Long-time banker and former president of the Cayman Islands Bankers
Association Eduardo D’Angelo Silva said that historically throughout the
world, bankers didn’t feel a need to know their customers before the
90s. “Bankers felt they weren’t policemen,” he said. “They felt it wasn’t a banker’s role to ask questions.”
Like a long roller coaster ride, the decade of the 2000s brought
Cayman’s financial industry ups and downs, thrills and screams, white
knuckles and exaltation.
Like the opening of “A Tale of Two Cities”, the decade of the 2000s represented the best of times and the worst of times for the Cayman Islands financial services industry. In a time when the hedge fund was king in the financial world, the Cayman Islands served as the investment instrument’s seat of power. More than 80 per cent of the world’s hedge funds were domiciled in the Cayman Islands during parts of the decade. The money flowed and the good times rolled.
From the late 80s, the fund industry started to pick up steam in the
Cayman Islands. Sean Flynn, a banker with Swiss Bank Corporation – which
later became UBS – said a fundamental change in the type of investments
began occurring in the early 90's.
Indeed,Cayman’s tax haven status and confidentiality law were seen by many as critical to the continuing success of the financial industry. Some saw nothing wrong with Cayman’s way of doing business and staunchly defended it.
Buoyed by the passage of investment-friendly legislation, infrastructure improvements and the political instability of one of its largest offshore competitors – the Bahamas – Cayman suddenly found itself on the map of more than just scuba divers. Following the bold steps taken in the 1960s to make Cayman more attractive as an offshore financial centre, the government continued to act; sometimes in cooperation with the British government.
In the first of a series of articles looking at the development of the Cayman Islands as an offshore financial services centre, Alan Markoff looks at the decade of the 1960s, when the seeds of success first took root. Legend has it that sometime in the 18th Century, a flotilla of ships wrecked close to Grand Cayman. Cayman Islands’ residents rescued the people on those ships, which included as their passengers some British royalty.