The Cayman Islands' lowest elevation is the Caribbean Sea at sea level. The highest point is The Bluff, a limestone outcrop 43 m (141 feet) in length on the eastern end of eastern Cayman Brac, which itself was named for The Bluff—"brac" is Gaelic for "bluff."
The Cayman Islands have a tropical marine climate, with a wet season of warm, rainy summers (May to October) and a dry season of relatively cool winters (November to April). Terrain is mostly a low-lying limestone base surrounded by coral reefs.
The Cayman Islands are a British overseas territory located in the western Caribbean Sea, comprising the islands of Grand Cayman, Cayman Brac, and Little Cayman. It is an offshore financial centre and one of the leading tourist scuba diving destinations in the world.
The Cayman Islands are located in the western Caribbean Sea. They are the peaks of a massive underwater ridge, known as the Cayman Trench, standing 8,000 feet (2,400 m) from the sea floor, which barely exceeds the surface. The islands lie in the centre of the Caribbean south of Cuba and West of Jamaica. They are situated about 400 miles (650 km) south of Miami, 180 miles (300 km) south of Cuba, and 195 miles (315 km) northwest of Jamaica. Grand Cayman is by far the biggest, with an area of 76 square miles (197 km²). The two "Sister Islands" of Cayman Brac and Little Cayman are located about 80 miles (130 km) east of Grand Cayman and have areas of 14 square miles (36 km²) and 10 square miles (25.9 km²) respectively.
All three islands were formed by large coral heads covering submerged ice age peaks of western extensions of the Cuban Sierra Maestra range and are mostly flat. One notable exception to this is The Bluff on Cayman Brac's eastern part, which rises to 140 feet (42.6 m) above sea level, the highest point on the island.
Cayman avian fauna includes two endemic subspecies of Amazona parrots: Amazona leucocephala hesterna, or Cayman Brac Parrot, native only to Cayman Brac, and Amazona leucocephala caymanensis or Grand Cayman Parrot, which is native only to Grand Cayman. Another notable fauna is the endangered Blue Iguana, which is native to Grand Cayman. There is also the agouti and the Booby Birds on Cayman Brac.
Tourism accounts for 70-75% of the annual GDP of the Cayman Islands. Of the millions of tourists that visit the islands annually, 99% visit Grand Cayman. George Town also serves as a major cruise ship port, which brings in 4,000 to 22,000 tourists a day, five days a week, depending on the number of ships in port.
One of Grand Cayman's (GCM) main attractions is the world-famous Seven Mile Beach on which a number of the island's hotels and resorts are located. Seven Mile Beach is regarded by many as one of the best beaches in the world. Historical sites in GCM such as Pedro St. James Castle in BoddenTown also attract visitors. The Sister Islands - Little Cayman and Cayman Brac - also supply their own unique charm.
The Cayman Islands is regarded as one of the world's best SCUBA diving destinations because of its crystal-clear waters and pristine walls. Cayman Brac and Little Cayman are also elite SCUBA dive destinations. There are several snorkelling locations where tourists can swim with stingrays including the popular Stingray City, Grand Cayman. Divers find two shipwrecks off the shores of Cayman Brac particularly interesting including the MV Keith Tibbetts.
Other Grand Cayman tourist attractions include the ironshore landscape of Hell, the 24- acre marine theme park Boatswain's Beach, also home of the Cayman Turtle Farm, the production of gourmet sea salt, and the Mastic Trail, a hiking trail through the forests in the center of the island. On Cayman Brac, a lighthouse and a few local museums are tourist draws. Little Cayman's wildlife attracts nature lovers, especially bird watchers in search of the island's Red-footed Booby population.
Art and Culture are other features of the Cayman Islands that attract international attention. The National Museum and National Gallery preserve contemporary and dated art works of local and international talent. A Cultural History Exhibition is displayed within the museum, and teaches patrons about historical customs and traditions native to the Cayman Islands. The Gallery sponsors eight exhibitions every year and is located in the Harbour Place in George Town.
The Cayman Islands are widely recognised to be one of the world's leading offshore financial centres.
The Cayman Islands financial services industry encompasses banking, mutual funds, captive insurance, reinsurance, vessel registration, companies and partnerships, trusts, structured finance and the Cayman Islands Stock Exchange. As of December 2005, just over 70,000 companies were incorporated on the Cayman Islands including 430 banking and trust companies, 720 captive insurance firms and more than 7,000 funds. The government distinguishes between local (or "ordinary" companies), doing business primarily with the local population, and "exempted" companies conducting business primarily with overseas entities.
A recent report released by the International Monetary Fund (IMF) assessing supervision and regulation in the Cayman Islands' banking, insurance and securities industries, as well as its anti-money laundering regime, recognized the jurisdiction's comprehensive regulatory and compliance frameworks. "An extensive program of legislative, rule and guideline development has introduced an increasingly effective system of regulation, both formalising earlier practices and introducing enhanced procedures," noted IMF assessors. The report further stated that "the supervisory system benefits from a well-developed banking infrastructure with an internationally experienced and qualified workforce as well as experienced lawyers, accountants and auditors," adding that, "the overall compliance culture within Cayman is very strong, including the compliance culture related to AML (anti-money laundering) obligations...". The Cayman Islands had previously (briefly) appeared on the FATF Blacklist in 2000, although its listing was thought to be harsh, and was criticised at the time.
"In May 2000, the Cayman Islands avoided the OECD's infamous blacklist by "committing" itself to a string of reforms to improve transparency, remove discriminatory practices, and begin to exchange information with OECD member states about their citizens.
