCTURES

Kate Hodson & David Nelson, Ogier

The Cayman Islands is one of the most utilised international finance centres in the Asian finance industry. The largest and most populous continent, Asia covers a diverse cultural landscape, with highly differing economies, laws and regulations and it is against this backdrop that the use of Cayman structures has been established as a legitimate and important channel for capital inflows and outflows between Asian countries and around the globe.

In particular, they have been highly utilised across Asia in capital markets, structured finance, mergers and acquisitions, and in the funds industry, most notably in Hong Kong, Singapore, China and Japan. Cayman Islands entities, when incorporated into a structure, can assist businesses, compete for and service an international client base allowing international stakeholders to cooperate without any one stakeholder taking the “home field” advantage. There are also a number of advantages in the Cayman Islands’ legislative framework that have helped secure its prominence. In particular, the Cay-

man Islands has historically been an attractive jurisdiction for Asia-focused funds, it has been one of the most popular domiciles for the listing vehicle for companies listing on the Hong Kong Stock Exchange (HKSE) and, in Japan, the Cayman Islands unit trust has historically been the vehicle of choice for non-domestic hedge funds. The use of Cayman Islands entities in these industries now has a long track record in the region and this familiarity amongst counterparties has contributed to its popularity.

IPOs Cayman Islands companies were first permitted to list on the HKSE in the mid-1990s. At that time, the list of approved jurisdictions (other than Hong Kong) was limited, including only the People’s Republic of China, Bermuda, the Cayman Islands and the Cook Islands. The list has now expanded to include the British Virgin Islands, the Isle of Man, Jersey and Guernsey, but the Cayman Islands remains the clear favourite. At the end of 2017 Cayman Islands companies accounted for 47% of all listed companies on the HKSE’s Main Board and 36% of total market capitalisation. The number of Cayman Islands companies listed has grown each year for over a decade. For the HKSE’s GEM (which services small and mid-sized issuers), Cayman Islands companies

account for 76% of all listed companies and 73% of market capitalisation. The number of companies has grown for seven years, following a period of declines around the financial crisis. Given this dominance on one of the ten largest exchanges in the world, Asia founders typically look to establish a Cayman Islands holding company with a view to listing the company in the future. This has been prevalent amongst Chinese, Taiwanese and Hong Kong entrepreneurs.

Structured finance In the finance space, we have seen an increase in enquiries from Chinese asset managers evaluating the possibility of securitising their loan portfolios using Cayman Islands incorporated “orphan” special purpose vehicle (SPV) structures. Global distressed debt fund specialists are actively purchasing non-performing loan (NPL) portfolios in China, with the scale of NPLs on commercial balance sheets in China being well publicised and commentators predicting that the securitisation of these acquired NPL portfolios is likely to grow. The transaction involves the SPV acquiring underlying assets from the asset manager or fund (the Originator), using the proceeds of the issue of notes (or other securities) made by the SPV to investors. The SPV then uses the revenue stream generated by the underlying assets to fund the coupon and principal repayments due to its investors on the notes. In such a transaction, the SPV will most usually be established as a Cayman Is-

lands exempted company limited by shares. The beneficial interest in the shares in the SPV is held via a Cayman Islands charitable trust or a STAR (ie. a purpose) trust. As a result, the SPV will not be part of the Originator’s corporate group and so the SPV and its assets will be “off-balance sheet”.

world’s largest pension fund, Japan’s Government Pension Investment Fund, of its intention to allocate to alternative investments mainly outside of Japan, has been a catalyst for more pension funds and Japanese institutional investors to follow suit and allocate to alternative investments.

Looking at the Chinese funds market, there are now dozens of Chinese funds that manage $1 billion or more; many of which have set up operations in Hong Kong serving as a primary offshore launch pad for mainland managers seeking to access the international markets.

This was further stimulated by a period of negative interest rates. As a result, a market that traditionally invested conservatively in Japanese government bonds or other conservative investments is increasingly placing some of that domestic wealth offshore and (whether investing offshore or onshore) partnering with offshore managers to seek more diversified investments.

Funds market While there is arguably plenty of capital to be raised in China, many of these managers are interested in international recognition and are expanding their portfolio to include offshore funds, predominantly structured using Cayman Islands vehicles, as they seek investment from US investors and other investors across Asia and parts of Europe. Meanwhile, China’s neighbour Japan has also witnessed a drive for the “internationalisation” of its funds markets, which has directly benefited the Cayman Islands funds industry. An announcement in early 2017 by the

The Cayman Islands unit trust has always been, and remains, the most popular structure for these types of investors, given the similarity to the Japanese domestic investment trust and the associated historical tax benefits (despite these now having ceased to apply). In recent years, we have seen collaborations between some of the largest Japanese domestic investment managers on the one hand and some of the most highly regarded US and European investment managers on the other hand, managing Japanese capital in both the private equity and hedge fund space. In the last few years we have seen global regulatory reforms, new structuring options and shifts in market trends that have changed the landscape for the alternative investment fund industry, creating a “domicile dilemma” for managers and, as a result, the Cayman Islands has seen competition from other offshore and mid-shore jurisdictions.

Where the fund will mainly raise capital in Europe, Luxembourg or Ireland will likely be a preferred choice to take advantage of the European passport but otherwise the Cayman Islands continues to dominate the Asian arena in the non-retail space. The true benefit of the Cayman Islands regulatory regime lies in its design to accommodate funds marketed to sophisticated and institutional investors.

Benefits of the Cayman Islands There are a number of key attributes of Cayman Islands vehicles which contribute to the continued popularity of the Cayman Islands across all of these sectors including: • the speed at which a Cayman Islands entity can be incorporated (it can be completed as quickly as within 24 hours so that transactions can be brought to market fast); • multiple structures available including: exempted limited company, unit trust, exempted limited partnership, segregated portfolio company and limited liability company; • the fiscal neutrality of the Cayman Islands is an important element for the cross-border nature of transactions, where investors may be spread across a number of jurisdictions. Tax-neutrality in the Cayman Islands does not affect the obligations of those stakeholders to pay tax in their home jurisdictions. Indeed, the Cayman Islands has repeatedly condemned tax evasion and was an early adopter of both FATCA and CRS, thereby taking

part in a global movement towards increased transparency in the financial services industry; • robust AML requirements pursuant to its AML regime. The thrust of the recent changes to the Cayman Islands AML Regulations was to close gaps that remained between Cayman’s anti-money laundering regime and the Financial Action Task Force 2012 recommendations; • robust common law legal system based on English law and with ultimate recourse to the Privy Counsel of the United Kingdom; and • a developed network of sophisticated professional advisors in the Asian region advising on Cayman Islands law.

Other benefits applicable to specific sectors include: •• the speed with which a Cayman Islands fund can launch in accordance with the Mutual Funds Law, the fact that a Cayman Islands fund does not have any restrictions on the location of its investment manager or other service providers (save in the case of the auditor for a CIMA registered fund). Unlike in some Asian “mid-shore” jurisdictions, the Mutual Funds Law places no restriction on investment scope and no requirement for local directors; • Cayman Islands legislators have developed the legal framework in the Cayman

Islands to codify key concepts found in secured noted transactions, such as the need for the SPV to be “bankruptcy remote”. For example section 95(2) of the Companies Law (Revised) of the Cayman Islands contains an express statutory recognition of the contractual agreement between the parties to the transaction not to petition for the winding up of the SPV while the notes remain outstanding; • no government or regulatory approvals are required in the Cayman Islands for the incorporation of a Cayman Islands company to be used as a listing vehicle (on an exchange other than the Cayman Islands Stock Exchange) or of an SPV, a closed ended fund or an exempt open ended fund, in each case, as long as it is doing business internationally; and • the main rating agencies all recognise the Cayman Islands as a well-established jurisdiction often used by participants in financial markets. The Cayman Islands’ strong track record in the region together with the multitude of advantages set out above should mean that market participants in Asia will continue to look to the Cayman Islands as a jurisdiction of choice for structures across a wide range of sectors. The commitment in the Cayman Islands to keeping pace with global regulatory standards, ensures the jurisdiction is well placed to adhere to today’s legal and global regulatory demands and participate in the continued growth we see in the Asian economy.

Kate Hodson Kate is a Partner in Ogier’s Hong Kong team. She advises a large number of sponsors and fund managers as well as their onshore counsel on the establishment and structuring of private equity funds, hedge funds and other closed ended and opened ended fund structures, with particular expertise in respect of partnership and unit trust structures. She also advises LPs, managers, trustees, family offices, HNWIs, administrators and other service providers on fund related issues and other corporate matters, including downstream investment transactions.

David Nelson David is a Partner in Ogier’s finance practice in Asia, based in Hong Kong. He has extensive experience advising on the Cayman law aspects of a broad range of debt financing transactions, including leveraged and acquisition finance, fund finance, margin lending, structured finance, real estate finance and secured and unsecured general corporate lending.

The Cayman Islands:

A strong partner of the UK through Brexit and beyond The Cayman Islands is a premier global financial hub that efficiently connects law abiding users and providers of investment capital and financing around the world and has a long standing relationship with the United Kingdom. The United Kingdom Government has indicated that global trade will be the cornerstone of the UK’s economic policy post-Brexit. The Cayman Islands is the world’s most popular global financial hub for international investment, providing a proven, trusted, stable, tax-neutral, and well regulated environment designed to support global trade. The Cayman Islands is a ‘global extender of value’ for the United Kingdom, its businesses, and its citizens to be competitive through global trade, investing and financing activities, providing the ultimate platform that is dynamic enough to support the UK currently and as it enters a new era outside of the European Union. The Cayman Islands, through its pivotal role in international investing and financing, supported by its robust and well-regulated financial services industry, can help the UK as it prepares for the challenges of Brexit and beyond by providing unparalleled access to: Foreign Direct Investment or “FDI” (essential to save or grow

UK businesses and jobs); inward infrastructure investing and financing; liquidity for the UK economy; UK job growth; increased UK tax base; global diversified investments for UK pensioners; and the free flow of global trade, capital, investing, financing, and services. In 2017, the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes estimated that in just one recent year, Cayman attracted at least US$4.1 trillion in

banking assets, direct investment and portfolio investment. Because the Cayman Islands is home to approximately 70% of global hedge, private equity, and venture capital funds, it is well positioned just like after the 2008 global credit crisis, to provide inward investing, financing, and liquidity into economies during times of need or uncertainty, as might be expected with Brexit. The Cayman Islands investment fund

provides the vehicle to facilitate trade to, from and through the United Kingdom bringing employment, expertise and tax receipts to the UK. It is the global collective investment vehicle, preferred by investors in North America, the Middle East, China, Japan and many other countries. It is used by international investors in those regions to aggregate overseas investment into countries around the world, including the United Kingdom; to facilitate co-investment by UK investors with others from around the globe; and to enable asset managers in the UK to provide services to international investors. For example, Cayman-based funds are used to facilitate infrastructure developments such as hospitals, schools, roads, power plants, etc. which help increase the quality of life in that country. Additionally, failing businesses are purchased, loans are provided to companies in difficulty, employees are re-employed and new jobs are created, increasing the tax base in that country. Among those investing in Cayman funds are UK pensions, which then have access to global diversified investments, potentially reducing risks associated with having these invested in one geographic area where disasters and other factors could have a negative impact on the investments. In turn, these globally diversified investments contribute higher returns to UK pensioners. Additionally, many service providers to Cayman Islands funds are based in the UK and, in particular, London, which is a global centre of excellence for the alternative investment management industry. The income of such service providers, including investment managers, is dependent upon the fees generated from man-

aging global pools of capital which are assembled in the Cayman Islands. This revenue creates additional jobs and taxable revenue in the UK and helps preserve Londonâ&#x20AC;&#x2122;s position as a leading financial centre by giving London based managers the ability to manage global capital that might not otherwise be invested in the UK. The Alternative Investment Managers Association, headquartered in the UK, has noted that the money invested in offshore funds like those in the Cayman Islands is not kept in an offshore bank but invested in financial markets around the world. It added that this activity helps to provide additional sources of financing to businesses and infrastructure projects in places like the UK, creating significant jobs and generating tax revenues for the government there.

While Cayman adds no additional tax to financial services transactions in its jurisdiction, investors (individuals and businesses) are still subject to any taxes owed at home. This is ensured by Cayman meeting globally-accepted standards for transparency and cross border cooperation with tax authorities and law enforcement. The importance of Caymanâ&#x20AC;&#x2122;s tax neutral status can be illustrated by considering what would happen were Cayman to introduce direct corporate tax on profits, eg. hedge funds. This would reduce returns to the UK inves-

tors in those funds and, consequently, reduce the taxes that those investors would in turn be liable to pay at home. Accordingly, Caymanâ&#x20AC;&#x2122;s efficient tax neutral platform provides the optimum outcome for investors, investees, and home tax jurisdictions. In summary, with the UK Overseas Territory of the Cayman Islands being a premier global hub for investment capital and financing, the United Kingdom stands to benefit on three fronts. Firstly, the UK, its businesses, and its people having access to participate in globally diversified investment and financing opportunities resulting in benefits such as greater returns for UK pensioners on pension fund investments. Secondly, with the substantial investible assets pooled in Cayman funds from around the world, Cayman entities are uniquely positioned to provide substantial foreign direct investment, infrastructure financing, and liquidity which can be used to save or grow UK businesses, jobs and tax base. Lastly, as the UK will look to opportunities outside of the EU to secure its future, the Cayman Islands is ready to work hand in hand with the City of London and other UK cities to connect the United Kingdom to the efficient flow of global trade, capital, investing, financing, and services around the world.

a glimpse into the future for cayman finance Cayman Finance Chairman CONOR O’DEA has spent more than three decades working within Cayman’s financial services industry and at the same time advocating for the industry both locally and on a global stage. As Chair of Cayman Finance, his vision for the organisation moving forward looks to elevate its reach and enhance its effectiveness to ensure it can properly fulfil its role as the lead promoter and protector of the most important pillar of Cayman’s economy.

In the 1980s we never worried about what an NGO thought of Cayman, or what the EU thought or even the US, although we kept a watching brief.

Background A desire for a change of scenery and a new career challenge brought Conor O’Dea from Dublin to the Cayman Islands in 1985 to work for KPMG as a Chartered Accountant. Four years later he moved to Butterfield Bank, assisting that entity with its then merger with Washington Bank in his capacity as CFO. Moving up the ranks, Conor became Managing Director in 1997, succeeding Nick Duggan in his role. Taking on further responsibilities for the Butterfield group during 2007 to 2010, Conor eventually oversaw the entire group’s banking division in 2015, before retiring in April 2016. He still remains Chair of Butterfield Bank (Cayman) Ltd. Conor’s role within the wider financial

services sector has been highly active throughout his career, having served as President of the Chamber of Commerce from 2001 to 2002, President of the Cayman Islands Bankers Association from 2006 to 2007, Chair of the University College of the Cayman Islands and actively participating on a variety of other government/private sector committees. In addition to chairing both Butterfield and Cayman Finance, he is currently a director of the board of Digicel (Cayman) Ltd, a director of Island Heritage Insurance Co and he has recently taken up the chairmanship of Real Vision, a financial services media company. He also chairs Prism, the entity that has brought the Automated Clearing House project to Cayman.

Effects of globalisation on the industry In order to appreciate where the industry needs to go, moving forward, Conor said it was important to take a step back and see how it had evolved in recent times. Cayman’s financial services industry had changed exponentially since the mid-Eighties, with unprecedented growth taking place over the past three decades in, at that time, untapped fields of business. “When I first arrived in 1985 pre-globalisation, Cayman was a developing yet self-contained financial services centre, master of its own destiny, if you will,” he said. “Its biggest overseer was the UK. The evolution of

globalisation brought tremendous growth for the industry in the Cayman Islands, with the islands evolving as a major global hub for hedge funds, captive insurance and now in the early stages of the reinsurance industry.” But with globalisation came geopolitical pressures with which the government and industry battle today in an ever demanding and challenging environment of risk management, regulation and transparency all of which is accelerating the cost of doing business and which ultimately the client pays for. “In the 1980s we never worried about what an NGO thought of Cayman, or what the EU thought or even the US, although we kept a watching brief,” Conor said. “There weren’t any geopolitical forces shaping the industry and yet now we have legislation and regulation that’s having a measured and significant knock-on impact on Cayman’s financial services industry.” The effect it had on Cayman was to take it from an entrepreneurial business culture to one that was heavily regulated with a strong risk management culture. “We’ve become far more technical to ensure that we manage risks and comply with regulation and that has caused an upsurge in costs with no opportunity for us to recoup these costs,” he said. “When taking into consideration recent amendments to US legislation and regulation such as the Dodd-Frank changes, I remain hopeful that in three years or

My vision is that Cayman Finance could become a research engine not just for our financial services industry but to benefit the wider economic community.

so those who are driving the agenda setting for regulation will realise they have gone too far. The private sector is overly risk averse in the present environment protecting against regulatory sanctions or reputational damage where incidents can go viral on social media and mainstream media causing untold financial damage to an organisation.”

rebalancing, as cryptocurrencies need a level of regulation and fiat currencies are seriously over-regulated.” At the same time KYC-AML regulation had got to the point of becoming “intrusive” Conor said. A fundamental legal principle is that individuals and entities are innocent until proven guilty, yet regulation now causes regulated entities to behave as if their clients were guilty until proven innocent and that is fundamentally wrong. “It’s entirely proper to document a client and to corroborate who they are but geopolitical pressures have just gone too far in driving intrusive and unnecessary requests of clients in this regard, at what cost and for whose benefit?” he said.

