Cayman in reflective mood

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Cayman NetNews is by far the best newspaper in the tax haven world. Nowhere else will you find opinion so worth reading. The editorial from which this comes is a good example:

If the US Government Accountability Office can come here to look at the same Ugland House that was frequently pointed to by Mr Obama himself while on the campaign trail, and found nothing especially devious or offensive going on, then why shouldn't Mr Obama do the same thing and reach the same conclusion?

The trouble is that's not quite true. As I have explained in my paper 'Finding the Secrecy World' there is every reason to believe that what happens in Cayman is well regulated. That is largely because very little happens in Cayman. Cayman provides structures for use in other jurisdictions where these structures are used to undermine regulation. As Maples and Calder, owners of the notorious Ugland House in Cayman were reported to have said to the US Senate investigators who visited them:

Cayman officials said they fully cooperate with the United States. Maples [and Calder] partners said that ultimate responsibility for compliance with U.S. tax laws lies with U.S. taxpayers.

And that is the key to this. Whilst Cayman is well regulated the structures that are created in the islands are intended for use elsewhere. Half of the companies located in Ugland House are, for example, linked to the USA. That those with responsibility for regulation in Cayman turned a blind eye to the regulation of these entities in the USA, to which they are indifferent.

It Cayman wants to be acceptable it has to do two things. First it has to make clear who owns the structures and where they operate and second it has to ensure that its regulation requires that either local officials ensure the compliance of the structures it creates within the countries in which they actually operate, or it actively transfers information about these structures to the countries in which they operate. If that were done we could not object to the use of these structures. Of course, their attraction would be diminished enormously, but that is because secrecy is a fundamental part of their appeal. But surely any law-abiding authority would ignore this fact and would wish to exchange information with other authorities to ensure that the rule of law was maintained? I don't think that is much to ask.