The Cayman Islands, long a hideout for companies and hedge funds with secrets to hide, is about to shed the light on key aspects of its financial practices and international tax-haven allure.
The Financial Times reported the British overseas territory “wants to shed its reputation for clandestine financial activity” by enacting reforms that will reveal the names of thousands of companies and their directors.
The Caymans’ minimal disclosure requirements and strong corporate privacy laws have attracted recent political attention in Europe and the United States.
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The scrutiny has increased amid a global outcry about multinational firms that use various loopholes to shelter hundreds of millions of dollars in international profits.
The Times said it had seen proposals sent by the powerful Cayman Islands Monetary Authority (CIMA) to Cayman-based hedge funds. Those proposals outlined plans to create a public database of funds domiciled on the island and to list the funds’ directors.
CIMA also intends to require that directors undergo a vetting process to ensure they are qualified fiduciaries, the Times said.
Politicians are not the only ones who have been clamoring for more financial clarity in the Caymans, the Times reported, noting that many of the world’s largest pension funds until now have not been able to verify details of the Cayman funds they invest with or their directors.
“We have been screaming for more transparency for some time now,” said Vincent Vandenbrouke, a spokesman for Hermes BPK, which makes hedge fund investments for U.K. pension funds. “It’s no longer acceptable for [offshore] directors to act as rubber stamps.”
In 2011, the Times exposed how some Cayman directors were on the boards of hundreds of hedge funds.
But even as a curtain of financial secrecy is being lifted in the Caribbean, Bloomberg reported another one may be coming down in Asia.
According to Bloomberg, China is proposing steps to block access to personal data on company directors in Hong Kong. The measures would conceal addresses and identifications that journalists and analysts use to determine ownership and management of Chinese companies.
Bloomberg’s blistering conclusion for why the proposals are being made: “China is livid over increased media scrutiny of the obscene wealth being amassed by top party officials and has resorted to blocking news websites. This change in law would further cloud an opaque paper trail of ill-gotten gains that find their way into Hong Kong’s first-world financial system.”
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