The role of Cayman Finance With these differing pressures in mind, Conor said the role of Cayman Finance was to work to support, promote and advocate for the industry locally and internationally.

Conor believes the differential between how traditional banks using fiat currencies are regulated versus how institutions using new currencies such as Bitcoin are regulated needs to be closed.

“Our members need to be at the core of what we do and how we prioritise. We must also ensure Cayman Finance has a trusted and respected partnership with the Cayman Islands government to continue to build a growing financial services industry,” he said.

“There’s a tremendous regulatory arbitrage between fiat currencies and the cryptocurrencies, giving the latter a hugely unfair advantage,” he said. “My great hope is that there will be a

Key partners of Cayman Finance are the political arm of Government, the civil service, the Cayman Islands Monetary Authority and other authorities locally, he said.

“The primary concern for all sides should be to foster a healthy relationship in this regard and this is going to involve creating a deeper understanding and trust to ensure the effective management, promotion and safe-guard of this most important of all of Cayman’s economic pillars,” he said. “One that provides 55% of the country’s GDP, employs 7,000 people, 4,000 of whom are Caymanian. It’s the backbone of the economy.” In order to strengthen the role of Cayman Finance, its vision had to be compelling as the lead association for the financial services industry as a whole, he said. In this way it could work cohesively with government and the country as a whole could become highly effective in protecting, promot-

ing and profiling Cayman as a major international financial hub. “One issue we face is that there are too many financial service industry associations to allow for cohesive representation with government and regulatory bodies,” Conor said. “I see a need to consolidate associations in order to create a much tighter and coordinated industry association. This doesn’t mean we lose existing associations as they could become quasi associations within Cayman Finance.” In five years, Conor said he would like to believe that Cayman Finance would be recognised by all bodies as the lead industry voice, having proven itself through a period of change ensuing from geopolitical forces and

Imagine lawyers who provide peace of mind. When acquiring your dream home in the British Virgin Islands, you have enough to think about. Let us do some of the thinking for you. Refreshingly upfront, open and personable, we deliver practical solutions that help our clients reach their goals. A global offshore law firm with entrepreneurial thinking. Welcome to Harneys. harneys.com

challenges. It would not only be recognised as the protector and promoter of Cayman’s financial services industry, but also as an agent for possible change through strong membership representing all the financial services industry sectors. “My vision is that Cayman Finance could become a research engine not just for our financial services industry but to benefit the wider economic community,” he said. “But at the same time, we need to do a better job in helping the local population to embrace and understand the value of the industry to Cayman as a whole. It’s essential that we embed far more widely the fact that the financial services industry is an engine of growth for the entire community.”

40 years

of the Cayman Islands Bankers Association

Barclays Bank was the first bank to open its doors in the Cayman Islands in 1953 followed by the Bank of Nova Scotia (now Scotiabank) in 1966, Butterfield Bank (Cayman) Ltd and CIBC Bank and Trust Company (now CIBC FirstCaribbean International Bank (Cayman) Ltd) both in 1967, and then Cayman National Bank in 1974.

The banking industry began to flourish in the late 1970s, and in 1979 the need was felt to establish the Cayman Islands Bankers Association (CIBA). Over the four decades, CIBA has thrived and as at 31 December 2017, it had 131 members comprised of 49 Ordinary members and 82 Associate Members. CIBA acts as a conduit between govern-

ment and the banking industry, keeping its members informed on policy, consultative issues, and advisories. Its three main objectives are: • to further the development and preserve the good reputation of the Cayman Islands as an international banking and financial centre; • to foster study courses for the training of bank and trust company personnel and to encourage and support institutions in the Cayman Islands in the furtherance of commercial education, with emphasis on banking and trust administration and fiduciary practices; and • to identify and uphold the common interest of members in their relationships with the government, the people of the Cayman Islands and with business and professional associations.

Education In those early days of its development, CIBA realised emphasis on education would become crucially important for the banks, as the need for trained staff to deliver professional services increased along with demand for services. Those educational opportunities first envisaged in the 1970s have grown exponentially today. CIBA has been able to offer a variety of sponsored courses, scholarships, financial awards and prizes which have in turn played an important role in attracting and supporting thousands of young Caymanians into the financial services industry. Current courses include the Companies Administration Course that takes

From left current president Michael Halsey, Gonzalo Jalles, President from 2010 to 2012; Conor O’Dea, President from 2006 to 2008; Mark McIntyre, President from 2014 to 2016; Brian Esau, President from 2016 to 2018 and Eduardo Silva, President from 1998 to 2000 and from 2004 to 2006. Photos courtesy CaymanCompass

place twice a year and usually attracts around 25 registrants per session. This is considered the most popular course and gets rave reviews each time it’s held, according to Richard Lewis, Chief Operating Officer at CIBA. Other popular courses include their Introduction to Investments Workshop, Introduction to Private Trusts and the AML/CFT Workshop. “The latter workshop is well supported by our Class ‘B’ and associate members. The workshop is conducted by qualified compliance officers seasoned in the local industry,” Mr Lewis said. One significant training collaboration has been particularly successful, the Cayman Islands Banking Certificate, which is produced in collaboration with the University College of the Cayman Islands (UCCI) and on average sees around 20 students study for the exam per semester. “This course is an excellent introduction for school leavers to banking,” Mr Lewis said. “As an encourage-

ment, CIBA rewards the best students each semester with a $3,000 cash award to the student with the highest GPA, $2,000 for the second highest and $1,000 for third.”

Early projects Soon after CIBA was formed, it wrote the first Code of Conduct for its members which required the implementation of ‘Know Your Customer’ (KYC) best practices in the industry. This was long before the Proceeds of Criminal Conduct Law (known as the PCCL and introduced in September 1996) and other legal requirements were formed. The first Code of Conduct was replaced in 2007, now based on the British Code of Conduct. In 1996, CIBA conducted a study and provided recommendations to government regarding the implementation of the Pension Funds Law. It hired a consultant, who reviewed the legislation and wrote a report indicating potential problems and offering suggestions for the project, most of which were adopted.

In 2009, CIBA spearheaded an Economic Impact Study, which indicated the importance of the financial industry as a whole and its direct and indirect contribution to GNP. Some of the key indicators of the study included the contribution by the industry of CI$1.2 billion in GDP or 55% of the economy, and a total of 12,603 jobs sustained by financial services equal to 36% of all employment in the Cayman Islands. While this study is now ten years old, the figures still remain impressive indicators of how vital banking is to the community.

Affiliation with Cayman Finance CIBA works in tandem with Cayman Finance on a wide variety of projects, as Mr Lewis explains: “Our major affiliation is with Cayman Finance with whom we collaborate on providing consultative reviews on regulatory matters as they are released by the Cayman Islands Monetary Authority and the Ministry of Financial Services, in cases where they relate to the banking industry on a whole. We also collaborate with Cayman Finance in its promotion of the financial industry on the global stage in the preservation of the good reputation of the Cayman Islands as an international banking financial centre.”

Recent achievements Mark McIntyre, Managing Director at CIBC FirstCaribbean International Bank (Cayman) Ltd was CIBA’s President from 2014 to 2016. He said the highlight of his tenure as President of CIBA was to secure the commitment

of all the clearing banks to move forward on establishing the Automated Clearing House (ACH) in the Cayman Islands, after many previous stalled attempts over the years. “This was successfully achieved with the signing of a contract to proceed under the Management of Prism Services (Cayman) Ltd with the six clearing banks,” he said. Brian Esau, Executive Vice President at Cayman National Bank, took up the mantel as CIBA President two years following Mr McIntyre’s presidency and guided the successful implementation of some key projects for the industry. “In April 2018, through the guidance, coordination and oversight of CIBA, the six retail banks in Cayman (in conjunction with Prism) successfully launched an Automatic Clearing House - Phase I - Electronic Funds Transfer. This also set the stage for launch of ACH Phase II - Cheque Image Exchange. This was a major milestone for CIBA in domestic payments in that it affords consumers increased convenience and reduced settlement time coupled with improved efficiencies and risk management for the banks.”

Recent policy discussions Over the summer of 2018, the CIBA board and sub committees met to discuss a variety of issues that will be affecting the industry, including: discussing amendments to the revised Guidance Notes upon the Prevention and Detection of Money Laundering in the Cayman Islands; proposed changes to the Banks and Trust Companies Law; changes to Regulatory Policy for Trust & Corporate Service Providers; proposed

changes to the Electronic Transactions Law and Bills of Exchange Law with relation to the forthcoming introduction of Cheque Image Exchange by the Cayman Automatic Clearing House; and proposed changes to CIMA Statements of Guidance & Rules upon Credit Risk, Management of Problem Assets and Liquidity Management.

Looking ahead Michael Halsey, Managing Director with Sackville Bank and Trust Company Ltd, took up the CIBA presidency in 2018. He said the industry was experiencing headwinds with new legislation and regulation required by banks in Cayman in order to comply with the implementation of Basel III, as well as pressure from the UK, OECD, EU and FATF. Around the globe we have seen the rise of sophisticated cyber-attacks on banks and its customers and the Cayman banking sector is working hard both internally and externally to educate the public about these risks. “Cayman banks continue to help work towards developing economic substance legislation as well as dealing with issues on correspondent banking. We continue to work closely with CIMA, Government and industry to put in place a workable legal framework,” he said. “I am confident the industry will take these headwinds in its stride with resources available to implement the new rules and come out possibly leaner, but stronger too.” Mr Halsey said it was a testament to the professionalism and resourcefulness of the jurisdiction that the Cayman Islands Bankers Association celebrated its 40-year anniversary this year and he said it was an honour to be President for this milestone.

NOT IN DISPUTE what makes Cayman such a strong location for crossborder commercial dispute resolution,

and how is the sector evolving?

Marc Kish, Ogier William Jones, Ogier

Each year, legal disputes over assets worth many billions of dollars worldwide are resolved in courtrooms and boardrooms in the Cayman Islands.

The jurisdiction has a reputation for dealing with complex financial services and commercial litigation based on the relevance of its legislation, the reliability of its court system, and the experience of the professionals who work here.

The Grand Court of the Cayman Islands was established in its present form in 1975, but the body of legislation in the Islands, which derives largely from English law, is supported by hundreds of years of English common law precedent. Determined to build on that foundation and in recognition of the strength of the jurisdiction as an international financial centre, in November 2009 the Grand Court established a specialised Financial Services Division (the FSD) for the purposes of managing complex commercial disputes. The FSD boasts a panel of seven highly experienced commercial judges, who are assigned to specific cases for the duration of the proceedings. This allows the FSD judges to take an active role in case management, with the aim of ensuring disputes are resolved as quickly and as efficiently as possible. The timeframe for doing so will naturally depend on a number of factors, including the nature of the dispute, the type of proceeding, the volume of documentary evidence and the number of witnesses involved, but even the most complex cases are typically resolved within one or two years, subject to any appeals. Appeals from the Grand Court go to a dedicated Court of Appeal, which sits in the Cayman Islands three times per year (but can also be convened on an urgent basis if necessary). The Court of Appeal is made up of a panel of eight judges, each of whom has held high judicial office for many years in

the Cayman Islands or elsewhere in the Commonwealth, predominantly England and Wales, and any three judges from that panel sitting together will constitute the Court. Appeals can be made from the Court of Appeal to the Privy Council in London, which is the final appellate Court for the Cayman Islands and consists of the same judges who sit in the English Supreme Court.

The Grand Court is more advanced than most in the way it deals with crossborder disputes because of the nature of the cases it deals with on a daily basis. It recognises the need to respect and cooperate with judges in other jurisdictions and commands similar respect in return. In the 1982 case of United States v Carver et al, both the Grand Court and the Court of Appeal referred to the well-known English decision in Rio Tinto Zinc Corp. v Westinghouse, in which the English court observed that â&#x20AC;&#x2DC;It is the duty and pleasure of the English court to do all it can to assist the foreign court, just as the English court would expect the foreign court to help it in like circumstances.â&#x20AC;&#x2122;

The Grand Court has consistently adopted that approach since at least the early 1980s, and in May 2018 the Chief Justice issued a new Practice Direction to address court-to-court communications and cooperation in cross-border insolvency and restructuring cases. Insolvency and restructuring cases are perhaps the most common types of cross border disputes heard by the Grand Court, but other examples include trust disputes, which can often involve high net worth families and trust assets spread across the globe, and the enforcement of foreign judgments and arbitral awards. High profile examples of cross border cooperation between the Grand Court and foreign courts include the liquidation of Bank of Credit and Commerce International (BCCI) in the early 1990s, which involved an agreement between Cayman liquidators and US authorities and resulted in significant recoveries for creditors, and the more recent Ocean Rig restructuring in 2017, which used Cayman schemes of arrangement to restructure approximately US$3.7 billion worth of debt in conjunction with Chapter 15 protection provided by the US Bankruptcy Court for the Southern District of New York. The multi-billion dollar Ocean Rig restructuring, is a good example of cooperation between jurisdictions since it involved a leading international contractor of offshore deep-water drilling services whose operations

comprised four companies originally incorporated in the Republic of the Marshall Islands. Unlike the Cayman Islands, the Marshall Islands lack any statutory restructuring regime, but the companies were able to benefit from the Cayman Islands scheme of arrangement process by transferring to Cayman by way of continuation (in the case of the parent) and registering in Cayman as foreign companies (in the cases of the three main subsidiaries). The Ocean Rig group had assets around the world and a considerable stakeholder presence in the United States, and so also made Chapter 15 filings in New York to benefit from the protection of the US Court. The Grand Court and local practitioners also frequently work together with practitioners in, and the respective judiciaries of, the UK, Hong Kong, Bermuda, the Channel Islands, and other Commonwealth jurisdictions. The popularity of Cayman Islands hedge funds, private equity funds and trust structures around the world dictates that the profession in the Islands, and the infrastructure that supports it, are able to respond quickly and appropriately to developments not only in Europe and North America but also in the Asia Pacific and Latin America regions, incorporating applicable legal developments from around the world and assisting in the smooth resolution of global disputes wherever possible. Certain practical and technological steps have been necessary to achieve this: the Grand Court now has video

conferencing equipment in many of its court rooms to enable, in appropriate circumstances, the cross-examination of foreign witnesses and hearings to be conducted by advocates in different time zones. Electronic hearing bundles are used with increasing frequency, and large scale document discovery systems are commonplace. Advances are also underway with respect to the central electronic filing of documents for all cases in the FSD. The Practice Direction alluded to above requires officeholders appointed by the Grand Court (primarily provisional liquidators and official liquidators) to consider, at the earliest opportunity, whether to incorporate some or all of two sets of guidelines into an international protocol or order. The guidelines in question are the American Law Institute/International Insolvency Institute Guidelines Applicable to Court-to-Court Communications in Cross-Border Cases and The Judicial Insolvency Network Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency Matters, which have been adopted by Courts in a number of jurisdictions, including the US, England and Wales, the British Virgin Islands, Singapore and Bermuda. As a jurisdiction, we believe the Cayman Islands can expect to see considerable further growth in the area of cross border dispute resolution and in cross border restructurings.

Marc Kish Marc heads Ogierâ&#x20AC;&#x2122;s Insolvency team in the Caribbean and Asia, and specialises in commercial litigation, contentious and non-contentious restructuring and insolvency proceedings, and fraud and asset-tracing claims.

