Cayman Islands Premier McKeeva Bush said Thursday that a provision in a pending legal document governing the relationship between the European Union and the overseas countries and territories would seriously damage the financial services industry in the
Speaking to members of the European Commission during a meeting of the Overseas Countries and Territories Association in Greenland, Mr. Bush pressed for change to Article 70 of the draft Overseas Association Decision document of the European Union, which calls for convergence with EU legislation of the financial services regimes in the overseas jurisdictions with regard to supervision, transparency, tax information exchange and anti-money laundering.
This would require that the Cayman Islands bring its laws on financial services in line with EU legislation. Premier Bush has opposed this measure since it was initially introduced in the draft version of the document.
The premier said it was due to what he deemed to be the possible dangers posed in the draft document that he and his delegation travelled to Greenland, according to a news release issued by his press secretary. Mr. Bush did not elaborate in the release on the nature of those concerns.
The document is in an advanced stage in the revision process and will lead to a new arrangement coming into effect in January 2014. Mr. Bush said the Cayman Islands and other territories with significant financial services interests hope for the support of the United Kingdom government as the matter goes to the Council of the European Union for finalisation.
The Cayman Islands is often referred to as the fifth-largest offshore financial services centre in the world, with its leading sectors including hedge fund formation and investment, structured finance and securitisation, captive insurance and general corporate activities.
“Cayman’s current regulatory regime is compliant with robust international requirements, providing a strong foundation element to attract investment that is safe in our jurisdiction,” Mr. Bush said. “Those investments in turn fuel growth of the world economy.”
Article 70 of the document aims at regulatory convergence in financial services in terms of supervision, transparency, tax information exchange and anti-money laundering.
It states that both the EU and overseas territories shall promote regulatory convergence with recognised international standards on regulation and supervision in financial services, including the:
- Basel Committee’s core principles for effective banking supervision;
- International Association of Insurance Supervisors’ “Insurance Core Principles”;
- International Organisation of Securities Commissions’ “Objectives and Principles of Securities Regulation”;
- OECD’s “Agreement on exchange of information on tax matters”;
- G20 “Statement on Transparency and exchange of information for tax purposes”;
- Financial Stability Board’s “Key Attributes of Effective Resolution Regimes for Financial Institutions”;
- Financial Action Task Force’s “Forty Recommendations on Money Laundering and Terrorist Financing”.
Article 70 further notes the EU and the overseas countries and territories shall promote convergence of overseas countries and territories legislation with EU legislation on financial services.
The overseas countries and territories are 25 countries and territories – mainly small islands including Cayman – outside mainland Europe, having constitutional ties with one of the following member states: Denmark, France, the Netherlands and the UK. Although their nationals are in principle EU citizens, these territories are not part of the EU and not directly subject to EU law.