Offshore Banking

The Cayman Islands are among of the richest islands in all the world.  The business of Grand Cayman is not really tourism, mind you.  It’s “offshore” banking.

Read “tax haven” here.

Another term used on the Islands is “asset protection.”  If you poke about looking into getting yourself a bank account here, you might find the following reasons listed for protecting your assets: business or partner lawsuits, personal lawsuit, divorce, unfair or unlawful creditors.

You are welcome to make unlawful creditors apply as broadly as required for your needs.  

And finding a bank on Grand Cayman is like fishing in a bucket.  More like fishing in a bucket that hands the fish to you when you get anywhere near it.  This tiny island is home to nearly 150 banks.  40 of the world’s top 50 banks hold licenses in Cayman.  Of those banks, only six are retail banks—banks where locals go for day to day banking transactions.  Five banks are category A banks, which can operate in both domestic and international markets.  The rest of the banks—the vast majority—are category B banks, which are permitted to conduct business with non-residents and only specially licensed local entities.

There is a lot of fancy footwork going on here.  Stuff we refer to as “investment banking.”  I don’t know much about that sort of thing…other than these folks tanked our economy a few year back.  Enfolded into all this investment banking are more than 10,000 hedge funds and hordes of insurance companies.

At this point, we need to recall a certain John Ralston Saul who said about bankers: “Bankers - pillars of society who are going to hell if there is a God and He has been accurately quoted.”

Offshore incorporation is also big on the Cayman Islands.  Somewhere in the vicinity of 100,000 corporations have their roots in the Cayman Islands.  We are not talking Mike’s Handyman Shop, Incorporated here. We are talking bigger.  Much bigger.  One five-story office building in George Town, the Ugland House, is the official address for nearly 20 thousand companies.  Something near 150 of these companies are from the U.S.  Coca-Cola, and Intel can be counted among those.

Here is a good trick.  An American company, should they want to make money without paying taxes, can funnel monies through a “holding” company or a “subsidiary” registered in the Caymans (read “shell” company here).  In either case, these Cayman Island companies are really nothing more than vehicles for pushing money protected places.

I will admit, have been on the island for over a week now, Grand Cayman is pretty laidback protected place…if only I had the money to get through the proper bank doors.

—Mitchell Hegman