William Jones Managing associate William Jones advises on all aspects of commercial litigation, specialising in contractual disputes, insurance claims and contentious trust matters. He also has significant experience in contentious restructuring and insolvency matters and is a member of the firmâ&#x20AC;&#x2122;s Restructuring and Insolvency Group.

Down, but not out

so who picks up the tab? William Peake, Gráinne King & James Elliott, Harneys

Landmark ruling for Cayman Islands

Who pays for the proceedings?

In a landmark ruling for the Cayman Islands jurisdiction, the Honourable Chief Justice Smellie of the Grand Court, on 31 May 2018, emphatically dismissed a multi-billion dollar claim in the case of Ahmad Hamad Algosaibi & Brothers Company v SICL & Ors, involving allegations of fraud arising from one of the largest corporate collapses of the financial crisis.

As can be expected in proceedings of this magnitude, legal costs to date have been significant and are estimated to have run to several hundred million dollars – but who foots the bill for these costs?

The case not only showcased the ability of the Cayman Islands Court to manage high profile and complex litigation, but emphasised the jurisdiction’s flexibility to manage seamlessly a year-long, multi-jurisdictional trial.

It is well known that the Cayman Islands is a creditor friendly jurisdiction where the prevailing principle is that the “loser pays”. Under the Grand Court Rules (GCR) (O.62), the Court may make such an order as to costs as it thinks just, the starting point for which is that costs follow the event and a party can expect to be penalised for pursuing a claim it should not.

In any sizeable litigation, the quantum of costs, once a party’s entitlement has been established, will usually be submitted to be taxed by a specialist Court official appointed by the Chief Justice called a Taxing Officer. The GCR provides for two distinct bases of taxation: the standard basis and the indemnity basis. In practice, the former usually comprises an award of approximately 70% of the costs incurred and the latter, an enhanced award often in the region of 85-90%. Usually, costs awarded will be taxed on the standard basis and a Court will resort to ordering taxation on the indemnity basis only where it is satisfied that the paying party has conducted the proceedings improperly, unreasonably or negligently (GCR, O.62, r.4 (11)). The issue of the costs of these proceedings came before the Grand Court recently in September 2018 where it was submitted on behalf of the Defendants that the costs ought clearly to be awarded on the indemnity basis as AHAB’s resounding defeat at trial was uncontroversial, with the Court finding, variously, that it created one of the “biggest Ponzi schemes in history”, “wallowed in its own culture of dishonest accounting practices” and tried “in vain to make a fraud case which did not fit the facts.” The Grand Court agreed that in light of AHAB’s conduct of

the proceedings, the case was a paradigm example of a case justifying an award of indemnity costs. In light of AHAB’s impending appeal of the proceedings (listed for hearing in May 2019), no steps towards taxation of these costs will commence for some time.

How can a successful party to litigation be sure its costs will be paid when the time comes? In order to protect a party from the pursuit of potentially spurious claims, the Cayman Islands Court has jurisdiction to award a party security for its costs. This is a critical deterrent which the jurisdiction will continue to uphold. This jurisdiction was invoked by the Defendants under Order 23 r.1 (a), AHAB being a foreign plaintiff having no assets in the Court’s jurisdiction. To date, following hearings in 2013, 2016 and 2017 respectively, AHAB has been ordered to post in excess of US$85 million as security for the Defendants’ costs. In making these awards, the Court has endorsed use of a “broad brush” approach when assessing the level of security to be posted. The Court also confirmed the importance of the “balance of prejudice,” weighing the likely prejudice caused to each party depending on the

amount awarded, in line with Popplewell J’s reasoning in the 2012 case of Stokers SA v IG Market Ltd. Having obtained an order for indemnity costs, the Defendants also applied in September 2018 for payment of “top-up” security in the combined sum of US$77 million, on the basis that the award left the Defendants significantly under-secured for costs actually incurred, the awards previously made having been calculated on the standard basis. The Defendants argued that there had been a material change in circumstances in the period since the original orders for security were made, which the Court, in its 2017 judgment, had previously recognised as warranting an order for top-up security. In doing so, the Court cited with approval the guidance set out in Stokers, providing that “a defendant will generally have to show a material change in circumstances from those which pertained or were envisaged when the matter was before the court making the order.” The Defendants argued that the award of indemnity costs represented a material and significant change in circumstances such that the previous awards for security should be revisited by the Court.

Stifling – recent consideration in the Cayman Islands Contesting the applications, AHAB argued that ordering the “top-up” security sought would stifle its appeal. This was on the basis that AHAB did not have sufficient assets available and would be forced to breach any such order, thereby prejudicing its ability to pursue the appeal. In support of its

position, AHAB argued that both AHAB’s and its partners’ assets were frozen by a Saudi Royal Order in 2009 and that AHAB did not have access to any assets which could readily be liquidated in order to provide security in cash, save for security it offered over various properties it held in London. The Court’s judgment in respect of the above applications is eagerly awaited, having heard nearly three days of argument.

Security for costs in the Cayman Islands Court of Appeal In the meantime, the Defendants have also pursued successful applications for security for costs as Respondents to AHAB’s appeal. Those applications were brought pursuant to section 19(2) of the Court of Appeal Law (2011 Revision) at a Case Management Hearing held before the Cayman Islands Court of Appeal in November 2018. AHAB again contested the applications, arguing that payment of the appeal security would stifle the appeal unless the Court directed that the security be provided by way of charges over its London properties. It further argued that the Court could not determine the issue of appeal security until the Grand Court’s judgment on the “top-up” security was handed down, in view of the limited assets available: in brief, this was a novel circumstance of issues being debated before the Court of Appeal before the Court of first instance had rendered its decision on similar issues. In its decision of 16 November 2018, the Court of Appeal granted the Respondents’

applications, ordering AHAB to post a total amount of US$10.6 million in cash by 1 February 2019, failing which the appeal will be struck out via an unless order. In doing so, the Court decided that AHAB’s appeal would not be stifled if it was ordered to provide security, as the Court was not satisfied on the balance of probabilities that the provision of security would not be forthcoming upon an order being made. The Court also held that charges over AHAB’s London properties would not constitute adequate security, concluding that it was always possible for AHAB itself to offer those properties to a lender as security for an advance which would be available in cash for the purposes of payment of the security sought. Fundamentally, the Court was of the view that the party which obtains security for costs should not have to bear the risk of having security for costs ordered on the back of properties with pre-existing charges over them, as is the case with the London properties. In our view, this is an important demarcation from the Court of Appeal on what constitutes adequate security. The approach taken by the Court of Appeal, not only in the expeditious manner in which this judgment was handed down, but also in the proactive stance being taken to case-managing the directions leading up to the appeal, further showcases the fact that the Cayman Islands is very much open for business as a large-scale trial jurisdiction. Since the commencement of the litigation in 2009, the authors of this article have acted for the Joint Official liquidators of SIFCO5, a defendant to the proceedings.

William Peake William is a London based Partner and frequently spends time in Harneys’ Cayman Islands office. He regularly advises banks and investment vehicles and their liquidators, shareholders, directors and associated individuals in relation to disputes.

Gráinne King Gráinne is a Senior Associate and a member of Harneys’ Litigation and Insolvency practice group in the Cayman Islands. Gráinne has experience in a broad range of commercial matters including insolvency and restructuring, enforcement, commercial litigation and financial services litigation.

James Elliott James is a Senior Associate and a member of Harneys’ Litigation and Insolvency practice group in the Cayman Islands. James specialises in commercial and insolvency litigation.

The Cayman Courts:

Respected and Robust Bernadette Carey, Carey Olsen

With its widely respected judiciary and reputation for robust judgments, the Grand Court of the Cayman Islands continues to ensure that the jurisdiction is at the forefront of the development of modern trusts and estates law. The Court has recently released a number of important and interesting decisions regarding the operation of Cayman Islands statutes and common law as they pertain to the operation of trusts and the powers and duties of trustees in this jurisdiction.

Firewalls, fiduciaries and families The so-called ‘firewall provisions’ of Cayman’s Trusts Law (2018) Revision (the Trusts Law) are an important component of Cayman legislation and give protections to trustees and beneficiaries alike. One of the ways in which these provisions operate is that, if foreign matrimonial proceedings seek to encroach on the administration of a Cayman trust, the trustee of that trust is protected in many respects. An example of this can be seen in the recent case of In the Matter of the A Trust, where a Cayman STAR trust was the subject of proceedings in the Court commenced by the trustee of the trust. The settlor had exe-

cuted various letters of wishes, which set out who should and should not benefit from the trust and how the assets of the trust should be applied. The settlor and his wife, N, both of whom were excluded from the trust, subsequently became involved in divorce proceedings before the England and Wales High Court (the English High Court). The trustee determined that it was not in the best interests of the beneficiaries of the trust to submit to the jurisdiction of the English High Court or to disclose confidential information about the trust to the parties to the English proceedings. Its concern was that, in doing so, it would confer on the English High Court an enforceable power to act to the detriment of the beneficiaries of the trust. However, recognising that it was an important step for a professional trustee to refuse to submit to the jurisdiction of a foreign court, the trustee applied to the Court for directions pursuant to S.48 of the Trusts Law, which provides that a trustee who acts on the opinion, advice or direction given by the Court will be deemed to have discharged its duty as trustee in respect of the subject matter of the application. The Court confirmed that it was the trustee’s duty to protect and preserve the trust from the claims in the English

proceedings and pursuant to Cayman’s firewall legislation, which confirms that a Cayman trust can only be varied in accordance with Cayman law and only by the Cayman Court: any order made by the English High Court against the trustee would therefore not be enforceable against the trustee, the beneficiaries of the trust or the trust fund.

Trustee paralysis In the judgment arising from In the Matter of Various Trusts, the Honourable Justice Mangatal considered an application made jointly by the beneficiaries of various trusts governed by Cayman law (collectively, the Plaintiffs) for orders substituting a new trustee in the place of the original trustee of those trusts. The original trustee of each of the trusts (the Existing Trustee) was a company incorporated outside Cayman. The trust’s assets were located in a number of countries, including the US. At the time the application was made, the Existing Trustee was facing allegations by the US government that some of the assets in the trust were in fact traceable to a conspiracy. All of the allegations were strenuously contested by the Plaintiffs, who feared impairment to, or permanent loss of, the assets if the Existing Trustee did not ac-

tively engage in the US Proceedings. The Existing Trustee had informed the Plaintiffs that it considered itself to be effectively paralysed from performing its functions as trustee, or from resigning as trustee, due to the risk that, if it were to take any such steps, it would be exposed to civil or criminal liability for any action it decided to take. The Plaintiffs sought orders that an alternative Cayman trustee (the Substitute Trustee) be installed as the replacement for the Existing Trustee. The Court’s sole focus was to consider whether, in light of the Existing Trustee refusing to authorise the taking of any steps or to resign, it was expedient to appoint a new trustee with the assistance of the Court. In this case, the Court found that its assistance was required to protect the welfare of the beneficiaries and to prevent or circumvent omissions that would endanger the trust property. The Court also found that the Substitute Trustee was fit to act and willing to take steps to protect the assets and to protect the interests of the beneficiaries, and had given undertakings that it would not take any action that would impair the in rem jurisdiction of the US District Court for the Central District of California, (CDCA) in the US proceedings or cause there to be any change in the ownership of the assets. Orders for substitution were therefore duly made, and the Existing Trustee was replaced by the Substitute Trustee in respect of all trusts of which the Plaintiffs were ultimate beneficiaries. Paralysis on the part of a trustee, whatever its cause, can therefore be resolved with the assistance of the Court, particularly where real and credible

threats against trust assets are on the brink of being realised.

Receiverships and trust assets In another recent case, the Court was asked to consider an application to appoint a receiver by way of equitable execution over future distributions from a Cayman discretionary trust. In the matter of Y v R, a Cayman discretionary trust was the target of enforcement proceedings in the Court in reliance on a US$2 million award issued by a foreign arbitral tribunal. A judgment was entered by the Court in the same terms as the award, and the plaintiff then issued a summons seeking, among other things, an order from the Court for the appointment of receivers by way of equitable execution to receive all distributions to or for the benefit of the defendant from the trust. The plaintiff submitted that the Court had jurisdiction to appoint a receiver over future distributions from a discretionary trust in circumstances where it was likely that the trustee would apply its discretion in favour of the judgment debtor. However, Justice Mangatal held that to grant the relief sought in the summons would amount to a ‘radical, impermissible extension of the law’ as it stands in Cayman. The judge confirmed the longstanding position with respect to discretionary trusts: that is, a beneficiary holds neither a legal nor a beneficial interest in the trust assets, but merely a right to require the trustee from time to time to consider whether to apply the whole or some part of the trust fund for their

benefit. In those circumstances, there was no available asset that could be viewed as the beneficiary’s asset in equity, and as such there was nothing over which to appoint a receiver.

Future judgments These recent and varied decisions concerning a range of issues that regularly arise in the trusts and estates arena have contributed greatly to the extensive jurisprudence already developed by the Court in the Cayman Islands - both through its interpretation of key provisions of the Trusts Law and application of well established common-law principles, and more important judgments are expected in the coming year.

Bernadette Carey Bernadette is a Partner in the Cayman Islands office of Carey Olsen. She advises on wealth structuring and estate planning matters, as well as probate and testamentary issues. She also regularly appears before the Grand Court of the Cayman Islands on multi-party contentious trust disputes, estate litigation, and other cross-border private client disputes.

Foundation Companies:

One year on Morven McMillan and Maxine Bodden Maples and Calder

The Cayman Islands foundation company is in a class of its own. It is not a carbon copy or an equivalent of a foundation established in any other jurisdiction. This is not the result of an accident but entirely by design - there was no intent to replicate what other jurisdictions have done or to introduce a new tool with limited use and a lack of supporting jurisprudence. Much time and effort has been invested to ensure that Cayman Islands foundation companies are considered on their own merits.

The long awaited Foundation Companies Law (FCL) came into effect on 18 October 2017. The FCL introduced a new form of incorporated vehicle which, a year on, has proved a popular innovation among clients.

The Cayman Islands foundation company is governed under our Companies Law (2018 Revision) save to the extent that it is modified by the FCL. This means the foundation company is an incorporated structure familiar to private client and commercial practitioners alike, while fundamental modifications to the Companies Law model company mean it will be a highly flexible vehicle for achieving a wide range of private client and commercial objectives.

With the exception of the memorandum and articles of association, which have to be filed with the Registrar of Companies on incorporation, foundation companies are private structures. While the constitution may provide for the making and altering of bylaws for the foundation company, bylaws do not form part of the constitution for any purpose of the Companies Law applicable to foundation companies or the FCL. Accordingly, persons dealing in good faith with a foundation company are not required to consider its bylaws or look into compliance by the directors or others with its bylaws. The registered office of a foundation company must be at its secretaryâ&#x20AC;&#x2122;s business address. The secretary must be a qualified person, that is, a person who is licensed or permitted by the Companies Management Law (2018 Revision) to provide company management services in the Cayman Islands to the foundation company. The role of the secretary

is particularly important from a compliance perspective which is why it is a licensed role subject to regulation by the Cayman Islands Monetary Authority. It must be certified by the secretary that there is no regulatory obstruction to the acceptance of any contribution of assets to the foundation company. The secretary is under an obligation, which is subject to criminal sanction, to maintain a full and proper record of the secretary’s activities and all enquiries which the secretary has made in relation to the acceptance of assets. The FCL requires the directors, before the foundation company accepts any gift of assets, to identify the provenance of that asset to the company secretary so that the secretary can satisfy itself that the asset clears all the AML thresholds laid down in Cayman’s compliance regime. Only when the secretary is satisfied as to the provenance of the asset, and has given its consent to the directors, will the foundation company be permitted to accept the asset in question. That exercise must be undertaken for each and every asset being introduced into the foundation company and must be properly documented. It is for that reason the FCL requires the company secretary to be a “Qualified Person”.

