Cayman Islands Govt. Open To Assist US With ENRON
GOVERNMENT OF THE CAYMAN ISLANDS
Contact: Tel: (202) 944 5137
(345) 945 0943
CAYMAN ISLANDS GOVERNMENT OPEN TO U.S. REQUESTS
FOR ASSISTANCE ON ENRON INVESTIGATION
Longstanding Channels for Information
Exchange
Available to U.S. and Other Government Authorities
Grand Cayman – 8 February 2002 – The Government of the Cayman Islands confirms its ability to respond to requests for assistance from the United States government in its ongoing Enron investigation. Through established regulatory, law enforcement and treaty channels, information exchange occurs frequently between the U.S. and the Cayman Islands governments on a range of issues. To date, no formal request has been made by U.S. authorities for information on the Enron matter.
Since 1990, the Cayman Islands government has provided information on criminal matters to the U.S. Department of Justice over 200 times. That exchange has taken place through the Mutual Legal Assistance Treaty. The Cayman Islands was the second jurisdiction in the world to sign such a treaty with the U.S.
The Cayman Islands Monetary Authority (CIMA) has a well-established working relationship with the Office of International Affairs of the U.S. Securities and Exchange Commission, which has facilitated mutual assistance. Any request in the Enron matter would be treated in accordance with Sections 30 and 43 of the Monetary Authority Law (2001 Revision), which provides for full cooperation with overseas regulators. One of the principal functions of the Authority is to provide assistance to overseas regulatory authorities and it is always ready to carry out that responsibility.
The Cayman Islands Financial Reporting Unit (FRU) has an ongoing relationship with the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). The FRU receives suspicious activity reports and provides international law enforcement cooperation on money laundering matters. On 13 June 2001, the Unit was admitted to the Egmont Group, an international organisation that includes over 50 similar agencies, and is the worldwide standard-setting body among financial reporting units.
As a major financial centre, the Cayman Islands
takes its international obligations seriously. It has kept
pace with international standards in terms of anti-money
laundering regulations and has been recognized for that by
the Financial Action Task Force, and the U.S. Treasury in
particular last year. In a speech last November, U.S.
Treasury Secretary remarked, "The Cayman Islands has a
long-standing relationship with the United States, including
partnering with the United States in a mutual legal
assistance treaty effective since 1990 under which we've
already been cooperating in the hunt for terrorist assets."
Secretary O’Neill added, "We commend the Cayman Islands for
emphatically demonstrating that those who seek to engage in
tax evasion or other financial crimes are not welcome within
its jurisdiction."
As in the U.S. and the United
Kingdom, the Cayman Islands respects the rights of
law-abiding citizens to financial privacy. However, the
Mutual Legal Assistance Treaty, the Confidential
Relationships (Preservation) Law, the Proceeds of Criminal
Conduct Law and other legislative provisions are designed to
ensure that the Cayman Islands are able to provide
assistance to U.S. and international authorities during a
criminal investigation. This track record of international
cooperation is well-established with those
authorities.
The Cayman Islands Monetary Authority is
responsible for regulating those engaged in the business of
company management and the provision of corporate services.
The Cayman Islands has required company managers to be
licensed since 1984. It is only one of a few jurisdictions
in the world to regulate these services.
Under the
laws of the Cayman Islands, any person conducting "relevant
financial business" – including bankers, lawyers,
accountants, securities brokers, company managers and
corporate service providers – is subject to the Money
Laundering Regulations. Therefore, company management and
corporate service providers are required to conduct
know-your-customer and due diligence procedures for each
corporate entity they provide services for.
In
matters of trans-border insolvency supervision, the
Government of the Cayman Islands makes appropriate
appointment of provisional or official liquidators. This is
to ensure that Cayman corporate entities affiliated to
foreign companies in bankruptcy or liquidation proceedings
are properly supervised or liquidated in the interest of
their creditors, employees and shareholders. Two Enron
Cayman subsidiaries are already in process of provisional
liquidation.
##
Notes to Editors:
The Cayman
Islands has had ‘all-crimes’ anti-laundering legislation
since 1996, following the introduction of the Proceeds of
Criminal Conduct Law. Under this Law, the Cayman Islands has
cooperated through its FRU on an "all crimes" basis,
exchanging information with other jurisdictions in the fight
against international crime. To date the FRU has provided
assistance to the Bahamas, Brazil, Canada, Germany, Hong
Kong, Mexico, Peru, Russia, South Africa, the United Kingdom
and the United States.
The laws of the Cayman Islands allow the freezing of assets during the investigative stages of a wide variety of criminal offences. In a recent example, in February 2001, the Attorney General of the Cayman Islands received several requests from the Peruvian government regarding funds held in various accounts at banks in Grand Cayman. The Peruvian government sought the freezing of these funds on the basis that they were the proceeds of crimes under investigation in Peru, in the Montesinos matter. Further investigations by the Financial Reporting Unit (FRU) using powers available under the Proceeds of Criminal Conduct Law resulted in the funds being frozen by the Cayman Islands Grand Court; these funds have since been returned to the Peruvian Government.
The Cayman Islands Monetary Authority has ensured that all financial service providers are examining their records in the light of information issued by the U.S. Authorities and other reliable sources on individuals and organisations suspected of terrorist involvement. Any information gleaned as a result will be automatically and immediately reported to the Monetary Authority and law enforcement agencies, for immediate transmission to the relevant Authorities in the U.S.
Key elements of the OECD ‘Advance Commitment’ made in
May 2000:
The effective exchange of information for
criminal tax matters shall become effective for the first
tax year after December 2003, and for civil and
administrative matters for the first tax year after December
2005.
The implementation of this commitment shall
require that information be provided only pursuant to a
specific request, and where such request 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 exchange
agreements.
Confidentiality provisions will ensure that
information that has been exchanged is adequately protected
from unauthorized disclosure.
U.S. – Cayman Islands Tax Information Exchange Agreement
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.
ENDS