(CNS Business): Financial Services Minister Wayne Panton has pointed to the constant changes and jumping around in the global regulatory environment as a major flaw that prevents solutions being able to show their worth before they are replaced. Speaking in Brussels earlier this month about offshore regulation, he said the fundamental flaw that undermines the efficacy of global regulatory initiatives was that “no recent international measures have been given the chance to work before other initiatives are introduced”.
Panton was speaking at a panel discussion organised by the Centre for European Policy Studies (CEPS) earlier this month, where he explained Cayman’s commitment to global initiatives to fight illegal financial activity and harmful practices. But he also pointed out that because the financial system is different in Cayman, the commitment is misrepresented.
“Our regime is misunderstood; and as a result, stubborn misperceptions of Cayman remain,” he said. “We cannot achieve transparency outcomes until we stop basing global initiatives on alternative facts, posing as unassailable truths,” he told the audience.
He explained that the Cayman Islands has never had a direct tax system, and has never had a preferential tax regime but a consumption-based model.
“In the decades since, we have evolved our tax system to suit our needs, as is our right. And we have never designed the system to compete with tax systems in any other jurisdiction,” he explained. “But nevertheless, we are often seen as a tax competition threat – and this clouds the reality that our system supports rather than harms other jurisdictions.”
Panton said that by facilitating global investment, Cayman benefits include investment into EU countries. He said that the IMF shows foreign direct investment from EU countries into Cayman is about US$45 billion but investment flowing from Cayman to the EU was more than US$201 billion.
“Not only is Cayman conducive to the effectiveness of global investment flows, but it also has the level of transparency necessary for the tax authorities in partner jurisdictions to take action where necessary,” the minister said.
Panton said Cayman has learned that participation and adherence to global standards has not hurt business but benefited the jurisdiction, but he added, “Jumping from one mechanism to another without assessing results and, more damaging, building the mechanisms on falsehoods compounds the inherent complexity of international regulation.”
He said this contributed to ineffectiveness. “When we focus so intently on the wrong key variables in the global financial services ecosystem, we make it impossible to achieve the transparency outcomes we are working so hard to achieve,” he warned. “Cayman’s primary function in the ecosystem is to provide a market in which investment flows can be efficiently and effectively deployed around the world.”
He said Cayman’s participation and support of international standards and its own self-sufficiency contributes to the stability of the global economy. He urged the audience to be open-minded and challenge their assumptions about the global financial services ecosystem.