In 1970, The Cayman Islands were a backwater in the Caribbean - fewer than 10,000 people, with minimal commerce and no natural resources. With so little happening in Cayman, there was also no crime, no racial tension, no government corruption and only the most basic of laws. In addition, in its 500-year history, Cayman had never had any direct taxation of any kind – ever.
But it was this very unique set of attributes that suggested to those in the worldwide financial industry that Cayman was an undiscovered jewel – a diamond in the rough.
Cayman did have beautiful white sand beaches and pristine, unspoiled underwater attractions, but the value to those in the financial industry was that, with no old, outdated laws, no ponderous governmental structure and greater tax freedom than any other destination, all that was needed was the introduction of the simplest and most client-friendly investment structure, and Cayman could become a highly significant jurisdiction that would attract investors from around the world.
And so, it was created. The re-born Cayman was immediately successful, as it ticked virtually all the boxes for investors who previously had to spread out their wealth across the globe in order to get all the features they desired, since no one jurisdiction offered them all. In addition to being only one hour from the US by jet, Cayman soon developed as an ideal location in which to live and/or invest, with world class infrastructure, residences and amenities, without losing its unusually harmonious social climate.
Little wonder, then, that this ideal jurisdiction has become home to 80% of the world’s major banks and all of the major international accounting firms, in addition to being the world’s centre for hedge funds and the world’s fifth largest financial centre.
Investors do come to Cayman for the exceptional level of services and professionalism, but they soon find that, due to Cayman’s streamlined legal framework and minimal regulations, business is conducted in a highly efficient manner, with minimal red tape and governmental interference.
Additionally, a total lack of direct taxation allows for a system that has virtually no reporting requirements. Financial privacy is respected on Cayman.
In the new millennium, the financial world has been changing rapidly and Cayman has been a leader in observing worldwide standards, whilst anticipating changing investor needs. As investors become ever more concerned over a possible negative future for stock and bond markets, an increasing number of savvy investors are turning to real estate and precious metals – both to be held outside their home countries.
Cayman has always been an exceptional attraction for real estate investment, as it is one of only three countries in the Western Hemisphere to have no property tax. This is more significant than it appears on the surface, as history has shown that even countries that have low property tax sometimes raise it dramatically in hard economic times. By contrast, Caymanians are staunchly opposed to any property tax.
And this right extends itself to all that come to Cayman’s shores. Expatriates find that virtually all laws of the Cayman Islands protect the expatriate equally to locals.
As mentioned above, as a financial centre, Cayman is unique in the world, as it ticks virtually all the boxes, but that is to change in 2015, with the opening of Strategic Wealth Preservation, Ltd. (SWP), which will tick the final box. Until now, Cayman investors who wished to store their valuables (precious metals, cash, fine art, etc.) could only do so at one of the islands many banks, where they could rent a safe deposit box or larger space in a bank vault.
However, for safe, independent wealth storage, forward-thinking investors are increasingly turning to major purpose-designed storage facilities. To date, the best of these have been in Hong Kong, Singapore and Switzerland. These facilities are excellent, but are very distant from the Western Hemisphere, making visits, physical deposits and withdrawals difficult. In addition, these jurisdictions are often burdened with complex governmental red tape and legal requirements.
Once again, Cayman was the ideal choice. SWP is to be a virtual state of the art facility, with a Class III vault, in-house security company and direct security link to the central police station, just down the road. On opening day, it will begin its life as, physically, one of the premier facilities of the world, with the additional advantage that Cayman does not regulate, tax, or require reporting of any kind for such wealth storage.
All told, there’s little wonder that so many people who are attracted to Cayman for its all-encompassing and advantageous financial services not only end up buying investment property, but find that they choose to live in Cayman either part- or full-time.
This, on the surface, would seem to be an exaggeration, but the reader is encouraged to visit Cayman to make his own assessment. A word of warning: Once discovered, Cayman is a hard place to leave.
Jeff Thomas is British and resides in the Caribbean. The son of an economist and historian, he learned early to question governments as a general principle. Although he spent his career creating and developing businesses, he has also written regularly for over twenty five years on Austrian economics, personal liberty and limiting government. He has a weekly column in Casey Research’s International Man, in addition to frequent publishing in other publications.