However, with the election of George W. Bush to the U.S. presidency, cooperation between Cayman and the OECD lost momentum. In May 2001, after the U.S. Treasury Department announced that it would not support the OECD initiative, other than pursuing tax exchange agreements, the OECD turned its attention to another initiative, the EU Tax Savings Directive."
"While the... (tax information exchange agreements (TIEA))... somewhat bolster the U.S. government's ability to prosecute corporations and individuals engaging in tax evasion, the agreements are limited, and in most cases do not allow the IRS to investigate suspected corporations or individuals unless there is a court order or strong evidence of criminal activity. As one Cayman official stated, "Despite excellent fishing in the Cayman waters, no fishing expeditions are allowed."
Another obstacle hampering the IRS investigations of tax fraud by U.S. citizens in the Cayman Islands is Cayman's Confidential Relationships Preservations Law (CRPL), which requires banking confidentiality unless there is evidence of criminal activity. While the Cayman government has gone a long way towards enforcing due diligence and the sharing of information with the U.S. government, Cayman's banking privacy laws remain intact. David McConney, CEO of Cayman National Bank, says, "Financial privacy is fundamental to traditional banker/customer relationships. If you have not committed a criminal act, no Cayman financial institution may release any information to any third party without your express approval."
If the IRS wants to investigate potential wrongdoing by a U.S. corporation or individual, it must request information from Cayman's chief justice on a case-by-case basis. Unfortunately, this painstaking process is inadequate to deal with the numerous cases of tax fraud perpetrated by U.S. citizens and corporations. Furthermore, the IRS does not have sufficient resources to pursue investigations of wrongdoing on a case-by-case basis."
However,
"On 27 November 2001, the Cayman Islands, concluded a tax information exchange agreement with the U.S. The agreement provides for exchange of information, upon request, for criminal tax evasion, civil and administrative tax matters relating to U.S. federal income tax. It provides for confidential treatment of information exchanged, and, in accordance with U.S. law, any such information may not be disclosed to any third party. It applies to criminal tax evasion for taxable periods commencing 1 January 2004, and to all other tax matters for taxable periods commencing 1 January 2006."
"OECD commitment
In May 2000 the Cayman Islands gave a letter of commitment to the OECD relating to alleged harmful tax competition. Under the letter of commitment, the Cayman Islands Government will implement a plan to share bank account information with foreign Governments that are conducting criminal tax evasion investigations for the first tax year after 31 December 2003, and on civil and administrative tax matters for the first tax year after 31 December 2005.
Tax information exchange agreement
On 27 November 2001 the Cayman Islands entered into a tax information exchange agreement with the US. The agreement is structured to conform with the Cayman Islands’ OECD commitment of May 2000. The implementation procedure will require that information be provided only in response to a specific request which is relevant to a tax examination or investigation conducted in accordance with the laws of the requesting state. Requests will be submitted by foreign tax authorities to a competent authority in the Cayman Islands who will act in a capacity similar to that in which the Cayman Islands Chief Justice has acted pursuant to other international information exchange agreements. Confidentiality provisions will ensure that information that has been exchanged is adequately protected from unauthorised disclosure.
It is likely that there will be further bilateral tax information exchange agreements. However, the Cayman Islands Government has made it clear that it will not enter into any agreements with countries that have legislation discriminating against the Cayman Islands.
EU Savings Directive
What has become known as the Savings Directive is part of a package of measures by the European Commission to tackle "harmful tax competition" in the European Union. It is designed to address the ability of "residents of Member States …. to avoid any form of taxation in their Member State of residence on interest they receive in another Member State".
The current form of the Savings Directive is a compromise solution following the failure of Member States to agree on the original proposal for the imposition of withholding tax on interest payments (which would have had a serious effect on the Eurobond market in London). In implementation of the requirement that Member States "promote the adoption of the same measures" in their dependent or associated territories, the UK Government has committed its Caribbean dependent territories, including the Cayman Islands, to their adoption and has threatened to "legislate" for them.
The Savings Directive requires the reporting of certain information relating to interest payments (including dividend payments by certain investment vehicles whose investments in debt instruments exceeds a certain percentage) to individuals resident in Member States. That information is to be provided by the paying agent (essentially, the last intermediary in a chain of intermediaries), who is also responsible for determining the residence of the payee.
The Cayman Islands Government is concerned that any application of the Savings Directive to the Islands, without equivalent application to their competitors, will result in little benefit to the European Union at a disproportionate cost to the Islands. The UK Government is aware from its own regulatory impact assessment that implementation of the Savings Directive will result in significant additional costs to both the public and private sectors in the UK, and the same will undoubtedly be true in the Cayman Islands.
The Cayman Islands has declined to commit to the implementation of the measures in the Savings Directive, and is now bringing legal proceedings to challenge the legality of certain aspects of the Savings Directive."
"If you read the press releases from the offshore jurisdictions that signed TIEAs, you’ll come away believing that they may be invoked only in the event of probable cause of tax fraud by a particular taxpayer. But that’s not what most of the treaties actually say. Instead, most TIEAs state that any information “foreseeably relevant or material to United States federal tax administration and enforcement with respect to the person identified” for investigation must be turned over to the IRS.
Not “probable cause” of a criminal or even civil tax offense. Not even “reasonable suspicion.” Merely “foreseeably relevant.” U.S. courts have interpreted this authority as permitting TIEA information requests “even if the United States has no tax interest and no claim for U.S. taxes are potentially due and owing.” In other words, fishing expeditions into offshore accounts are explicitly permitted. The potential for abuse is obvious."
On the phone with Cayman National Bank officer: "We will disclose your information if there is any court order to do so in the U.S."