Some of the key features of a Cayman Islands foundation company are: Incorporated vehicle: a foundation company is an incorporated vehicle that is brought into existence following the completion of a registration process; Legal personality: a foundation is a separate legal entity distinct from that of its members, directors, officers, supervisors and founder. Accordingly, it is able to transact, and to sue and be sued, in its own name. It acts through its board of directors, which is the body charged to administer the foundation’s assets and carry out its objects; Object: a foundation company can be formed for any lawful object, as long as it is lawful and not contrary to public policy and it need not be beneficial to other persons; Perpetuitous: like a Cayman Islands STAR trust, a foundation company can continue in perpetuity; Flexibility: a foundation company is very flexible as regards its objects, management and supervision. Foundation companies appeal to and are readily understood by clients from a civil law background. However, foundation companies also appeal to other clients be-

cause their features suit their specific and individual needs. Such clients are using foundation companies for a wide variety of reasons, including:

Succession and estate planning Having built businesses and accumulated wealth for many years, many founders are now more than ever concerned with business succession planning, thereby recognising the need to establish a structure to ensure the business is not fragmented on their passing. The flexibility offered by a foundation company allows the founder to establish a structure that is bespoke and specific to his or her circumstances, including the ability to restrict the flow of information regarding the foundation company and its property to the beneficiaries. The fact that a foundation can be established where beneficiaries have no right to enforce and no rights to information may also appeal to some founders.

Hold ‘awkward’ or ‘wasting’ assets Changes in the worldwide economy have brought about a shift in trustees’ attitudes as to the assets they will hold. Assets

such as yachts, artwork and aeroplanes are accepted by trustees as trust assets. However, so that a founder may continue to have influence over their management, foundation companies may be the preferred vehicle for such assets. A foundation company may be established specifically to hold such assets and the founder or family members can maintain a level of control as regards, for example, investment, preservation, or running a business.

Hold the shares in private trust companies Families who wish to retain a level of control often establish a private trust company (PTC) and sit on its board to ensure they have direct involvement in any decision concerning the trust. The shares of the PTC are usually held on the terms of a STAR trust by a Cayman Islands trust corporation. However, the foundation company offers an alternative structure, not only by allowing the founder/settlor and named family members to sit on the board, but the foundation company may itself act as trustee, rather than a PTC. The foundation company may also own the shares of any other corporate in the structure, eg. enforcer or protector.

Charity and philanthropy A foundation company can be created for charitable purposes,

and also for purposes which are philanthropic but do not meet the strict criteria to qualify as charitable.

Hold shares in offbalance sheet commercial vehicles Special purpose vehicles are usually established where their ownership needs to be separate from the rest of the structure. A foundation company as a vehicle that prohibits dividends or other distributions of profits or assets to its members can be established for a specific business purpose and is ideally suited to this type of planning.

Morven McMillan Morven is a Partner in Maples and Calderâ&#x20AC;&#x2122;s Cayman Islands office, where she is head of the Cayman Islands Trusts group. Her expertise includes contentious and non-contentious international trusts and private client work.

Cryptocurrency The foundation company has attracted considerable interest from clients wishing to establish cryptocurrency companies. Many crypto and blockchain companies operate as not for profits so the foundation company is an ideal vehicle. The Cayman Islands foundation company has quickly become a valuable structuring tool that adds significantly to the structuring opportunities available to clients in the Cayman Islands.

Maxine Bodden Maxine is part of the Maples and Calder Trusts team in the Cayman Islands. Maxine specialises in advising the worldâ&#x20AC;&#x2122;s leading banks and trust companies and private individuals on the establishment and ongoing administration of Cayman Islands trusts, including unit trusts, pension and employee benefit trusts and charitable trusts. Maxine is a leader in the use of private trust companies and all matters pertaining to licensing, registration and operation of private trust companies. She also advises clients on wills and the administration of estates.

How to Evaluate Your

Risk

Dorothy Scott and Sandra Edun-Watler, Walkers

as well as to their consequences. It is worth noting that AML/CTF risks are inherently difficult to describe or to measure in quantifiable or numerical terms. Therefore, a risk assessment will involve making judgements about these perceived issues.

Over the course of the last year, amendments to the Cayman Islands’ Proceeds of Crime Law (2018 Revision) and Anti-Money Laundering Regulations (2018 Revision) have grabbed the attention of financial services stakeholders and, once again, thrust regulatory compliance into the spotlight. The amendments to the Cayman Islands’ anti-money laundering and countering the financing of terrorism (AML/CFT) regime have generally made explicit what was previously implicit, and were largely designed to bring the letter of the Cayman Islands’ regime into line with the Financial Action Task Force (FATF) recommendations. While much attention has been given to the extension of the application of the AML/CFT framework to all “relevant financial businesses”, and in particular to entities that conduct the business of “investing, administering or managing funds or money on behalf of other persons” or “investment related insurance” in or from the Cayman Islands, and to the requirement to appoint natural persons as

anti-money laundering (AML) officers, the formal adoption of a risk-based approach in the primary legislation ensures that measures to prevent or mitigate money laundering and terrorist financing are proportionate with the risks that have been identified. A risk-based approach, through a risk assessment, is an essential foundation in allocating AML/CFT resources efficiently to the perceived threats. Importantly, there should be sufficient breadth and depth devoted to potential threats and vulnerabilities,

While the new regime requires each entity to perform risk assessments on its investors/clients, it also requires the entity to conduct a risk assessment on itself. Failure to comply with this requirement for an assessment of its own risks under the Anti-Money Laundering Regulations can result in the entity facing criminal sanctions under the Regulations or administrative fines under the newest piece of legislation to the regime, the Monetary Authority (Administrative Fines) Regulations 2017. Failure to conduct an internal risk assessment would be considered a serious breach to which a fine not exceeding CI$50,000 for an individual or CI$100,000 for a body corporate may apply. As CIMA’s licensees and registrants vary significantly in the types and sizes of business, a single risk assessment model cannot fit all but general guid-

ance has been provided in the Guidance Notes. While there is no single standard for how thorough or complex a risk assessment must be, what is clear is that a risk assessment needs to be carried out and documented. Risk covers a wide category of factors and it needs to be clear that the entity needs to assess and measure its risk specific to money laundering and terrorist financing threats. Although no matrix has been provided on how to assess this type of risk, risk should still be categorised. As all risks are not created equal, various factors can be applied to different categories of risk. Before an overall assessment is done, all relevant risk must be considered along with the appropriate level of mitigation to be applied. The entity must make its own determination on how it weights each individual factor and also take into consideration the relevance of each different risk factor that applies in context to the entity. Entities should adopt risk assessment policies and procedures appropriate to their size, nature and complexity. In order to identify and assess inherent risk faced, entities need to examine the four key areas of money laundering/terrorist financing risk: products and services, delivery channels, customer types and geographic locations in which investors/clients operate. An entity needs to take into account the amount of risk tolerance it is willing to accept, part of which

is determining its risk appetite. This is one of the most important factors to take into account when looking at the overall business of the entity. It should always be borne in mind, however, that there are no prohibitions on how an entity chooses the business it intends to take on. The entity’s risk appetite will severely impact risk mitigation measures and controls it employs. These must be commensurate with the risks associated with that type of business. This is achieved through monitoring of the specific type of business. One challenge that arises is trying to apply an objective standard to something that can be very subjective. Assessments must be kept up to date, and although no guidance has been given on how frequently these should be done, the performance of an internal audit may help to determine how often this requirement should be completed. Finally, it is crucial not to forget that even when all of these factors have been taken into account, the most important point to ensure is documenting how the entity has assessed its risk. Without this, the entity has no evidence that all the factors have been taken into account and that an internal assessment requirement had been complied with.

Dorothy Scott Dorothy is based in Walkers’ Cayman Islands office where she is a partner in the Global Investment Funds Group. Dorothy has extensive experience in advising on the full life-cycle of open-ended and closed-ended funds, including formation and structuring considerations, ongoing operations, governance, regulatory compliance, general corporate and partnership transactions, reorganisations and end of life matters. She has particular expertise in advising distressed hedge funds in volatile markets and manager-led wind downs, and counsels a broad range of highly regarded investment managers, private equity sponsors, trustees, family offices and start-up/emerging managers.

Sandra Edun-Watler Sandra is based in Walkers’ Cayman Islands office where she is Senior Vice President at Walkers Compliance. Sandra has expertise in all aspects of regulatory law and has advised on issues concerning anti-money laundering and terrorist financing, dealing with international requests for assistance and the drafting of bilateral agreements between CIMA and other regulators around the world. She is also President of the Cayman Islands Compliance Association.

The talent challenge: Re-balancing skills for a digital age Iva Rozinkova and Chris Bailey, PwC

The transformation of the workforce demanded by the digital age and economy simply improves routine processes and automates them.

The digital age brings all sorts of exciting opportunities, demands, threats and risks. Going digital for us as individuals might mean efficiencies such as ordering a pizza from a self-driven Domino’s car or grocery shopping at a store without actual employees. However, what does it mean for the individual as a part of today’s and tomorrow’s workforce, and what does it mean for HR professionals and organisations themselves? The digital age we live in is derived from us humans and we once again need to be agile to adapt to the present and foresee what the future will bring.

and advancing technology, its possibilities and potential impact.

The transformation of the workforce demanded by the digital age and economy simply improves routine processes and automates them, but an organisation’s full potential is only unleashed when talent and technology collaborate.

As more processes and routine tasks are being automated, jobs and positions are being re-evaluated and re-categorised. Digital transformation is a process as any other and the path to success in an automated world means that people and machines are working together, learning from each other, rather than replacing each other.

It’s not about jobs, it is about people Human resources needs to take a leap into the future to support organisations, ensuring the right skills and capabilities for tomorrow. This means protecting and enhancing the employee experience, building trust and developing relationships with society at large. Human resources plays a crucial role for the current workforce, explaining changes, seeking their inputs and fears or discussing possibilities for transformation. To do that HR professionals need to understand in depth new

Speed of technological change Increased efficiency and productivity leading to profitability of the organisation are the biggest promises of automation and artificial intelligence, but what if the human part of the equation is not yet aware of their potential? CEOs have to weigh the balance between the business opportunities provided by emerging technologies and the inevitable impact on their people and trust.

Finding and hiring the best talent The big question is ‘Should we plan for a decrease in the headcount due to automatisation?’ Based on PwC’s 21st CEO survey, more than half of the surveyed CEOs intend to increase their headcount over the next 12 months. A willingness to recruit more workers should be a signal that CEOs are taking action to rebalance their work-

force and respond to the fear and challenge of transformation and growth. Do we have the pool of people rightly skilled and capable to adapt to the constantly changing environment? The digital age economy does not necessarily mean the workforce must have IT or robotics degrees, it should rather bring the question: Is our workforce capable and willing to adapt?

Willing to adapt? An organisation’s current workforce will be more approachable and agile to adapt if its culture fosters change, differences in opinions and values proactive behaviour. If the organisation’s culture supports new ideas and creativity, the workforce will be more open to embrace the digital transformation and accompanying period of talent development.

Capable to adapt? Not every person within an organisation has the resources and knowledge to educate themselves and gain new capabilities. An organisation’s learning and development, training and succession planning are the tools which will enable the success of the entire workforce during the transformation. Organisations are not only looking for technical and digital degrees and certificates but are also looking to develop or attract a workforce which is capable of solving problems, leading teams, creating, innovating and adapting. This is an intangible skillset, which is acquired over time but can be learned. People with the right skills and capabilities are hard to find and difficult to keep. Organisations face the biggest challenge of creating attractive employee value propositions and employee experiences - the

reasons the right talent is attracted to work with the organisation in the first place and is engaged in long term. Attracting, keeping and nurturing the right talent for the business means having the right value proposition. That does not necessarily mean improving compensation packages. Money and compensation can only go so far. It means CEOs and human resources need to create the right employee experience and culture so the workforce is content every day, and not only for the week after they receive their well-deserved bonus.

The importance of trust – the ultimate challenge Leaders and businesses are facing the ultimate challenge with automation transition. If the workforce feels betrayed, everyone will face consequences and no machine and technology will be able to fix it. Trust starts with transparency and communication. We need to let our workforce know what the business is facing and what impact it will have on jobs. Talk to the workforce on multiple levels, ensure everyone understands where the organisation is going, what the approach is and let the workforce provide their feedback and challenge the organisation’s ideas. Both current and future workforces need a fair chance to prepare themselves for the changing environment and to re-think their actions to achieve the common goal. We all are part of one worldwide society and now more than ever we can participate and steer the wheel. The businesses in our society have been put in the spotlight to act and engage on various political and social issues. The pressure is on, and when organisations build trust in society they build trust in the workforce.

Conclusion The talent organisations need for tomorrowâ&#x20AC;&#x2122;s workforce is out there. If we struggle to find it, it is our responsibility as leaders and HR professionals to develop and nurture the talent to overcome the challenges which the digital age brings. Skills and capabilities can be encouraged through the right training and development, environment and culture, and performance management approach. The transition to automation is calling for strong two-way communication with the workforce and above all requires a focus on the right leadership, culture and employee experience.

Iva Rozinkova

Chris Bailey

Iva is a Senior Consultant with PwC Cayman Islands team providing People & Organisation advisory and consulting services to clients in the Caribbean Region. Iva specialises in talent strategy and management, job evaluation, data analysis and benchmarking, organisation design, compensation and rewards philosophy and strategy.

Chris is a Director within PwC Caymanâ&#x20AC;&#x2122;s Advisory practice, specialising in People and Organisation consulting covering several territories across the Caribbean. He has over 16 yearsâ&#x20AC;&#x2122; experience in Talent Acquisition, Human Resources, Business Development and outsourcing, during a successful career covering several jurisdictions including Europe, Bermuda and Grand Cayman. His professional experience includes the successful execution of many CFO and C-suite searches.

Nassau Re provides reinsurance, insurance, distribution and asset management services. Affiliates include Nassau Re Cayman, Nassau Life and Annuity, Constitution Life, Saybrus Partners, Nassau CorAmerica and Nassau Corporate Credit. www.nsre.com 93

Building a franchise across the insurance value chain

The Cayman Office

Market Sloane Rhulen, Rhulens

The Cayman Islands is known as a leading international financial hub with best in class services and an infrastructure that is continually evolving to remain top tier. The islands provide not only a safe, high quality lifestyle experience but optionality within the commercial office market allows companies to work from amenitised Class A office premises. The Grand Cayman office market is comprised of approximately 2.6 million square feet. The market fundamentals have been, and continue to, remain strong both within the capital city of George Town and along the Seven Mile Beach corridor. The total average vacancy rate for the island is approximately 10% but the figure varies across the Class A, B and C markets. The vacancy rate for Class A office space is closer to 3%, while Class B is hovering around 8%. The commercial leasing market was buoyant in 2018 with roughly 242,497 square feet of office space leased over a total of 65 registered transactions. In 2017, approximately 170,702 square feet of space was leased in a total of 55 registered transactions. Notable leases and renewals signed included Deutsche Bank, Ogier, Maples FS, Carey Olsen and Mourant Cayman, examples of the world-class

firms that operate from the Cayman Islands. Rental rates for Class A office space range from US$40 to US$60 per square foot while Class B space is available from US$28 per square foot to US$35 per square foot. Leases are generally undertaken on a triple net basis, so tenants are responsible for paying the Landlordâ&#x20AC;&#x2122;s costs, known as Common Area Maintenance (CAM) costs, in addition to utilities. The CAM costs across the market ranges from US$8 to US$18 per square foot. Traditionally the tenant mix in Cayman was comprised primarily of companies in the financial services industry and those businesses that provide services to the industry, including accounting, legal and consulting firms. The tenant profile has changed in the last decade with the establishment in 2012 of Cayman Enterprise City, a special economic zone created to attract investment in growth industries including Internet and technology, commodities and derivatives, media and marketing, biotechnology and life sciences, and maritime services. Additionally, efforts have been made by Government to attract the insurance industry to the jurisdiction including reinsurance and captive insurance management firms with favourable licensing and regulatory requirements. Another new venture,

TechCayman, launched in 2018 to provide a business platform to attract software developers and other entrepreneurs to the jurisdiction. In 2004, Cayman was forever changed by Hurricane Ivan. Numerous office and residential buildings were significantly impacted, and developers quickly understood that any new construction must be Category 5 hurricane rated construction. As a result, there are a number of Class A office accommodations both within George Town and along the Seven Mile Beach corridor. The Cayman Islands Government occupies a bespoke, Class A building, which was constructed in 2011 and where most of the Government administration is located. Due to the sophistication of the tenants in the Cayman market, landlords offer amenities-filled spaces that can accommodate the latest technology and utilise sustainable development principles to attract and retain tenants. LEED certifications and WELL building principles are the norm as tenants want to feel good about their choices â&#x20AC;&#x201C; both from an employee retention standpoint and with a view towards corporate and social responsibility. There are two large Class A office complexes on island and a number of stand alone Class A buildings. The largest complex is Camana Bay, a 685 acre master planned New Urbanist community which is comprised of approximately 600,000 square feet of Class A office premises and ancillary retail and residential. The property amenities for office users include a gym, restaurants, shops and general services (banking, dry cleaning, etc.). Additional expansion is planned for

Camana Bay for both residential and commercial premises. International firms including AON, State Street, Citco, Knighthead Annuity & Life Assurance Company, Greenlight Re, Ogier and Mourant are all located in Camana Bay. A second large office complex situated in George Town near the Government Administration building is Cricket Square - a 275,000 square foot property which includes restaurants and office space. In early 2019, the newest building at Cricket Square, SIX, will open for occupancy along with a recently constructed gym exclusively for tenants. The anchor tenant for SIX is KPMG. Other tenants at Cricket Square include Maples FS, Carey Olsen, and Campbells. Both the Cayman Islands Monetary Authority and the Cayman Islands Stock Exchange will relocate to Cricket Square in 2019. Other recent developments in George Town include the construction of Cayman Technology Centre and the purchase by the Cayman Islands Government of 5 Cardinal Avenue. Cayman Technology Centre is the new headquarters of Digicel which features the largest solar array in the Caribbean and is completely off-grid. In August 2018 the Cayman Islands Government completed the purchase of 5 Cardinal Avenue in central George Town which will be used as a permanent home for the Cayman Islands courts. A new Town Manager was appointed by the Cayman Islands Government in October 2018 to spearhead the redevelopment of George Town. Efforts by Government along with the private sector to enhance and revitalise the capital city will begin in 2019. The large scale revitalisation plans are be-

ing finalised and include changes to the road network, enhancing the curb appeal of the district and creating parking solutions, among others. The decision by the Government to keep the countryâ&#x20AC;&#x2122;s courts in central George Town demonstrates the level of commitment to the revitalisation efforts and will help to move those efforts forward in the coming months. Cayman is a robust and resilient market with world class tenants and prime leasing opportunities. Further development is planned in, and around George Town and the Seven Mile Beach corridor. The Government continues its work to ensure the islands remains a safe and attractive environment for investment.

