Banking secrecy in the Cayman Islands

By Sebastian Said

The offshore jurisdictions are commonly thought to be highly secretive, with banking secrecy being an important part of what those jurisdictions offer to businesses and individuals who use them. For example, in 2000, the US Treasury Department issued an advisory notice stating that extra vigilance was required in doing business in the Cayman Islands: ‘The Cayman Islands remains committed to strict bank secrecy, outside of a limited suspicious transaction reporting and international co-operation regime.’

The Confidential Relationships (Preservation) Law was introduced in the Cayman Islands in 1976. There had been a previous 1966 law seeking to establish banking secrecy, based on a piece of Bahamian legislation introduced the year before.

In proposing the new legislation in 1976, the major concerns were: first, the then recent Field case in the US (in which a Cayman banker had been served with a subpoena at Miami Airport and was held in contempt for refusing to answer questions that would cause him to commit an offence in the Cayman Islands under the 1966 law); and second, the activities of foreign investigators on the islands (see the US Supreme Court decision of Payner 447 US 727 for a discussion of thefts by IRS agents in pursuit of information offshore around this time, as part of ‘Operation Trade Winds’)…

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