Although there is a stereotype that Cayman Islands allow money laundering, it is not much easier than opening a bank account in the USA with minimum due diligence. Although Cayman Islands has a record of being a offshore banking jurisdiction, where money laundering and illegal transactions were frequent, nowadays offshore banking Cayman Islands operations are regulated by Cayman Islands Monetary Authority (CIMA) that ensures that financial sector is more strictly regulated than many financial sector sof many onshore financial centers.
Current the regulatory and the supervisory framework of offshore banking Cayman Islands is based on “Know Your Client” (KYC) principle. KYC requires that an offshore banking institution providing an offshore bank account to a client is required to know everything that is relevant about the client. For this purpose banks request complete information on the
background of their clients to ensure that he/she was not suspected in money laundering, terrorism financing and in conducting other illegal transactions and that he/she shall not use future offshore bank account for fraudulent purposes. As a result nowadays procedure for opening an account in Cayman bank can be much more sophisticated than the similar procedure in the USA or European countries.
There are different banking licenses that Cayman Island authorities provide. The main types of licenses are Class A and Class B license. The rules governing licenses are quite elaborated however summarizing shortly it can be said that Class B licensed banks are more involved in offshore banking and provision of banking services mainly to non-residents, while Class A licensed banks can deal with both onshore and offshore transactions. Out of 280 banks that are licensed in Cayman Islands only 6 of them (Cayman National, RBC, Butterfield, Scotia, First Caribbean and Fidelity) offer onshore banking. The rest of them are involved in offshore banking practices.
Foreigners that want to open bank account in Cayman Islands are asked a written recommendation from the bank, where they hold an account or held it in the past. Banks also require letter of the employer indicating the position an individual holds and future projected earnings and proper identification document such as passport or driving license.
Cayman is a tax haven. There are no personal income tax, corporate income tax, property tax, capital gains tax or any other tax that creates highly favorable environment for international companies. There are no foreign exchange restrictions in Caymans, currency can be freely transferred in and out of the country that encourages international trade and investment. These benefits in addition to confidentiality, bank secrecy, strong economy and stable government makes Cayman Islands one of the top investment destinations in the world.
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