Sloane Rhulen Sloane has over twenty years of real estate experience and is well respected for her knowledge of commercial sales and leasing and her positive track record in Cayman. Prior to relocating, Sloane was employed for thirteen years in Manhattan where she experienced tremendous success as one of the few female brokers in the marketplace. Sloane began her career in Cayman at Dart Realty and in 2015 founded Rhulens, a full service boutique brokerage and advisory firm. She is known for her ability to build consensus between parties during challenging negotiations and providing valuable and meaningful advice to her clients.

Mergers and acquisitions in the Cayman Islands

Structuring Options Jacob MacAdam, Appleby

Flexible structuring options attract M&A dealmakers With deals valued at over US$60 billion in the first half of 2018 alone and Cayman Islands companies being the target of 421 transactions, the Cayman Islands, by deal volume, ranks as the number one international financial centre for mergers and acquisitions transactions.1 So what makes the Cayman Islands so attractive to dealmakers? One reason is undoubtedly the structuring flexibility that the jurisdiction offers. This article considers the four principal methods of acquiring a company (or its assets) incorporated in the Cayman Islands. These being, a statutory merger/consolidation, a scheme of arrangement, a tender offer and, an asset purchase.

Statutory merger/ consolidation A statutory merger or consolidation under Cayman Islands law is the process whereby one or more constituent companies is/are subsumed into another constituent company (or a new company in the case of a consol-

idation), the latter of which becomes the surviving entity. Provided that the merger is permitted by, or is not contrary to, the laws of the jurisdiction of incorporation of the overseas company, Cayman Islands companies can also merge or consolidate with overseas companies where either a Cayman Islands company or an overseas company is the surviving entity. Cayman Islands law requires that the directors of each constituent company must first approve and sign a plan of merger/consolidation. The shareholder approval threshold for a statutory merger/consolidation (subject to any higher threshold or additional requirements in the relevant constitutional documents) is a two-thirds majority of those shareholders attending and voting at the relevant shareholder meeting. Grand Court approval is not required (contrast with a scheme of arrangement) but the consent of any secured creditors of each constituent company must be obtained. Dissenters in a merger/consolidation scenario have the right to be paid the fair value of their shares and can compel the company to institute court proceedings to determine that fair value. Minority dissenters however will not be able to block the merg-

er/consolidation if the relevant approvals and thresholds have been satisfied.

Scheme of arrangement A scheme of arrangement is a court approved compromise or arrangement entered into between the target company and its shareholders (or any class of them) that can be used to effect a takeover of a Cayman Islands company. The procedure requires both shareholder and Grand Court approval. The three key steps in the process are as follows: • an application for a scheme of arrangement is commenced by petition, filed at the Grand Court together with a summons seeking an order for the convening of the relevant shareholder meeting(s), at which the shareholders will be asked to consider the proposed scheme of arrangement; • if the Grand Court makes an order convening the meeting(s) and having determined the constitution of the relevant classes for voting purposes, the meeting(s) will be held, at which a majority in number representing 75% in value of the shareholders or each class of shareholders, as the case may be, present and voting at the meeting, must vote in favour of the proposed scheme of arrangement in order to proceed to the sanction hearing; and • if at the second court hearing the Grand Court sanctions the scheme of arrangement, all of

the shareholders, or classes of shareholders as applicable, and the company, will be bound by the scheme of arrangement (regardless of whether any shareholders voted against the scheme or voted at all).

Tender offer A tender offer is a contractual offer to acquire some or all of the shares in a company. Cayman Islands law provides for a “squeeze-out” of minority shareholders holding 10% or less of the shares where the relevant statutory thresholds have been met. The offer must be approved by not less than 90% in value of the shares subject to the offer, excluding any shares held or contracted to be acquired before the date of the offer. Notice must then be given to the dissenting shareholders that the offeror wishes to compulsorily acquire their shares. If the dissenters do not apply to the Grand Court for relief from the compulsory squeezeout within the relevant time periods, then the offeror will be entitled and bound to acquire their shares.

Conclusion The continued growth of the Cayman Islands as a leading global jurisdiction for mergers and acquisitions activity will come as no surprise to market observers. Much of the deal flow has originated in the financial services sector as private equity funds continue to deploy capital particularly in the fiduciary administration space. High profile examples of transactions of this nature include Bank of N.T. Butterfield & Son Limited’s acquisition of Deutsche Bank’s Global Trust Solutions business and CVC Capital Partners’ acquisition of the TMF group for €1.75 billion. The jurisdiction, with its sophisticated yet flexible regulatory and legal framework, appears well placed to continue to dominate the offshore mergers and acquisitions landscape.

1 Appleby’s Offshore-i Report on Offshore M&A H1 2018

Asset purchase If an acquiror desires to purchase certain assets of a target, rather than the shares in the target, then the acquisition could be structured as an asset purchase. Such an arrangement would be documented in an asset purchase agreement (which could be Cayman Islands law governed but does not need to be) and each asset would need to be transferred pursuant thereto and in accordance with the particular transfer mechanics specific to the assets in question.

Jacob MacAdam Jacob is a Partner and a member of the Corporate Finance team at Appleby in the Cayman Islands. He represents clients in a wide variety of corporate finance transactions including mergers, acquisitions, leveraged buyouts and joint ventures.

Connecting Cayman:

Direct flights from around the world

It is easy to travel between Grand Cayman and the rest of the world. International flights run daily from Owen Roberts International Airport on Grand Cayman with direct flights available to several cities in the United States, Toronto, London, Nassau, Havana, La Cieba, Panama, as well as Montego Bay and Kingston, Jamaica. The Cayman Islands is 480 miles south of Miami, which is just an hour by plane. Flying from New York takes only three and a half hours, while Chicago and Toronto, Canada are less than four hours. There are direct flights from many

North American cities like: Atlanta, Boston, Charlotte, Chicago – ORD, Dallas/Fort Worth, Houston, Newark, New York – JFK, Philadelphia, Toronto, and Washington, DC – Dulles. The Cayman Islands is serviced by the following airlines: Air Canada, American Airlines, British Airways, Cayman Airways, Delta, JetBlue, Southwest, United, and WestJet. Find out more at visitcaymanislands.com.

Intelligent and insightful offshore legal advice and services. Delivered 98with perspective.

applebyglobal.com

Life Reinsurance

Industry challenges and innovation Kristian Leese, Aureum Re

In the last edition of this magazine, Cayman Finance published an article on Financial Reinsurance and the reasons why Cayman has seen a significant inflow of life and annuity reinsurance companies. The authors explained that Caymanâ&#x20AC;&#x2122;s decision not to pursue Solvency II equivalency was a key factor in attracting reinsurers who have a North American focus. Companies such as Aureum Re saw material benefits from choosing Cayman given their desire to report results under a regime which is more closely aligned to their US life insurance clients (ie. risk based capital and US statutory accounting principles). Since

that article was published we have seen continued collaboration between the Cayman Islands Monetary Authority (CIMA) and the National Association of Insurance Commissioners (NAIC) as noted by the memorandum of understanding which was signed in August 2018. The life and annuity reinsurance market continues to attract interest from new entrants including hedge funds looking for more permanent capital sources. The market offers meaningful spread opportunities given the long duration

and relatively low and stable cost of the liabilities. The greater number of players has translated to increased competition on reinsurance quotes. The end result has been an upward trend in ceding commission which is of benefit to cedants and margin dilutive to reinsurers. We predict continued growth of life reinsurance given the scale of annuity reserves held by US life insurers (which are estimated to be $1 trillion). In this article, we will explore the industry in more detail along with challenges from both a ceding and reinsurance company perspective.

Rationale for block transactions A substantial proportion of legacy reserves have high policyholder crediting rates as they were written more than 10 years ago. An insurance portfolio which backs life and annuity reserves typically consists primarily of investment grade fixed income securities. Given the extended period of low interest rates, insurers have encountered spread compression and an increasing pressure on their ability to achieve original return targets. This has resulted in direct writers seeking reinsurance solutions to help them meet profit objectives and alleviate capital strain. Insurers can use reinsurance capacity to obtain reserve credit so they can release the capital committed to these blocks and redeploy to newer and more profitable lines of business.

Product development and innovation The industry has seen an increase in the number of clients looking for prod-

100

uct development support for their new business initiatives - more commonly referred to as flow business. Reinsurance is quite unique in that the writing company and reinsurer have aligned partnership interests during the development stage and full life cycle of the product. Direct writers are looking to utilise the expertise which reinsurance companies can offer on both sides of the balance sheet so that their new products are competitive, profitable and ultimately sustainable. On the liability side, we work closely with the ceding company to design and price the product. We also provide support in the preparation and review of contracts and marketing materials. For the assets, we develop a model portfolio based on projected volume, duration and risk profile characteristics of the underlying reserves. This process ensures that the annuity product which is eventually distributed to the market, meets return objectives and risk constraints for both the ceding company and the reinsurer. Flow business can be beneficial to the reinsurance company for a number of reasons. Most importantly, capital is consumed over time rather than at inception for a substantial block. New business also results in cash being received so it can be invested in accordance with the model portfolio from the outset. This contrasts with a substantial block transaction where there can be a cash drag as investment opportunities are executed. Similarly, if a significant proportion of inherited assets are unsuitable, there can be inefficiencies associated with repositioning the assets to the target portfolio.

How to structure a reinsurance transaction? Coinsurance is the most common and straightforward of available reinsurance structures. Under this type of approach the assets are transferred from the ceding company to the reinsurer. Under coinsurance, the reinsurer establishes its quota share of the reserves and the ceding company takes reserve credit. In general, for the credit to be recognised by the domiciliary regulator the reinsurer must be authorised by the state. If the reinsurer is unauthorised, the reserve credit must be fully collateralised by either letters of credit or assets in trust (all of which must meet regulatory requirements laid out by the NAIC). The trust structure used in a coinsurance transaction guarantees access by the ceding company to the supporting assets in the event of a default by the reinsurer. Most offshore reinsurance companies are classified by the NAIC as unauthorised reinsurers. Under this approach, the offshore reinsurer typically needs to fully collateralise its obligations on a market value basis (which is not required or commonly offered by authorised domestic reinsurers). This can and should be seen as a positive differentiating aspect of a coinsurance transaction with an offshore reinsurance company. As an additional safeguard to the client, it is common for the reinsurance agreement to define a negotiated level of over collateralisation (OC) in excess of the market value of the assets supporting the reserves. When choosing a reinsurance partner, it is important for clients to perform adequate due diligence and

really understand the reinsurerâ&#x20AC;&#x2122;s yield enhancement strategies. This is particularly relevant if a recapture event were ever to occur. In this scenario, the ceding company would need to take control and potentially trade out of supporting assets. Ceding companies do not want to be faced with assets which have limited liquidity and lower than expected credit quality. The ceding company should also be comfortable with the negotiated investment guidelines as they relate to permitted assets, limits by asset class and issuer and duration limits relative to the liabilities. With alternative reinsurance structures such as funds withheld coinsurance or modified coinsurance, the ceding company retains ownership of the assets (which are recognised on their balance sheet). Some clients prefer this approach as it can provide greater visibility to the underlying investments. Under these arrangements, the assets are typically retained in a segregated custody account and managed by an investment advisor agreed upon by both the reinsurer and ceding company.

How is the industry changing? There continues to be new market entrants and capital sources from non-traditional market participants. With rising interest rates and the prospect for increasing investment yields, traditional onshore reinsurers are more active in the market. We therefore expect competition will continue to grow for reinsurance opportunities involving asset intensive product lines. Ceding companies are requiring more information on investment strategies

101

and the underwriting process performed by the investment manager. We are seeing a renewed emphasis on credit quality and collateral liquidity. Ceding companies are pushing for greater levels of overcollateralisation. Clients are also focused on limiting their risk in default scenarios which may compress reinsurer margins. The prospects of the industry look strong, and with nimbleness and through working collaboratively with our clients to ascertain their needs, we can look forward to further growth in the industry.

102

Kristian Leese Kristian is a Vice President at Aureum Re, a Class D reinsurance company in the Cayman Islands which primarily reinsures fixed and indexed annuities. Besides his finance and operational roles, Kristian is responsible for Aureum Reâ&#x20AC;&#x2122;s business development and marketing initiatives. Prior to joining Aureum Re, Kristian spent 4 years with AON Cayman working primarily with startup reinsurance companies. He was previously the financial controller for AIG UK and was also an audit manager at KPMG Cayman in its alternative investments practice.

What’s locking women out of the boardroom? Tanis McDonald, KMPG

Let’s be clear

they want to have the I have been really en– no-one is same opportunities as couraged by the desire men. An analysis perof my male colleagues setting out formed by Green Park to engage in making to deliberately of 2017 FTSE 100 leadmeaningful change. At the same time, let’s exclude women. ers found that women have to be three not kid ourselves that everyone believes in equality for men times more educated than men to and women. In her 2018 book ‘Win sit on a FTSE 100 Board. Research by Win’, former editor-in-chief of USA To- KPMG and YSC in Cracking the Code showed that a man is 4.5 times more day Joanne Lipman references a 2017 likely to make it to executive commitglobal survey where one in five men said they believe that women are in- tee level than a woman embarking on her career at the same time. ferior to men. The actual experience of women in the workplace shows they have to be superior to their male counterparts if

The inequities illustrated by this research is indisputable and there is no doubting the need for change.

103

If we consider two of the professions prevalent in our jurisdiction – law and accountancy – there is a similar fact pattern in two of the largest markets with which we transact:

Legal In 2017, women were the majority (50.2%) of practicing solicitors in England and Wales, yet of the 30,000 partners in private practice, only 28% of partners were women. In the US, the American Bar Association reports 2018 statistics that women comprise roughly 45% of associate level positions, but only 19% of equity partners.

Accountancy In the UK, 2017 results show that just over 45% of new members of the Association of Certified Chartered Accountants were female, whereas females comprised less than 20% of accounting firm partners. In the US, the American Institute of Certified Public Accountants reported in 2017 that women comprised approximately 45% of associate level positions, while only 32% comprised director or non-equity partner roles, and 16% were equity partners. The evident gender gap in leadership positions that is so common in our professions and organisations represents a significant missed opportunity for business. Women are a highly skilled source of leadership talent with a range of approaches and perspectives that are being overlooked. If you are surrounded by people who are very like you, in terms

104

of background, experience and lifestyle, then it follows that their perspectives are likely to be very similar to yours – and a senior leadership team made up of people with the same experiences and perspectives can be a very blinkered one. McKinsey & Company’s latest research reinforces the impact that diversity can have on the bottom line. Based on its 2017 report, companies in the top quartile for gender diversity on their executive teams were 21% more likely to experience above-average profitability than companies in the fourth quarter.

