Competitive Advantage.
Many of the popular international banks, law or accounting firms are once again deciding to invest in Cayman which will most likely be the collective response in 2013 in light of another year of financial turmoil, says partner and editorial chairman of KPMG Anthony Cowell. Business is reviving in the Cayman jurisdiction because it offers many competitive advantages that make it once again an attractive place to do business.
Anthony Cowell went on to say, "In my opinion, the alternatives industry continues to suffer from a crisis of identity. Through open dialogue, the application of innovative ideas and by embracing the concept of continuing evolution, I believe we hold the power to invent our own future. Our new laws give us plenty of room to play as we approach a new year and I look forward to seeing how seeds planted at this conference grow and develop in 2013."
Actually, Cayman Islands is not just spurring on investors globally, but catering the very prestige of finance to the local citizens and locals taking up residency on the three islands. As Anthony Cowell further stated, "Our people are driven and passionate about protecting our islands for future generations and to help those less fortunate in the community in which we live. Our commitment to our community is at the heart of how we conduct business everyday, to truly make a difference."
The reason why the Cayman Islands strike such a financial interest to this story and business men around the world for centuries is because of the very nature of the island itself. Yes, it may be riddled with charm and beauty to the romantic, but it's also a melting pot of power and ambition for the economic. The British royal and noble families considered these hubs pivotal to the enduring success of the British Empire, and with such ideology came the "schooling" of young masters who would one day inherit and lead their family fortune onwards to greater riches. Cayman Islands can thus be seen at the time as a prestigious business school for the elite, where every aspect of daily life and interaction on the islands constituted some type of lesson to the grooming of young gentle businessmen.
Offshore Funds and Law.
When economists and entrepreneurs refer to "offshore funds" they are initially saying an account abroad of their registered corporate or individual national residency. Under Admiralty Law "Law of the Seas" also known as Maritime Law, a company is a corporate individual/citizen with the same privileges of a regular person. As such, when individuals themselves are "incorporated" represented by a corporate entity, are allowed to proceed having received the proper steps and tokens needed to secure an offshore account.
Certificate of Direct Investment.
A certificate of Direct Investment is available to Chinese individuals and foreign nationals with a personal net worth of at least US$ 7.15 million who have made, or propose to make an investment of at least US $2.86million in any licensed, employment-generating business or businesses in the Cayman Islands. This certificate allows the holder to reside in the Cayman Islands permanently with their families and to work in the business or businesses in which they have invested for up to 25 years. It is then renewable or extendable at the end of this period.
Opening a Bank Account.
In addition to all the benefits of holding an offshore account at the Cayman Islands, opening a bank account or use financial services is quite as easy as may be expected when the rules are properly followed.
Below are a few points an investor should be aware of when considering to open an account. You will be asked to provide personal information in order to establish and confirm your identity, as required by Cayman law.
This is related to "nationality" or residency of the host corp. you will be conducting business through, the legal entity of operations.
- An original financial reference addressed to the Bank indicating a satisfactory relationship of over three years, and quoting approximate average balances maintained over the past six months?
- One's full name, residential address, telephone/fax numbers, nationality, date and place of birth, occupation, name and address of employer;
- Details regarding the purpose of the account;
- The nature and dollar volume of anticipated transactions through the account including the source of funding of initial and subsequent deposit;
- A notarized clear copy of your passport or driver's license (with photo showing);
- Confirmation of physical address (e.g. copy of a utility bill or drivers license);
- In addition, for accounts of non-resident individuals, most banks will ask to require original character references addressed to the bank directly from a law or an accounting firm. Certification of identification is not required of persons who have been personally interviewed at the Bank and from whom a photocopy of passport has been taken by Bank personnel. There may be situations that are not covered by the above, but the banks will be pleased to discuss their requirements and help investors successfully open an account if there is any exceptional case.
