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"Over the last 18 months, jurisdiction was floundering because of the lack of direction as to what was happening in the Insurance Department," said Ian Kilpatrick, president of Crusader International Management (Cayman) Ltd.
"The Monetary Authority is a step in the right direction." And with "the appointment of Bill and Chris, we now have an exceptionally good department," he noted.
Furthermore, "To see an independent body overseeing it, with what I consider outside directors, it's an improvement because you have both sides of the fence's point of view, not just the government's," Mr. Kilpatrick said.
"The Monetary Authority is a very good idea," agreed Wayne A.M. Cowan, senior vp of Johnson & Higgins (Cayman Islands) Ltd. It can act more as a private company, especially in terms of its pay scale, he said. "It can recruit the brightest and best."
For individual captives, the major advantage of the Monetary Authority is "there's less red tape," Mr. Cowan said.
While the Monetary Authority does not result in any specific change in regulation for captives, "it makes (procedures) easier," Mr. McCullough said. "The Monetary Authority is responsible for administration now, rather than the government." And private sector people tend to be "more understanding of private sector needs."
Tucked into the Monetary Authority Law was legislation amending longstanding confidentiality laws on the island.
Previously, Cayman's insurance regulators were prohibited under the island nation's financial services secrecy laws from disclosing any information about a captive insurer to authorities outside the Cayman Islands without first gaining approval from higher government officials.
The law came under fire from those who thought that the time it takes the Insurance Department to obtain permission to talk about a suspicious Cayman-based insurer was long enough for the insurer to transfer assets and clean up its books to make all look well.
Under the new law, "The Monetary Authority is able to discuss with other regulators and crime bureaus information where there is suspicion of money laundering or fraud," Mr. McCullough said.
"Confidentiality still remains, but in terms of suspicion of fraud, we can now discuss matters openly with," for example, the U.S. Federal Bureau of Investigation, he said.
In addition to amending secrecy laws, Cayman became the first offshore finance center in the Caribbean to pass legislation allowing all proceeds of serious crime to be seized by the government.
The Proceeds of Criminal Conduct bill also makes it a criminal offense for a financial services provider to fail to report any suspicions he may have that a client is benefiting from crime (BI, Oct. 7, 1996).
"Those two bills, in themselves, make much clearer the government's intention to make our domicile very clean," Mr. McCullough said.
Most captive managers support the new laws, saying they will encourage quality business and discourage dishonest business from coming to Cayman.
The laws should help quell outsider perceptions that the island is an offshore money-laundering ha-ven.
"I think Cayman suffers from a considerable number of misconceptions, money-laundering being one of them," commented Anthony B. Stelling, director of Midland Bank Trust Corp. (Cayman) Ltd. "It's extremely difficult, once established, to change minds about the island.
"We try to encourage people to come down and discuss the issues. More often than not, it is not the principal (of a corporation) but an intermediary who comes and has to go back and say, 'Cayman is not as it is portrayed, but is worthy of being the fifth-largest financial center in the world with appropriate checks and balances and controls in place to supervise activity.'*"
The new laws "will give some confidence that there is legislation here to counter money-laundering," Mr. Stelling said.
"The Cayman Islands has to realize there are skeletons in the closet," Mr. Kilpatrick noted. "Banks did hide suitcase money. But that ended 15 years ago, and anyone in the business knows that."
"The image of the Cayman Islands portrayed in movies like 'The Firm' is really not the reality," added John R. Lower, president of International Risk Management (Cayman) Ltd. "I can't say it's never happened here, but you can't say it's never happened anywhere."
There has been lots of discussion about the two new bills, Mr. Lower continued. "All in all, I'm not upset. I like the aspect of having some ability to deal with the fraud element if it exists," he said.
The two bills are "another step in getting rid of unwanted business," J&H's Mr. Cowan said. "Any law that can encourage quality business in coming to Cayman and discourage the dishonest business from coming, we're very supportive of."