So near and yet so far…
Hopes were riding high yesterday that UK parliamentarians might seize the opportunity to take historic action to end decades of financial secrecy in the UK’s Overseas Territories. We blogged about this yesterday highlighting the fact that a lot of ongoing Parliamentary business was at risk of being shelved because of the sudden general election called by British Prime Minister Theresa May. There’s a phenomenon known as the wash-up period which “refers to the last few days of a Parliament before dissolution. Any unfinished business is lost at dissolution and the Government may need the co-operation of the Opposition in passing legislation that is still in progress.”
By Alex Cobham
Last week I took up the kind invitation of the government of Cayman to speak at their conference on ‘Tax Transparency in the Global Financial Services Ecosystem’, and to meet with staff from the monetary authority, statistics office and corporate registry; and with a range of industry representatives including those from the compliance association and Cayman Finance. Above is a video of my presentation; and here a few reflections on the divergences between reputation, rhetoric and reality; and on where things now stand.
We welcome this latest research on the under-researched Cayman Islands, an Offshore Financial Centre (OFC) ‘with foreign assets amounting to over 1500 times Cayman’s domestic economy.’ As we so often explain, while Switzerland currently tops our Financial Secrecy Index, if the UK and its Crown Dependencies and Overseas territories were all rolled into one and assessed together, the UK would in fact be number one in terms of the world’s most significant offenders. And the Cayman Islands is a prolific contributor to that dubious pedigree. We rank the British Overseas Territory of the Cayman Islands as number five in our 2015 Financial Secrecy Index, which combines a secrecy score with a global scale weight in financial services exports.
Now we’re pleased to present the following research from Jan Fichtner at CORPNET which “uncovers, investigates and aims to understand global networks of corporate control in contemporary global capitalism.” It’s funded by the European Research Council and is located at the Amsterdam Institute for Social Science Research, University of Amsterdam. We now hand over to Jan Fichtner:
Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional ‘competition’
Prof. Thomas Rixen, who has written a lot about tax ‘competition’ (aka tax wars) in the past, has a new article looking at similar dynamics in the area of financial regulation. Entitled Why reregulation after the crisis is feeble: Shadow banking, offshore financial centers, and jurisdictional competition, it points out that the shadow banking sector, many of whose players were implicated in the global financial crisis that erupted almost a decade ago, is heavily entwined with offshore financial centres. Typically, this involved banks sponsoring off-balance sheet vehicles, located in places like Cayman or Luxembourg: these supposedly took risk off the banks’ books, but then returned to haunt the banks when they blew up, causing widespread economic disaster.
From the U.S. Department of Justice:
“Cayman National Securities Ltd. (CNS) and Cayman National Trust Co. Ltd. (CNT), two Cayman Island affiliates of Cayman National Corporation . . . pleaded guilty to a criminal Information charging them with conspiring with many of their U.S. taxpayer-clients to hide more than $130 million in offshore accounts from the U.S. Internal Revenue Service (IRS) and to evade U.S. taxes on the income earned in those accounts.”