How Gender Diversity Correlates with Financial Performance Likelihood of profitability* above national industry media, % 55

21% 45

Top

Bottom

Average of 14% women in sample * Average earnings-before-interest-and-taxes (EBIT) margin 2011-2015

Despite the business case and best efforts to drive change, progress is slow. The male leaders of our organisations are the most powerful stakeholder group that stands to benefit the most from diversity initiatives, though arguably the most difficult group to engage. In a survey performed by Catalyst, three barriers to men’s support were mentioned most often: real and perceived ignorance, apathy, and fear. In terms of apathy, interviewees said that many men were not concerned about issues of gender equality and/or did not see a compelling reason for becoming actively involved with gender initiatives. The fear that was described was related to three different concerns: fears about loss of status; fears about making mistakes when talking about gender; and fears about other men’s disapproval. According to the interviewees, many men perceived that although beneficial to women, equality could only come at the expense of men. Their fear of loss outweighs the potential gains. Or, there is concern by men that by getting involved, they inadvertently expose themselves to the criticism of women. With a better understanding of what some of our male leaders think, it is easier for us to develop strategies to either improve awareness or engage change. The personal situations of our male leaders, such as a spouse’s employment status or having a daughter, can certainly result in an increased commitment to gender equity. Change can also come about by expos-

ing men to the personal cost of gender bias and the personal benefits that can be gained. In a more equitable work environment, individual men may stand to gain from freedom to share financial responsibilities with one’s partner; more rewarding and intimate relationships with one’s partner; freedom to parent more substantively; freedom to define oneself according to one’s own values rather than traditional gender norms; and, better psychological and physical health. Providing men with opportunities to have directed or facilitated discussions about issues of gender in the exclusive company of other men may bring out the personal case for equality. Another suggestion is to pair senior male leadership with female employees for reverse mentoring. As the culture and perceptions within our organisations change, the obstacles women face should fall away and more women should stay. In 2016, when a women-only college at Cambridge did a survey of its entire living alumni to see what impediments, if any, to career progress they had faced, they almost certainly expected balancing family and work to come out on top. But, whilst that came in at 22%, there was another impediment that was much more significant – 33% of alumni said workplace culture was the biggest impediment to career progress. A large body of research, covered in the report, reveals the problems that many women experience with workplace culture, and how these are grounded in inherent bias in most workplaces:

105

• Men and women network differently. Women want to do strategic networking during their workday and women prefer formal over informal contacts. Men tend to form informal networks that are difficult for women to break into. • Men and women are evaluated differently. Women tend to be promoted based on experience whereas men may be promoted based on potential. Or the same behavior is judged more negatively if you are a woman. • Women have limited access to high profile assignments. Male leaders assign prestigious projects to men that are similar to them or form part of their informal network. • Men sponsor other men for leadership roles. Senior men, and some junior women, may not feel comfortable with cross-gender sponsorship. In order to benefit the most from diversity, it is imperative our senior leaders, male and female, recognise that things can be done differently and commit to driving change. I think it is imperative that an organisation’s inclusion and diversity strategy is linked and integrated into its growth strategy. Leaders should endeavour to identify aspects of inclusion and diversity that act as performance enablers for specific business metrics, such as talent attraction, winning new business, or reducing turnover. People are our organisations’ most important appreciating assets. The cost of leader-level employee attrition will depend on the organisation, but one estimate puts this cost at 1.5-2X annual salary. Statistics show that senior level women exit firms at a greater rate than senior level men. If organisations reduced the number of women exits, there can be a direct impact to the bottom line. Finally, I think organisations should support leadership training as well as bias awareness training. Bias exists in both

106

men and women – we can all benefit. Not only do our organisations need to address workplace culture, but everyone can make it a priority: • ask a man at least as often as you ask a woman to do the people mentoring, office administration, work parties and teaching that are often thought to be more suited to a “female skill set”; • ask about the gender balance of the event you’ve been invited to speak at, encourage a gender diverse panel; • challenge gender bias by doing a gender language flip. In other words, ask yourself, “How would I have said that if I’d been talking to a man/ woman?”; • set a goal to meet someone new of another gender for coffee, say, once a month; and • adapt your leadership style to deliberately include women, in your opportunities, assignments, mentoring and in your succession planning. Do not be scared to try - and sometimes fail. Driving meaningful change takes courage and determination, with the end result beneficial to all.

Tanis McDonald Tanis is a Director in KPMG’s Asset Management Practice. She has 14 years of experience auditing funds in a number of financial centres including London, British Virgin Islands and Cayman. Tanis has taken a personal interest in inclusion and diversity.

Women in finance To gauge a measure of how women in business are dealing with the complex issue of leadership, Cayman Finance posed the question to key female business leaders in the Cayman Islands:

“

What are the key issues you see influencing leadership in the next five to ten years?

opportunities to positively impact the outcomes for the Cayman Islands in the process. In years to come, leaders will have to be even more outward-looking and engaging, while ensuring that the domestic considerations and concerns are adequately addressed. Hon. Tara Rivers Minister of Financial Services and Home Affairs, Cayman Islands Government

I think the answer to that question depends on whether you take a macro or micro perspective. At what I would call the ‘macro level’, the key issues influencing leadership – especially effective leadership – in the next 5-10 years are similar to those experienced today, but to an even greater degree. I believe the biggest areas of focus will be navigating and responding to the external geo-political threats and realities of the day which may impact the domestic economy, local business and/or way of life; and finding or creating the

At the ‘micro level’ the issues influencing leadership, in particular effective leadership, will remain relatively the same. There will always be the need to develop and demonstrate managerial effectiveness through strategic thinking and problem solving, time and project management; to inspire others/ your team to perform (and excel!) at delivering on the objectives set; and to take decisive action, when needed, to lead and demonstrate leadership. In addition, issues such as leadership style and emotional intelligence will also influence the productivity and performance of the team(s) within the organisation.

107

Wanda Mellaneo Partner, Audit, KPMG

There are many complex issues confronting leaders in today’s business environment and that will continue to influence leadership in the upcoming years. Two key issues include evolving technology and the ability to innovate. By its very nature, technol-

Betsy Drummond Head of Operations & MD BSS Halifax, Butterfield

Successful leadership – past, present and future – has a fairly consistent inventory of components including: effective communication of vision and purpose; securing (willing – or better yet – en-

108

ogy evolves quickly, and I sometimes find myself rushing to keep up with new programmes and technological developments and processes being implemented in my own workplace. Technology is in many ways the driving force behind a leadership model that embraces change, learning and communication. The leaders of tomorrow will be challenged to not only adapt to a constantly changing environment but to anticipate and respond effectively to the challenges and opportunities that technology will bring; they will need to demonstrate a level of comfort with the disruption that comes from reinventing long-standing process-

es, that will be required to prepare for future potential emerging technologies.

thusiastic) buy-in and successful delivery, building and maintaining trust; engaging, listening to and keeping followers. All while keeping track of, understanding and maneuvering around goal posts and external factors that can and do shift, often rapidly. Add in the challenge of doing these things with increasingly diverse and geographically distributed teams who may also be part of complex matrix reporting structures, and the role becomes really interesting!

increasingly important to leaders, going forward, will include better ways and means to make meaningful and authentic connection across the diversity and distribution, while also building new ways to engage and harness the incredible power and strength which those two things contribute. I would also add that I am also truly hopeful that some of the negative influences we have seen, particularly in some of our global leaders in recent times – lack of integrity, blatant dishonesty (to name a few) - will be firmly and emphatically rejected.

I suspect a couple of key influences that will become

As the workplace continues to evolve through disruptive advancements, it will be important to embrace a culture that supports innovation. Innovation is critical in driving growth and responding to a constantly changing business environment. Leaders who embrace innovation and have the ability to motivate their staff to introduce new ideas, practices and solutions, position themselves to be the most successful. The future leaders will need to be agile enough to recognise when it’s time to change or adjust their approach and respond effectively.

to embracing it head on and exploiting the opportunities associated with it. Leadership will increasingly focus on harnessing disruptive innovation through change management.

Carolyn du Toit Assurance Partner, PwC

We live in a time when it seems that continuous change is the only constant. We have evolved from a position of thinking “no one likes change” to a view of change as not only critical to business survival but where change is necessary to realise opportunities. There has already been a significant shift in leadership thinking from responding to change

Ingrid Pierce Partner, Walkers

Leaders of tomorrow will be dealing with a different labour economy in an environment where employees have a much greater say in and control over the jobs they

The complexity of issues businesses deal with today has broadened and is increasingly focused on societal threats such as over-regulation, terrorism, geopolitical uncertainty, and climate change, as opposed to traditional business threats. Increasingly, leadership will be challenged with demonstrating a clear purpose and measurable values which align with the views of the stakeholders outside of regular financial targets. Rapid technology advance-

undertake and the manner in which they choose to work. Remuneration will come to mean much more about reward than pay and therefore leaders will have to be very thoughtful about how they reward each individual rather than the collective body. This ‘pick and mix’ approach it is a long way from the process driven procedures generally preferred by businesses today. The use of AI in business applications and problem solving will undoubtedly influence the way in which leaders think about their own roles as well as those in their

ment has led to massive transformation from a worker perspective and there is a great deal of discussion and uncertainty around machines replacing people. Acknowledging the continuance of change in the roles of people versus technology, leadership will have to ensure there are sufficient people with the correct skills to effectively utilise/leverage the digitally enhanced work place. In terms of leadership issues, attracting and maintaining top talent will remain the top priority over the next five to 10 years. It is the people that underpin all of the above who will push the organisation to successfully navigate the threats and opportunities whatever they may be.

wider business. Initially this will make the issues more complex (or at least seem more complex) until we become comfortable with doing business in a slightly different way. It should be fun!

109

been the ‘drivers’ of much of this change, having seen more change in their lifetime than previous generations.

Wanda Ebanks Partner, Maples Group, Legal Services

For Generation Xers, those now endowed with workforce leadership, keeping pace with rapid technological advancement and remaining relevant in the ever-evolving dynamics of today’s workforce will rank high as key issues influencing leadership in the coming years. Thankfully, today’s leaders are acutely aware of these challenges and in fact have

YOUR

The next decade will be a time of ‘fine-tuning’. Today’s leadership has taken on board the Millennial’s mantra of ‘work life balance’ and ‘9-5 needs to be assessed by global standards’. They have led the charge to the virtual office and, in doing so, been credited with shepherding the unprecedented growth in productivity and innovation attributed to the current workforce. Future leaders will need to work differently to keep the same pace of return, buying in to the concept of learning and understanding their workers in a way that pushes them beyond

their comfort zones. While concepts such as ‘agile working’, ‘hot-desking’ and ‘work life balance’ are almost instantaneously digested and implemented by today’s leaders, greater reliance on automation, decentralised processing and AI will judge them by subjective standards for which there is not yet empirical evidence. Leaders will be known as ‘innovators’ and ‘societal disruptors’; expected to shake up the status quo and step outside of the norm. The blueprints from which ancestral leadership has shaped past generations are no longer a point of reference and our leaders of tomorrow are setting courses into the unknown. Guided only by the one known constant they have – change.

LEGAL

EXPERTS

Legal Advice | Corporate & Trust Services Global Experience | Local Knowledge | Proven Results Speak to our experts: conyersdill.com

110

KEVIN C. BUTLER

RICHARD D. FEAR

PARTNER, HEAD OF CAYMAN ISLANDS OFFICE

PARTNER

kevin.butler@conyersdill.com +1 345 814 7374

richard.fear@conyersdill.com +1 345 814 7759

CORPORATE

FUNDS

TRUST

ACCOUNTING

BERMUDA BVI CAYMAN ISLANDS GUERNSEY HONG KONG ISLE OF MAN JERSEY LUXEMBOURG MALTA MAURITIUS UNITED KINGDOM

World class fiduciary and administration services With 500 experienced professionals across 11 offshore and onshore jurisdictions, our people are the stars of our business. Collaborative, experienced and armed with substantial technical expertise, they provide quality solutions to your specific requirements. Call Richard Gordon on +1 345 640 0512 to find out more. estera.com Follow us

Regulatory information is available at estera.com

111

112

Cryptocurrency Funds:

Risk or opportunity for the Cayman Islands? Caroline Heal and Tom Hagger, Walkers Cayman Islands

It may be surprising to learn that the word “cryptocurrency” was added to the Oxford English Dictionary in 2014, since many industry participants would not have come across the word until 2017 when the rapid increase in the price of certain cryptocurrencies garnered mainstream media attention.

The most well publicised of these price increases was Bitcoin, which saw its value increase from approximately US$950 in December 2016 to a peak of US$19,783 in December 2017 (an astonishing 1,982% increase in less than one year). As a result, stories and articles about “Bitcoin Billionaires”, plans to turn Puerto Rico into a “Crypto Paradise” and Satoshi Nakamoto all

became front page news. However, by November 2018, the price of Bitcoin had slumped to slightly above US$4,000. The volatility is not limited to Bitcoin; all cryptocurrencies have experienced volatility. High volatility potentially makes cryptocurrencies a promising opportunity for alternative investment funds. Institutional investors are actively pursuing these opportunities and are leveraging their experience in traditional asset classes to seek to minimise the risks associated with investing in cryptocurrencies. As the most popular offshore jurisdiction for alternative investment funds, the Cayman Islands has already experienced significant activity in this space and is well positioned to see this increase. The Cayman Islands must ensure it protects its reputation as the pre-eminent offshore jurisdiction for investment funds by developing laws, rules and regulations which encourage the establishment of cryptocurrency funds in the Cayman Islands without undermining the jurisdic-

113

tion’s well-earned reputation. There are also some key risks associated with cryptocurrency funds that are being navigated by service providers in order to take advantage of the opportunity presented by this relatively new asset class.

Effective legislation The legal and regulatory framework in the Cayman Islands is designed to facilitate growth and enterprise and to provide a flexible business environment, while at the same time maintaining its position as a leading financial centre. Cayman has well-tested structures with which both managers and investors are familiar and comfortable. These structures accommodate a wide range of investment strategies, differing liquidity requirements and, specific to cryptocurrencies, the issuance of tokenised equity interests. This flexibility is vital to the innovative area of cryptocurrencies. We have seen cryptocurrency funds established in both the hedge fund and venture capital space, using exempted company, exempted limited partnership and limited liability company vehicles. The Cayman Islands has comprehensive anti-money laundering (AML) legislation, which complies with global standards by adopting in principal a risk-based approach. Where subscription proceeds are received in-kind for cryptocurrency funds, the requirement to identify and verify the investor and relevant source of funds becomes more difficult. This presents a new challenge for fund administrators and a key

114

risk for AML compliance officers and fund operators. Some administrators have had to partner with tech providers to be able to track the provenance of the coins and satisfy themselves on the source of funds in order to confirm compliance with Cayman Islands AML laws. Cryptocurrency funds with tokenised equity interests have had to embed qualified purchaser requirements and AML requirements into their smart contracts for transfers of their tokenised equity interests on the blockchain platform. Given the importance of AML in the cryptocurrency space, the number of AML providers specialising in cryptocurrencies has increased significantly, however all participants must be mindful to ensure AML providers are not merely collating the AML information (rather than confirming compliance with Cayman Islands AML standards).

Safe and effective custody It is usual for cryptocurrencies to be stored in “hot” and “cold” storage facilities. Hot storage is kept online and connected to the Internet. It offers better liquidity, but as it is connected to the Internet there is more risk that it may be hacked. Cold storage is kept offline and disconnected from the Internet. It offers less liquidity but significantly reduces the risk of hacking. Neither hot nor cold storage provides a perfect solution, and one alternative option is to keep the cryptocurrency in cold storage with a small percentage in hot storage to facilitate liquidity requirements to the extent that this is practicable.

The security and storage of cryptocurrencies have emerged as additional challenges for cryptocurrency funds. There have been numerous incidents of hacking and security compromises, which have had a negative and detrimental effect on the reputation of cryptocurrencies as a mainstream investment. To address this concern, Cayman based custodians need to have robust policies and procedures in place to satisfy funds and their investors as to the security of cryptocurrency that they are holding. Some cryptocurrency funds are self-custodying (to the extent that they are able to do so under applicable laws) being of the view that they have the technology available in-house to self-custody securely, compared to third party custodians. In light of the risk of theft or hacking, custodians, crypto exchanges, cryptocurrency funds and their fund directors are also looking at insurance options. Again, this is a developing area with few insurers providing insurance against theft or hacking. Some insurers have chosen not to provide “Directors and Officers” insurance to directors of cryptocurrency funds until the market is further developed, while those insurers who are providing insurance in this space are able to command higher premiums.