When it comes to private banking, it is known that massive funds are said to be "hidden" on the island. "When you want to 'hide' what you're doing, the Cayman Islands is the place to go. Just ask Mitt Romney, who according to MSNBC invested up to $25 million in 12 Cayman Islands-registered funds. His old company Bain Capital has had more than 138 investments in the Caymans, and 40 personal offshore accounts" says the investigative economist Tod Robberson.
The appeal of the Cayman Islands is in part due to the well established set of regulations enabling the registration of investment funds with their financial regulator. As a result of this registration, the sponsor/company can then further choose to market its funds on the open market such as that of the European Union. So why is the Europeanized Cayman Islands such an attractive option opposed to other more regional hubs like Hong Kong or South Korea for mainland Chinese? The answer is tax. Taxation is always at the root of everything.
Considering again the 1700's of which the Cayman Islands enjoyed the immense wealth distributed throughout the British Commonwealth, this was a major factor of the Revolution in America and Declaration of Independence. The colonies (pre-revolution) were subjected to heavy taxes imposed by the British monarchy. As a British colony producing and exporting massive varieties of goods, especially cotton, taxation was an ever increasing burden on the American Colonists. While the Americans labored under imperial rule, the spoils of the rich American plains never failed to precipitate through out the global web of British hubs filled with aristocrats enjoying the latest goods and wares from the New World. And the Cayman Islands, encapsulated in a bubble of infamy lives on in a state today, perhaps tinkered with technological improvements, but still the essence of what low-tax, stock and drop ports were all about 300 years ago
This means that Chinese nationals and foreigners can "organize" their capital with basically zero tax liability locally, regardless of its on income or capital gained. For Chinese investors this implies that the only tax liability which will be weighed on their investments into such funds depends on their "national registration" and the country to which it applied for residency. When tax is slim to none, any financially minded individual will find locations such as the Cayman Islands a promising investment.
Investment Guidelines.
When deciding upon a hub to invest savings and capital, the individual should be aware of the dangers associated to transferring large sums of money through financially driven individuals and organizations. Fraud is unfortunately not uncommon. Fraudulent individuals have always existed in all forms and fields of daily activity. It's therefore not surprising to find these types of people operating in these places. It's the benefactor's best interest to benefit by knowing the signs and signals given by financial crooks.
Perhaps it may seem unnerving to release large sums of money to a foreign party with a history of finding an appreciated value on the investors "investment", but this is not entirely true. Actually if an individual is well prepared and knowledgeable about the field he is to operate in, careful preparation can have more positive than negative conclusions. A few points to strongly consider for any individual serious about their money traveling safely to an offshore safe haven should be mindful of the following points:
Dimension.
Begin first by identifying the specific fund in which you are interested in investing. If the funds are small, then there is a strong possibility that a danger is possible with that specific transaction. Additionally, research the fund company you are considering using and how many funds it has available. If the company only presents a single fund, then it should be clearly marked as a liability and discarded.
Offer.
In regards to offers and fund promoters offering deals which sound too good to be true, are most like offering offers that wont do the investor much good. Avoid these offers and be keen on knowing the difference between a bad scam and a good steal.
Status.
Hubs that belong to the British Commonwealth as well as a few other European low-tax jurisdictions, have a really solid status for being well regulated, and provide a large degree of security on behalf of the investor.
Risk.
The first goal should always be to eliminate risk and weigh the remainder to make a calculative decision. Risks are a part of any game, especially investments and business. There is no foolproof guideline for new investors to follow. A reason for the appeal to gain riches in fortune and privileges is associated with the fact that only those who know what they're doing succeed.
Leverage.
Knowing the fund you are considering investing in will have its ups and downs. It is the investor's responsibility to be aware of the pattern associated to financial cycles. In addition, it would be wise of the investor to know the calculated risk of total losses possible. Old rule of thumb is that one should not invest in more than they are willing to lose. A relative sized investment can easily turn into a heavy burden.
