Cayman Islands banking secrecy is one of the most mischaracterized and misunderstood aspects of the offshore banking world.
In large part, this is due to Hollywood movies, mainstream media, and left-leaning government initiatives aimed at “cracking down” on offshore banking more generally.
But, while the Cayman Islands might be everyone’s favorite scapegoat, it’s also a highly sophisticated banking jurisdiction and successfully opening as a foreigner in the Cayman Islands is no easy task.
While we’ve covered Cayman Islands banking in past articles, in this article we’ll take a closer look at Cayman Islands banking secrecy.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Cayman Islands Offshore Banking 101
- Does the Cayman Islands Offer Banking Secrecy?
- What Secrecy Does Cayman Offer?
- Who Can Open a Private Bank Account in the Cayman Islands?
Cayman Islands Offshore Banking 101
The typical news article about banking in the Cayman Islands sounds more like a James Bond movie than a piece of reputable journalism.
And unfortunately, the media’s interpretation of the Cayman Islands unfortunately shapes society’s perceptions of banking here.
As a result, Cayman Islands offshore banking is often considered on a similar level to accessing offshore structures and services in less reputable jurisdictions like Seychelles, Panama, or even Belize – when in reality, this is not the case. Cayman Islands offshore banking is in a league of its own.
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Does the Cayman Islands Offer Banking Secrecy?
In order to understand what level of banking secrecy is available in the Cayman Islands, we need to first understand how information is shared about bank accounts internationally.
With this in mind, there are two important conventions to consider:
OECD Automatic Exchange of Information (AEOI)
AEOI was introduced by the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. This means that international bank account information is automatically shared with an account holder’s country of residence (and in some cases citizenship).
Importantly, the Cayman Islands were one of the very first countries to participate in AEOI when it first launched in 2017. This was the same time that other reputable jurisdictions such as Germany, France, Sweden, and the UK also joined.
In fact, the Cayman Islands participated in AEOI before Australia, Canada, New Zealand, the United Arab Emirates, and many other developed countries.
Country Specific Tax Information Exchange Agreements (TIEAs)
Certain countries do not participate in AEOI, most notably the United States. That’s because the US has their own version of CRS, known as FATCA – which predates (and was the inspiration for) AEOI.
So instead of participating in AEOI directly, the US signs TIEAs directly with countries of interest in order to assist with the sharing of relevant information to enforce taxes. Examples of countries the US signed TIEAs with include Jersey, Guernsey, Isle of Man, Hong Kong, Panama, and the Cayman Islands.
What Does This Mean for Banking Secrecy?
Despite the media labeling the Cayman Islands as an offshore secrecy hub, it has actually been a leader in the exchange of information and transparency from a banking perspective.
So if you were hoping to open bank accounts here so your information wouldn’t be shared with tax authorities in your home country, think again.
What Secrecy Does Cayman Offer?
While government agencies will have access to information related to your financial accounts in the Cayman Islands (like most countries today), banking here can still offer a degree of privacy that isn’t available in your home country.
For example, having a bank account overseas puts a geographic distance between your account, bank, and banker from financial predators. So, whether you come from Canada or Kazakhstan, having an international bank account in an offshore financial center like the Cayman Islands could be worth considering.
Who Can Open a Private Bank Account in the Cayman Islands?
Cayman Islands private bank accounts can be accessed by individuals from a range of different countries and residencies. That said, you will need to pass standard due diligence and meet the bank’s account opening requirements.
When it comes to opening private bank accounts in Cayman, most individuals will need to deposit at least US $250,000 to get started. However, depending on your risk profile and the specific bank you choose, this amount can increase to between $500,000 and $1,000,000.
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