Proper valuations The ways in which traditional assets classes are valued are well established, and fund administrators and calculation agents in the Cayman Islands can perform valuations quickly

and efficiently. On the other hand, the valuation of cryptocurrencies has presented new challenges and it is not easy, or in some cases not possible, to apply standard valuation formulas to cryptocurrencies. In addition, there is not a single established exchange from which a valuation can be marked. This is especially problematic when you consider that the difference in the price of Bitcoin on the top two (by volume) cryptocurrency exchanges is US$200 and that there are 2000+ cryptocurrencies. Market practices are continuing to develop, but this remains a key area of focus for fund administrators, calculation agents and auditors. The market capitalisation of all cryptocurrencies sits at approximately US$137 billion. That is exceeded by the US$8.8 trillion that the alternative investment industry manages, and is miniscule when compared to the estimated US$300 trillion market capitalisation of all traditional asset classes. However, these figures do not take into account that Bitcoin, generally considered to be the first cryptocurrency, only recently had its ten-year anniversary. This is a very new asset class that has exceeded all expectations to this point. Some believe cryptocurrencies will replace fiat currencies. Some believe cryptocurrencies are just a part of the wider blockchain revolution. What is clear is that there are plenty of opportunities in this space for the Cayman Islands, and its experienced service providers are already working through the particular challenges that cryptocurrency funds present.

Caroline Heal Caroline is based in Walkers’ Cayman Islands office where she is a Partner in the firm’s Global Investment Funds Group. She has extensive experience in the structuring, formation and continuing operation of investment funds, including restructurings and fund terminations, working with corporate, partnership and unit trust structures. Caroline is also a part of the FinTech team at Walkers and advises FinTech businesses on projects associated with blockchain, digital assets and a range of related activities, including the establishment of cryptocurrency funds.

Tom Hagger Tom is based in the Cayman Islands where he is an Associate in the firm’s Global Investment Funds Group. He advises asset managers, and their onshore counsel, in relation to a wide range of corporate and partnership issues. He also regularly advises clients in the FinTech space with a particular focus on cryptocurrency funds, blockchain products and virtual currencies.

115

The business lunch: Caymanâ&#x20AC;&#x2122;s meeting spots The art of the business lunch is a fine dance between personal and professional. And one of the key factors in striking this balance lies within your choice of restaurant. Whether meeting with an employer, investor or client, it is important the location of the lunch sets the right tone and the service allows conversations to flow smoothly. Luckily for those conducting the business on our islands, Cayman is known as the culinary capital of the Caribbean. With a sea of high quality restaurants, there are certainly a few standouts for you to choose from.

Agua, Camana Bay. Having recently relocated to Camana Bay, Agua remains a restaurant of choice for locals because of its sophisticated atmosphere. Its seafood focused dishes are rooted in Italian tradition and inspired by Peruvian cuisine. Even the express business lunch menu stands to impress. A private dining area is also available within the restaurant. Contact: +1 345 949-2482 agua.ky

Ave, Kimpton Seafire Resort + Spa presents an approachable menu of coastal Mediterranean recipes made with simple, yet flavourful ingredients. The flow from the rolling waters of Seven Mile Beach into the outdoor terrace and indoor seating invites conversation to follow suit. Contact: +1 345 746-4111 averestaurant.com

116

The Brasserie, Cricket Square is the pioneer of the farm-to-table movement in Grand Cayman. The grassroots establishment utilises its own fishing boats, bee hives, coconut plantation, organic vegetable garden and fruit trees to consistently produce high quality, sustainable and seasonal dishes. The Brasserie has one of the largest and most diverse range of private dining options on the island, from the Wine Room to the Brasserie Garden. Contact: +1 345 945-1815 brasseriecayman.com

Abacus, Camana Bay is a Caribbean-style city lounge created by local restaurateurs Markus Mueri and Neil Bryington. Its outside dining is perfect for casual lunches while the more private indoor dining allows for a more formal experience. Chef

Lobster Pot, George Town is a family owned and operated restaurant located near the heart of our islandâ&#x20AC;&#x2122;s financial district, with panoramic views of the George Town waterfront. The menu contains several vegetarian and gluten free options, made with locally sourced ingredients, so it is sure to please a wide variety of palates. Contact: +1 345 949-2736 lobsterpot.ky

Will Oâ&#x20AC;&#x2122;Hara focuses on creating a menu that highlights the textures and flavours of the islands. Contact: +1 345 623-8282 abacus.ky

Grand Old House, George Town offers a rich history and an even richer menu. The Grand Old House has been a local favourite since its opening in 1969 featuring an award-winning wine selection with over 15,000 bottles from around the world and a sophisticated atmosphere, the Grand Old House lives up to its name. Contact: +1 345 949-9333 grandoldhouse.com The Wharf Restaurant and Bar, George Town, the sister-restaurant to the Grand Old House, The Wharf Restaurant has recently benefited from refurbishment in both its indoor and outdoor dining. The improvements to the restaurant extend to a refreshed menu and professional staff. Contact: +1 345 949-2231 wharf.ky

117

cayman finance OVERVIEW Originally known as the Cayman Islands Financial Services Association, Cayman Finance was established in 2003, with the vision of a broader organisation representing the countryâ&#x20AC;&#x2122;s financial services industry.

118

Financial OVERVIEW

The Cayman Islands is a premier global financial hub, efficiently connecting law-abiding users and providers of investment capital and financing around the world. Cayman Finance’s mission is to protect, promote, develop and grow the Cayman Islands financial services industry through cooperation and engagement with domestic and international cooperation and engagement with domestic and international political leaders, regulators, organisations and media to promote the integrity and transparency of the industry through legislative and regulatory enactment and encouraging the sustainable growth of the industry through excellence, innovation and balance. As well as contributing to the debate about the role of International Financial Centres, Cayman Finance corrects misinformed perceptions that fail to appreciate how IFCs operate and contribute to the global economy. The Cayman Islands is a strong partner in combatting global financial crime and possesses a highly respected legal framework and a robust legal system which underpins the laws.

Cayman Finance members include some of the leading names in the financial services industry, including many law firms, accounting firms and organisations, as well as the jurisdiction’s major financial services associations, covering sectors such as investment funds and asset management, banking, insurance, reinsurance, capital markets, trusts and governance. Within Cayman Finance, there are a number of specific working groups that provide specialised information and insight to the organisation. Among these working groups are specific ones for international relations in Europe, Asia, Latin America and China, multiple groups focused on many different areas for FinTech, IT, and many more. Cayman Finance also works closely with its partners in the Ministry of Financial Services to promote and safeguard our industry in the international arena. The far reach of Cayman Finance’s partnerships ensure that Cayman’s financial services industry speaks with a single cohesive voice, allowing the jurisdiction to remain at the forefront of international business.

Conor O’Dea has served as Chairman of Cayman Finance since being elected in late 2017. Mr O’Dea worked for Butterfield Bank (Cayman) Limited in various capacities since 1989. He ended his executive career with a stint as Managing Director Cayman and President & Chief Operating Officer, BNTB Group. In April 2016, he retired from executive responsibilities with Butterfield Group and assumed a non-executive role as Director of BNTB Board and Chairman of Butterfield’s Board. Jude Scott has been the Chief Executive Officer of Cayman Finance since 2014 and has served in the financial services industry in the Cayman Islands for over 25 years, spending much of his time as a Partner at Ernst & Young before moving to Maples and Calder as Global Chief Executive Officer. With over 60 Ordinary and Associate members and 15 Honorary (associations) members, Cayman Finance is truly the representative voice of the Cayman Islands financial services industry.

119

cayman FINANCE

A Year in Review The past year has been another successful one for Cayman Finance, as the organisation fulfilled its mandate both at home and abroad, working extensively and diligently to protect, promote, develop and grow the Cayman Islands financial services industry. Cayman Finance continues to actively engage globally to share the facts about the Cayman Islands importance to the global economy, the world class transparency and cooperation standards it has had in place for many years, and the beneficial role the Cayman Islands continues to play in supporting the success of G20 countries and other countries around the world. Early in 2018, Cayman Finance hosted its 5th annual New York breakfast briefing attracting more than 150 attendees at the event held at the Harvard Club of New York City. Featured speakers included Cayman Finance CEO Jude Scott, Minister of Financial Services and Home Affairs Hon. Tara Rivers, Heather Smith, the head of the Investments and Securities Division at the Cayman Islands Monetary Authority (CIMA), and guest speaker Alex Mashinsky, the founder and CEO of Celsius Network.

120

Year in REVIEW

Mr Scott also engaged with guests in the Cayman Finance hospitality cabana at the Managed Funds Associationâ&#x20AC;&#x2122;s (MFA) Networking 2018 event in Miami, Florida. MFA represents the global alternative investment industry and its investors and that event is the MFAâ&#x20AC;&#x2122;s primary business development and networking conference. Cayman Finance had a presence at many events in the Cayman Islands throughout the year, including presentations at the Cayman Alternative Investment Summit, the STEP Cayman International Wealth Structuring Forum, the Fidelity Cayman Economic Outlook Conference, Vistra 2020 roundtable, Armour Expo 2018, Mourant Ozannes Regulatory Seminar, Campbells Funds Focus, and the IOSCO Growth and Emerging Markets Committee (GEMC) Annual Conference. The Cayman Islands Chamber of Commerce Economic Forum, provided the opportunity for Cayman Finance to highlight to a broad Cayman Islands audience the importance of the Cayman Islands Financial Services Industry to the Cayman Islands economy, the work Cayman Finance con-

tinues to do to promote and protect the most important driver of the local economy, and how this could be enhanced through further collaboration and greater support from the Cayman Islands Government. Cayman Finance also does its part to ensure Cayman maintains strong relations with the United Kingdom including presentations with both new Cayman Islands Governors – H.E. Anwar Choudhury and H.E. Martyn Roper – shortly after their arrivals to the islands, outlining the work Cayman Finance does and the significant role the Cayman Islands financial services industry plays not only in the local economy but also in the global economy. With the passage of the Sanctions and Anti-Money Laundering Act 2018 by the UK parliament, which called on British Overseas Territories to have publicly accessible registers of beneficial ownership by 2020, Cayman Finance engaged officials in the Cayman Islands and London to explain how the world class verified ownership regime that exists in the Cayman Islands is superior to what is being proposed by the UK and urged them to promote the key elements of Cayman’s regime as a new global standard. The issue of beneficial ownership was also a central part of discussions with UK Foreign and Commonwealth Office (FCO) Minister Lord Ahmad of Wimbledon, as well as at a presentation to members of the UK All-Party Parliamentary Group Andrew Rosindell, Henry Smith, Col. Bob Stewart

and Martin Vickers. Cayman Finance Chairman Conor O’Dea and CEO Jude Scott also discussed a range of matters relating to the industry with Ben Merrick, the FCO Director for the Overseas Territories, in November and began discussions on how Cayman’s premier global financial hub was well positioned to support the success of the United Kingdom post-Brexit. Cayman Finance made a submission in September to the United Kingdom Parliament’s Foreign Affairs Committee (UKFAC) during its ‘Future of the Overseas Territories Inquiry’. Following the UKFAC’s public release of this information in November, Cayman Finance used the submission contents to develop a booklet “The Cayman Islands: An Extender of Value to the UK”, which was distributed widely digitally and with printed copies in the Cayman Islands and the UK. Also on the international front, Mr Scott participated in a series of meetings in London and Brussels in December with various stakeholders and industry associations to discuss Cayman’s high standards of transparency and cooperation and to enhance the awareness of the importance of Cayman’s role as a premier global financial hub and an extender of value in the global economy. During the trip, Mr Scott, along with other London-based Cayman Finance members, attended a briefing with Financial Services Minister Hon. Tara Rivers. Promoting the Cayman Islands in Asia as a premier jurisdiction with which

121

to conduct business was also on the agenda in 2018. In March, Mr Scott was among a group of private sector representatives from the Cayman Islands at the UK Department for International Tradeâ&#x20AC;&#x2122;s GREAT Festival of Innovation in Hong Kong, where the Cayman Islands government and businesses, particularly in the financial services industry, were showcased and emerging FinTech trends discussed. In September, Mr Scott also accepted an invitation from a Cayman Finance member firm to be the featured speaker at their annual client forums in Shanghai and Beijing and their investment funds annual forum in Hong Kong. Speaking to approximately 400 major decision makers within the investment community, Mr Scott highlighted how the Cayman Islands operates as a neutral and efficient hub, connecting capital and financing around the world. In doing so, these leading international business lawyers and investment specialists became better familiarised with the importance of the Cayman Islands financial services industry in facilitating the global flow of investment capital. Opportunities to engage with media were embraced, including with the China Business Law Journal, a leading legal publication in Asia. Our Public Awareness Committee (PAC) had another busy year, especially with launching its inaugural online Industry Ambassador Programme to equip members of the financial services industry with the knowledge required to champion the benefits of using the jurisdiction as a leading place to do business. For the fourth consecutive year, the

122

Year in REVIEW

highly successful Cayman Finance Student Education and Work Experience Programme was carefully planned and executed, working in partnership with the Ministry of Financial Services and Home Affairs, and the Ministry of Education, Youth, Sports, Agriculture and Lands. During the four years of the programme, over 200 Caymanian students (60 in 2018 alone) have now participated in the initiative that saw them attend workshops, weekly one-on-one mentoring sessions, and a one-month work placement at Cayman Finance member firms. The world-class programme continues to provide pathways for talented young Caymanians into the financial services industry. Locally, it was another busy year as we continued to expand our membership by welcoming at least 15 new member organisations. Cayman Finance participated in a number of consultations, including: European Union Tax Co-operation (Economic Substance) Bill, Rule and Statement of Guidance, Proposed Rules and Guidelines on Liquidity Risk Management for Banks, and Guidance Notes on the Prevention and Detection of Money Laundering Terrorist Financing in the Cayman Islands. Leading financial services innovation is another important role of Cayman Finance and its member firms and associations. For example, this year the Cayman Finance Innovation Lab, formerly the FinTech Working Group, continued its substantial work toward the creation of a regulated Certified Digital AML ID (CDAMLID) platform ecosystem, which will shift a significant amount of compliance costs out of the financial services sector, improve the quality of KYC/AML

globally, and enhance the customer experience significantly. It is envisaged that this will solidify the Cayman Islands as the premier digital identity hub and reduce costs, increase quality and improve the customer experience. These efforts are recognised by the Cayman Islands Government and the Minister of Financial Services recently announced in the Legislative Assembly that, â&#x20AC;&#x153;The Government is open to, and the Ministry is actively exploring how regulated digital ID systems could help revolutionise and streamline AML compliance locally and globally.â&#x20AC;?

As a whole, the Cayman Islands financial services industry continued to focus on finding a successful balance between regulatory and commercial priorities, while evolving to meet continually changing international standards. Cayman Finance is proud to serve as the industry voice for the largest pillar of the Cayman Islands economy and looks forward to continuing our work in 2019 and beyond to fortify the Cayman brand and that of our financial services industry at home and around the world.

Lead. Navigate. Disrupt. Deloitte advisory services Embrace complexity and accelerate performance. Deloitte Risk and Financial Advisory helps organizations navigate risks to lead in the marketplace and disrupt through innovation. From strategic, reputation, and financial risks to operational, cyber, and regulatory risks, we apply our knowledge and expertise to help clients develop strategies to become stronger, more prepared, and more resilient to the ever-evolving risks surrounding their business. Contact us to learn more about how our team can help you embrace risk and financial complexities, to power performance in your business, or to help you manage any crisis, threat or opportunity. Taron Jackman Partner, Risk Advisory tjackman@deloitte.com

Nick Kedney Partner, Financial Advisory nkedney@deloitte.com

www.deloitte.com/ky ÂŠ 2018 DCB Holding Ltd. and its affiliates.

123

2018

CAYMAN FINANCE IN REVIEW

JANUARY

FEBRUARY

APRIL

For the 5th year, Cayman Finance hosted its Annual New York Breakfast Briefing at the Harvard Club of New York City to provide attendees with updates about developments within the jurisdiction and the industry.

Cayman Finance CEO Jude Scott participated on a panel at the 2018 Mourant Ozannes Regulatory Seminar, discussing the risks and opportunities associated with blockchain, cryptocurrencies and FinTech.

