Cayman plunges in Financial Services ranking, flaws identified in security index says report

By Shanieka Smith

Features Writer

#Cayman, May 19, 2022 – The Cayman Islands, which held the top spot in the Tax Justice Network’s global financial secrecy ranking, has now fallen to the 14th position. This comes following a data disclosure which has it that the financial services provided by the country to non residents was below expectations.

Cayman holding the top spot was due to significant flaws detected in the Financial Security Index choice of data and scoring when calculating a Global Scale Weight (GSW) for the country. Cayman Finance conducted an analysis last year that showed that portfolio liabilities were used instead of publicly-available data for financial services exports, and this made the Cayman’s GSW almost nine times higher than it should have been.

The Financial Security Index (FSI) assesses the secrecy of financial centers and its impact on global financial flows. It then grades each country’s financial and legal system on a scale out of 100: 0 is full transparency and 100 is full secrecy.

Rules on transparency on ownership of companies, trust and foundations, public access to annual accounts, and compliance with anti-money laundering standards are included in the 20 Key Financial Secrecy Indicators (KFSI) used to measure the FSI.

Cayman has the 10th highest FSI score in the Caribbean, the 30th in the world. At the same time, it had the second highest Global Score Weight (GSW) in the region (after the British Virgin Islands) and 14th in the world. The US has the highest Global Scale Weight because of its refusal to exchange information with the tax authorities of other countries.

Jude Scott, Chief Executive Officer of Cayman Finance, response to last year’s report was:

“We are confident in the leadership of the Cayman Islands Government and our financial services industry have shown in adopting global standards for transparency and tax information sharing. While fraud is a global issue that we all have a continued role in tackling, both the EU and the OECD have recently reviewed the Cayman Islands tax neutral regime and found it to be transparent, consistent with good tax governance principles and without the existence of harmful tax regimes. Those are the kinds of internationally recognized assessments that should be considered when assessing the Cayman Islands.”