companies can be licensed into the platform, subjected to consistent
standards, to issue certified digital AML IDs that can be relied on
in the current “bricks and mortar” environment but also preparing
the certified digital AML IDs for the full deployment of technologies
such as blockchain, cross-border peer-to-peer financial services
Jonathan Roney: That’s a massive opportunity in innovation for
the right person, the right platform coming in; it’s something we’re
focusing on internally, totally revamping our AML procedures and for
the right platform globally.
There are so many different global standards, it’s going to be very
hard to get over the finish line but it will be a massive step forward, it
will make business so much easier and quicker to close on deals and
anyone can participate if you’re a globally recognised citizen.
Proctor: From a policy perspective we are moving forward with the
AML work that we recognise as a jurisdiction we have to comply with.
The FATF will be issuing its guidance on the AML expectations for
cryptocurrency and virtual assets later this year, so that’s a stream
of work that the ministry has started and is working with Cayman
Finance and industry working groups to progress.
We expect to have more clarity on that by November in terms of
technical parameters around the AML supervision for crypto assets
and virtual assets.
Smith: A lot of these innovations and proposals do touch on
regulatory activity, so one proposal is the creation of a regulatory
sandbox because there are aspects of the offerings that are new both
for the regulator and for the service providers themselves. Therefore,
creating a space where you can learn alongside each other is an
approach that has been taken in other jurisdictions.
38 CAYMAN FUNDS | 2019
We see this approach as beneficial because you don’t necessarily
want to overlay the exact same regulatory framework and
requirements for an entity that maybe operates in slightly different
way. But you then have to have an understanding of their risks and
the differences in the requirements of, for example, an investment
manager for crypto assets.
Scott: The are great opportunities that come with innovation and
new technology but also there’s a constant need for sharing insights
because great unseen risks come with it as well.
The real benefit of an environment like Cayman is we’re so connected
globally, we’re connected with the brightest investing minds around
the world, we have amazing minds within the jurisdiction that are
constantly experiencing these things and the ability for us to come
together with the regulator, with government, within industry, talking
about what we’re seeing coming down the pipeline. We are starting
to share our thoughts and ideas, so we start positively influencing the
outcome of it and I think that’s a space in which Cayman’s going to
continue to be more and more recognised as a thought leader.
Roney: A key focus should be tax neutrality and tax transparency.
We are at the forefront of that. The focus shouldn’t be on
implementing arbitrary tax rates to get off black lists which is a
hugely subjective area.
We are moving in the right direction with that and I would like to
think the rest of the world will see and understand the benefits of
going down that route.
Scott: The ministry has been doing a lot of good work in this area of
creating knowledge and awareness internationally so it is understood
that it’s not just about tax rates, it’s about a combination of stated
tax rates, applied tax rates, and tax treaties in conjunction with how
some jurisdictions actually focus on creating minimisation of taxes
that may be considered inappropriate to other jurisdictions.
When we look at a jurisdiction like Cayman, we have a stated tax
rate of zero, an applied tax rate of zero, we do not have tax network
treaties, we’re not involved in tax shifting or tax minimisation. We are
tax-neutral and I think we need to put more effort into creating that
awareness and also deeming it unacceptable that there are going to
be lists that are purely based on the stated tax rates.
It’s our responsibility to create that awareness, so that there
can be changes over time and more sophistication used if they’re
developing those types of lists, so they’re objective and they’re
Guilfoyle: What do you think Cayman needs to do to be able to do
that more effectively?
Scott: The starting point is some of the work that we’re doing now,
for example, working with government, we’re putting together
a research paper that’s specifically focused. One aspect of it is
better understanding tax neutrality but also linking it into how
there are specific tax-neutral products in many jurisdictions that
function the same way, so their tax rates may be high tax rates but
they have specific aspects of their economy that are designed to be
Creating awareness of that and showing how Cayman’s tax
neutrality creates benefits around the world without causing tax harm
to other countries—at an academic level that’s probably never been
Farrington-McSweeney: That’s the point of a roundtable such as
this, to communicate externally to a global network, so people know
what is going in Cayman and how we’re addressing regulations and
new products and new asset clients.
Photography by Janet Jarchow Photography
“We’re so connected globally,
we’re connected with the
brightest investing minds
around the world.” Jude Scott