The Student Education & Work Experience Programme, for the 4th consecutive year, provided pathways for 60 Caymanian students from schools across the Islands. The students benefitted from attending and participating in 10 weeks of workshops and one-on-one mentorship sessions.

While in New York, Cayman Finance representatives joined Ministry of Financial Services representatives, including Minister Hon. Tara Rivers, at the Nasdaq Stock Market. (photo above) Jude Scott engaged with guests in the Cayman Finance hospitality cabana at Managed Funds Associationâ&#x20AC;&#x2122;s Networking 2018 event in Miami, Florida.

124

Year in REVIEW

MARCH

Cayman Finance CEO Jude Scott was among those who represented the Cayman Islands private sector at the UK Department for International Trade in Hong Kong GREAT Festival of Innovation in Hong Kong.

M AY

JUNE

AUGUST

At the Chamber of Commerce’s Economic Forum, attendees were updated on steps to further strengthen Cayman’s financial services industry and how, with the support of government, it could overcome various external challenges.

University College of the Cayman Islands (UCCI) student Johnathan Page was rewarded with an iPad for achieving 100% on a quiz about the financial services industry. He was presented with his prize by Cayman Finance representative Tamika Hue.

Members of the UK All-Party Parliamentary Group for the Cayman Islands - Andrew Rosindell, Henry Smith, Col. Bob Stewart and Martin Vickers paid a four-day visit to Cayman, during which they were presented with an update on the strength of the jurisdiction’s financial services industry by Cayman Finance CEO Jude Scott.

Public Central Beneficial Ownership Registers was the focus when Cayman Finance representatives met with UK Foreign and Commonwealth Office Minister Lord Ahmad of Wimbledon. Jude Scott stressed the importance of a level playing field when it comes to central public registers, while highlighting the benefits of Cayman’s own system.

J U LY Cayman Finance participated in several consultations throughout the year, including the Securities Investment Business (Amendment) Bill 2018 in July. This particular consultation was requested by the Ministry of Financial Services. Consultations in other months included The European Union Tax Co-Operation (Economic Substance) Bill and Guidance Notes (Amendments) on the Prevention and Detection of Money Laundering Terrorist Financing in the Cayman Islands.

SEPTEMBER CEO Jude Scott was invited to be a featured speaker at Maples Insights Forums in Hong Kong, Beijing and Shanghai. Speaking to approximately 400 major decision makers within the investment community, Mr Scott highlighted how the Cayman Islands operates as a neutral and efficient hub, connecting capital and financing around the world. Cayman Finance was pleased to assist member firm eShore with its Armour Expo. Chairman Conor O’Dea presented welcome remarks. (photo above) 125

2018

IN REVIEW

continued

OCTOBER

NOVEMBER

DECEMBER

Students celebrated another successful year of the Cayman Finance Student Education Awareness and Work Experience Programme, which provides pathways for talented young Caymanians to enter the financial services industry.

The UK Parliament’s Foreign Affairs Committee published Cayman Finance’s submission for its ‘Future of the Overseas Territories’ Inquiry. That information was compiled and released in a booklet ‘The Cayman Islands: An Extender of Value to the UK’.

Representatives from Cayman Finance member firms in London attended a briefing with Financial Services Minister Hon. Tara Rivers on the latest developments in the financial services industry. CEO Jude Scott also met with various stakeholders on the trip to London and Brussels to build relationships and spread the word about positive developments in the Cayman Islands financial services industry.

Governor H.E. Martyn Roper and Ben Merrick, the Foreign and Commonwealth Director for the Overseas Territories, hosted Cayman Finance Chairman Conor O’Dea and CEO Jude Scott to discuss a range of issues affecting the industry.

126

Year in REVIEW

2019

UPCOMING EVENTS

JANUARY New Year’s Day

Cayman Finance New York Breakfast Briefing

Taste of Cayman Food and Drink Festival

National Heroes Day

STEP Cayman Conference

APRIL Good Friday

Easter Monday

GAIM Ops Cayman

JUNE Queen’s Birthday Celebration

Flowers One-Mile Sea Swim

FEBRUARY 6

Cayman Alternative Investment Summit (6-8)

Kaboo Music Festival Cayman (15-16)

MARCH 06

Ash Wednesday

9th Annual Top Employer Awards Gala

M AY 1 16

CayMAS CARNIVAL (16-20)

Cayman Discovery Day

J U LY 1

NOVEMBER Remembrance Day

Annual Cayman Batabano Carnival (1-5)

Cayman Constitution Day

DECEMBER 3

Cayman Captive Forum

Intertrust Cayman Islands Marathon

Christmas Day

Boxing Day 127

board members CAYMAN FINANCE

Our Board of Directors is comprised of the following dedicated, experienced and well-respected members of the Cayman Islands financial services industry. Their broad range of skills and experience provides our association with the strong and capable leadership our industry needs to continue to prosper in the every-changing landscape of global finance.

Conor O’Dea, Chairman Conor worked for Butterfield Bank (Cayman) Limited in various capacities since 1989, including Managing Director and Senior Executive VP, International Banking for 18 years, and Managing Director Cayman, and President & Chief Operating Officer, BNTB Group. In April 2016, he retired from executive responsibilities with Butterfield

Jude Scott, CEO Jude is well respected locally and globally having spoken internationally on financial services topics and featured on a number of occasions in international media. He retired as an Audit Partner in 2008 after spending over 23 years with Ernst & Young. As the Global CEO of Maples and Calder, he took an active role in the strategic growth and develop-

128

CF Board MEMBERS

Group and assumed a non-executive role as Director of BNTB Board and Chairman of Butterfield Bank (Cayman) Ltd Board. Throughout his career, O’Dea has served in various associate and government positions, including member and President of the Cayman Islands Board Members Association, a member of the Cayman Islands Government National Advisory Council, Chamber of Commerce Council member, and President of the Cayman Islands Chamber of Commerce. He currently holds several chairmanships/ directorships of companies operating in the Cayman Islands and elsewhere.

ment of the firm. Having served on various Cayman Islands Government and private sector committees, including the Cayman Islands Financial Services Council, the Cayman Islands Society of Professional Accountants, the Education Council, the Insolvency Rules Committee and the Stock Exchange, Jude has attained extensive experience within the Cayman Islands’ financial services industry. He has served as the CEO of Cayman Finance since 2014, and is committed to protecting, promoting, developing and growing the financial services industry of the Cayman Islands.

Dr. Dax Basdeo Dax oversees the strategy, operations and administration of the Cayman Islands Ministry of Financial Services and Home Affairs as its Chief Officer. Entities under his leadership include the Department of Financial Services Policy and Legislation; the Department of International Tax Cooperation and the General

Alan Dickson Alan Dickson is a Partner in the Corporate Department of Conyers Dill & Pearman in the Cayman Islands. Alan was previously the Head of the Singapore office of Conyers Dill & Pearman having joined Conyers in 2000.

Jon Fowler Jon is Global Head of the Investment Funds group of Maples and Calder and is based in the Cayman Islands. He specialises in hedge fund and private equity fund formation, representing a diverse industry client base. Jon has extensive knowledge of structuring and regulatory issues, and is a frequent speaker at indus-

Ashley Gunning Ashley Gunning is a partner in Walkers’ Global Investment Funds and Corporate Groups based in the firm’s Cayman Islands office. He specialises in the formation of hedge funds and private equity funds, and all aspects of corporate work, restructuring and mergers and acquisitions and has extensive experience dealing exclusively with international trans-

Registry. The Ministry also has responsibility for the jurisdiction’s financial services regulator, the Cayman Islands Monetary Authority, as well as the Auditors Oversight Authority; the Cayman Islands Stock Exchange; the Maritime Authority of the Cayman Islands; and the Financial Services Legislative Committee. Dr Basdeo’s background is in economics, finance, statistics and strategic management.

Alan’s current practice includes many areas of corporate and commercial law, with particular experience in securities law, private equity, investment funds and mergers and acquisitions. Alan also advises public and private companies in a wide range of financings and restructurings.

try events. Who’s Who Legal ranked Jon as one of the top ten Most Highly Regarded Individual Offshore Lawyers in private funds. He has been recommended in Legal 500, and named as a leading lawyer by IFLR1000. Jon has been ranked in Band 1 as a notable practitioner by Chambers Global.

actions Ashley qualified into the investment funds team at Norton Rose in London and in 1999 moved to their Singapore office where his area of practice included cross-border mergers and acquisitions, joint ventures and foreign direct investment. In 2004, Ashley joined Walkers in the British Virgin Islands before moving to the Cayman Islands in 2006. He then set up the Singapore office in 2009 before returning to the Cayman Islands office in 2012.

129

Peter Hayden Peter is a partner at Mourant and is based in their Cayman Islands office. Prior to joining Mourant Ozannes in 2008, he worked in London as a partner at Matthew Arnold & Baldwin and before that at Allen & Overy. Peter has extensive experience of financial services litigation and insolvency matters. He

Bryan Hunter Bryan is the Managing Partner of Appleby’s Cayman office and the Corporate and Commercial practice group head in Cayman. He has extensive experience in the structuring and formation of hedge funds, funds of funds and private equity funds. He regularly advises on various operational and regulatory issues in relation to these funds. His practice also includes

Kevin Lloyd Kevin is Managing Partner at KPMG in the Cayman Islands, joining the office of the firm in 1991. He became a partner in 1997 and was appointed as Regional Head of Audit in 2004, Managing Partner in 2012 and Regional Chairman in 2015. He has led the firm through significant growth and regulatory change, driving in-

Michael McWatt Michael is the Managing Director for Butterfield Bank (Cayman) Limited with responsibility for the Butterfield Group’s Cayman operations and is a member of the Group Executive Committee. He is a career banker with more than 25 years’ experience in Canada, Bermuda and the Cayman Islands. He has been with Butterfield for 19 years and was previously Group Chief Credit Officer in Bermuda and Executive

130

CF Board MEMBERS

has worked in-house at UBS and Barclays. Peter was admitted as an English solicitor (currently non-practising) in 1996 and granted higher rights of audience in 2002. He was admitted as a Cayman Islands attorney in 2008. Peter is a member of the Chancery Bar Association, Insolvency Lawyers’ Association, INSOL and the Commercial Fraud Lawyers’ Association.

general corporate matters, corporate finance and merger and acquisition transactions. Bryan is a notary public in the Cayman Islands. He has served as a board member of the Civil Aviation Authority, the Caymanian Bar Association (of which he is a past president) and the Chamber of Commerce and has served as a member of the Financial Services Council. Bryan has contributed to various legal publications, including Legal Week and the Cayman Financial Review.

dustry specialisation, collaboration, leadership and engagement. Recruiting, developing and retaining high performers who are passionate about delivering real value to the firm’s clients is a key focus area for Kevin. Kevin’s client base focuses on entities in the insurance and banking sectors and he served as Lead Insurance Partner for many years.

Vice President and Deputy Managing Director in Cayman. He previously held positions in Corporate Banking and Risk Management in Canada. Michael holds a BA in Economics from McMaster University, an Honours Commerce Degree from University of Windsor and is a graduate of the Executive Program from the Ivey School of Business at Western University. He is a Director and past president of the Cayman Islands Bankers’ Association.

David Roberts David is the Managing Director of Cayman Management Ltd., joining the firm in 1982, and has the overall responsibility for the diverse range of services provided by Cayman Management and its affiliated companies. He specialises in the establishment and operation of a variety of corporate structures and holds numerous executive and non-executive directorships, including hedge funds, insurance and reinsurance companies, investment companies, international holding company structures, along with gen-

eral operating and asset holding companies. David has an extensive background in business administration, investment and international corporate matters. He took up residency in the Cayman Islands in 1982, prior to which he gained international experience to a senior level with an international publicly quoted company based in the UK. He is a Fellow of the Institute of Chartered Secretaries and Administrators in the United Kingdom and is a registered Trust and Estate Practitioner. David is a long standing Director of Cayman Finance Ltd., is a founding member of the Cayman Islands Directors Association and is currently sitting on a number of other financial sector representative boards and committees.

Nick Rogers Nick joined Ogier as a Partner in 2010. He advises on a wide range of corporate matters with a focus on hedge fund and private equity fund formation, joint ventures, acquisitions, digital assets and cryptocurrency matters and venture capital financing transactions.

Rohan Small Rohan is a Partner in the Bahamas, Bermuda, British Virgin Islands and Cayman Islands (BBC) region of EY’s Financial Services Organisation. He has more than 25 years of audit experience in the financial services sector serving numerous large hedge funds, insurance companies and banks. He is currently the co-leader of EY’s Global Captives Practice and has oversight of the EY’s BVI audit practice. Rohan received Bachelor Degrees in accounting and computer

science from the University of Texas located in Austin. He is licensed as a CPA in the State of Illinois, a member of the American Institute of Certified Public Accountants (AICPA) and a member of the New York State Society of CPAs. Rohan has served on various government, statutory and service organisation boards and committees. He is a past Chairman of the Cayman Islands’ Chapter of the Alternative Investment Management Association (AIMA), past president of the Cayman Islands Society of Professional Accountants (CISPA), and the first chairman of its Licensing Committee. He is currently a director of Cayman Finance and chairman of its Reinsurance Strategy Sub-Committee.

131

Graeme Sunley Graeme serves as assurance leader and alternative asset management leader for PwC in the Caribbean and is also the PwC Cayman Islands territory leader. Graeme was admitted to the PwC Cayman partnership in 2006, and has more than 20 years of professional experience with PwC. His client portfolio comprises alternative investment

funds with a variety of different investment strategies and legal structures and involves working in conjunction with major fund administrators, legal counsel and fund governance firms. Graeme is a member of the New Zealand Institute of Chartered Accountants. He sits on various industry groups consulting with the Cayman Islands Monetary Authority and the Cayman Islands Government. Graeme is past president of the Cayman Islands Institute of Professional Accountants and a former member of the Executive Committee of the Cayman Chapter of the Alternative Investment Management Association.

Stuart Sybersma Stuart is the Managing Partner of Deloitte in the Cayman Islands and the Chairman of the Board of the Deloitte member firm in the Caribbean and Bermuda countries. In his continued client serving capacity Stuart specialises in providing restructuring, insolvency and dispute consulting services to Cayman Islands domiciled entities such as alternative investment funds, banks, captive insurance companies and special purpose companies.

William Walmsley William is a Partner of Rawlinson & Hunter and has responsibility for the firmâ&#x20AC;&#x2122;s trust and corporate services department. He has over 30 years of experience and specialises in private client and fund fiduciary services including services to international trust structures, private trust companies and purpose trusts. William is a director of The R&H Trust Co.

132

CF Board MEMBERS

Ltd. and The Harbour Trust Co. Ltd., duly licensed Cayman Islands trust companies owned by Rawlinson & Hunter in the Cayman Islands. He advises on the establishment and ongoing administration of Cayman Islands trusts and companies including acting as a director of a number of private trust companies, other regulated entities and other client companies. He also serves as an independent director of a number of the firmâ&#x20AC;&#x2122;s fund clients. He is a Fellow of the Institute of Chartered Accountants in Ireland, a member of the Society of Trust and Estate Practitioners (STEP), a former Vice Chairman of the Cayman Islands branch of STEP and a member of the Cayman Islands Society of Professional Accountants.

members DIRECTORY

MEMBERS BDO bdo.ky 1 345 943 8800 19 Degrees North Fund Services Ltd. 19northfs.com 1 345 749 1919

AON Risk Solutions (Cayman) Ltd. aon.com/caymanislands 1 345 945 1266

Cayman Management caymanmanagement.com 1 345 949 4018

Circumference FS (Cayman) circumferencefs.com 1 345 946 4091 Butterfield Bank (Cayman) Ltd. ky.butterfieldgroup.com 1 345 949 7055

Campbells campbellslegal.com 1 345 949 2648

Conyers Trust Company (Cayman) Ltd. conyersdill.com 1 345 949 1040

Apex Fund Services apexfundservices.com 1 345 747 2739

Appleby (Cayman) Ltd. applebyglobal.com 1 345 949 4900

Aureum Reinsurance Company Ltd. aureumre.com/reinsurance 1 345 640 0070

Carey Olsen careyolsen.com 1 345 749 2000

Carne Global Financial Services Ltd. carnegroup.com 1 345 916 4155

Conyers Dill and Pearman (Cayman) Ltd. conyersdill.com 1 345 945 3901

Collas Crill collascrill.com 1 345 949 4544

133

members