CAYMAN NOT INCLUDED IN LATEST EU GREY LIST

The European Union(EU) has published its updated Grey List of what it describes as “non-cooperative” offshore financial centres and the Cayman Islands is not included.

This is welcome news for Cayman despite an aggressive campaign by some EU Members of Parliament and campaigners to apply pressure on the regulators to have the jurisdiction reinstated.

Ten jurisdictions have been added to its so-called grey list of non-cooperative tax regimes in its council's update dated 24th February.

The new Annex II list sees the Bahamas, Belize, Bermuda, British Virgin Islands (BVI), Israel, Montserrat, Russia, Tunisia, Turks and Caicos and Vietnam now being subjected to closer scrutiny.

The other countries already listed are Anguilla, Barbados, Bermuda, Botswana, Costa Rica, Dominica, Hong Kong, Jamaica, Jordan, Malaysia, North Macedonia, Qatar, Seychelles, Thailand, Turkey and Uruguay.

The so-called and more serious 'EU black list' remained unchanged and it still includes American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.

The EU list is reviewed twice a year with the next update set for October.

While the exclusion of Cayman is significant, the inclusion of Russia on the 'grey list' is even more telling.

Russia is being slapped with a series of economically crippling sanctions due to its ongoing attacks on, and invasion, of Ukraine.

Cayman is also instituting measures against Russia as part of wider measures being instituted by the British government against the Putin regime and its supporters, several of whom are listed in documents published by the Cayman Islands Monetary Authority(CIMA) as having investment interests registered in Cayman.

In February 2020 the EU had included the Cayman Islands on its “Tax black list” citing several technical points on which it said the jurisdiction was not compliant including the introduction of new legislation...which at the time was in process.

However, after an uproar by the Cayman Islands Government and the finance industry here - and supporters globally - the Cayman Islands was removed from the EU Tax black list just a few months latter in October 2020.

According to industry experts, this means that the Cayman Islands is considered by the EU to be a fully cooperative jurisdiction for tax purposes.

But the pressure is still not yet fully off Cayman.

According to industry experts Mourant, “The Cayman Islands will be included on the EU's list of 'high-risk third countries' on 13 March 2022.” But it explains that this is inclusion is a technicality that stems from the addition of the Cayman Islands to the Financial Action Task Force's(FATF) own 'grey' list released last year. The FATF list is separate from that of the EU.

However, Mourant says there are few practical consequences arising from inclusion on that EU list which focuses on anti-money laundering(the AML list).

In February 2021 the Financial Action Task Force (“FATF”) - which has its own system of monitoring - added Cayman to their increased monitoring or “Grey” list, because it said Cayman had not complied with a remaining 3 of out of 63 actions on a list of recommendations by FATF.

That came despite the fact, experts note, that in October 2021 the Cayman Islands was deemed by FATF to be compliant or largely compliant with all of its 40 recommendations to prevent money laundering and terrorist financing.

Meanwhile, on January 7th this year, the European Commission adopted a draft regulation adding the Cayman Islands to its list of countries with what it said were strategic deficiencies in their AML/KYC (anti-money-laundering/know your customer) systems.

The inherent message was that EU individuals and companies should avoid investing in Cayman’s financial sector while it remains on that list.

Governments over the years in the Cayman Islands and experts involved in the financial sector here have continuously had to defend the reputation of the sector - one of the top in the world - as compliant with the demands insisted by international regulators, noting the series of legislative amendments and other steps to keep the jurisdiction aligned with global standards.

There have been accusations of double standards when the pressure being put on Cayman and other offshore financial centres are compared to similar metropolitan centres of global finance.