Up Front
Cayman Islands Bankers Association(CIBA) update
to the Institute of International Bankers
During the second half of 2000, variouslegislative changes took place in the Cayman Islands. In responseto the Financial Action Task Force Un-cooperative JurisdictionReport, the Cayman Islands in mid-2000 enhanced its anti moneylaundering legislation by issuing the Proceed of Criminal ConductLaw (Money Laundering) Regulations 2000 (PCCL) and in April 2001issued Guidance notes on the Prevention and Detection of MoneyLaundering in the Cayman Islands.
Under the money laundering regulations,banks and other financial businesses are required to ensure thatthey have in place adequate 'Know Your Customer' (KYC) and anti-moneylaundering procedures in place, that their staff are trained insuch procedures and that records are retain for a specified minimumperiod.
The regulations also make provision forthe client identification of persons with whom a business relationshipwas formed before 1 September 2000 to be completed by December2002, with a possibility of six (6) months extension. An additionoffence was also created under the Proceeds of Criminal ConductLaw, (2000 Revision, making failure to report suspicious transactionsa criminal offence.
An amendment to the Monetary Authority Lawexpanded the provision for the Monetary Authority to share informationand cooperate with overseas regulatory authority. In addition,provisions were included to prevent "fishing expeditions"and to safeguard the legitimate interest of the Cayman Islands.
Since the start of 2001, amendment havebeen made to the bank and trust company law, insurance law andmutual funds law empowering the Monetary Authority to conductfit and proper test of directors, officers and shareholders ofinstitutions licensed to operate within or from within the CaymanIslands.
Further amendments to the Banks and TrustLaw (2000 Revision) require all class B banks which are not branchesor subsidiaries of banks licensed in other jurisdiction to establisha physical presence in the Cayman Islands. These banks will berequired to maintain books and records and adequate resources(including staff and facilities) in the Cayman Islands.
Financial Sector
Performance
Banking Sector Performance
The number of active banking and trust companies licenses at theend of 2000 increased to 580 compared to a fall to 570 between1998 and 1999. Despite this, the forty-three of the top fiftybanks held active banking and trust companies licenses in theCayman Islands, a symbol of confidence placed on the jurisdictionas a premier international financial centres. Active licenseesrepresented sixty countries, with 27% from Europe and 24% fromNorth America.
Insurance
At 31 December 2000 the total number of insurance licenses onrecord was 673. Cayman's captive insurance industry continuesto be one of the fastest growing despite increased competitionfrom other domiciles and the continuing soft insurance market.
During 2000, the Cayman Islands maintainedits position as the second largest captive insurance domicilein the world with an increase to 517 companies writing over US$3.3Billionin premiums and reporting total assets in excess of US$14.8Billion.Captives emanating from the USA increased slightly to 84%, followedby decreases for the Caribbean and Latin America region (4.8%)and Europe (3.8%).
Investment Services
In 2000, the Cayman Islands increased its dominance as the numbertwo offshore mutual fund jurisdiction by eclipsing the vaunted3,000 mark with assets of $210 billion. At the end of 2000, therewere 3,014 regulated funds, an increase of about 33% and reflectedthe continued growth of the mutual funds industry in the CaymanIslands.
In addition, the total number of mutualfund administrators licenses increased by 26, with Full MutualFund Admin-
istrators Licenses showing the largest increase, bringing thetotal number of mutual fund administrators to 202.
The advent of the Internet and the introduction of on-line brokerageservices contributed to the continued phenomenal growth in themutual funds industry globally.