The Cayman Islands is probably one of the first places that come to mind when you think of offshore banking. The reason has largely been due to Hollywood and how they portray the mystique of these offshore island jurisdictions. However, the truth is that the Cayman Islands do not live up to their reputation of shady operations and are, in fact, quite highly regulated and well regarded. In this guide, I’ll attempt to show you how to Open an Offshore Account in Cayman Islands.
The reality is that banking standards have risen sharply in the Cayman’s over the past decade or so and the island nation’s banks now take compliance very seriously. So, if you think you can hide rivers of dirty money in this jurisdiction then click away now because nothing could be further from the truth.
The main reason for the increase in banking compliance standards stems from the fact that the British overseas territory has become the leading jurisdiction for offshore hedge funds. Their nation has over $7 billion in deposits and most of the world’s offshore hedge funds. Subsequently, there is every reason for the local and international banks to take their compliance obligations exceedingly seriously. Additionally, it’s not like their banking sector is desperate for business and the local financial institutions are now being quite choosy over who they will accept as clients.
Regardless, the Cayman Islands still represent probably one of the premier locations to incorporate a company and utilize banking services. However, it should be noted that it is an incredibly expensive jurisdiction to operate in and you will find that every service provider you deal with is likely to have their hands out looking for payment.
In short, the Caymans are more expensive than almost any other offshore jurisdiction in the world. The costs of formation, banking, and compliance are among the highest in the world and dwarf locations such as Belize, Hong Kong, Cook Islands, and Liechtenstein.
However, if you can afford the outlays, and need the reputation of the Cayman’s jurisdiction, then this guide will help you find the right service providers and banks to get your company/trust/fund formed and completed.
Why Bank in the Cayman Islands
Given the reputation of the Cayman Islands and their connection to the world financial system, it’s no wonder why you would choose them to bank with. There are some excellent benefits to banking on the island, not the least that they have a large pool of professionals to assist you.
Fortunately, international banking is not a dirty word in the Cayman Islands as it is in many other places around the world. Amongst the financial community you will find that most are very well versed in offshore structures and banking. Cayman professionals typically have great knowledge of international banking and are sophisticated and trustworthy professionals. They can confidently advise you on everything from non-resident banking to withholding tax regimes in the Americas. The reality is that banks on the island are full-service providers and offer a vast array of financial and non-financial services.
In fact, banking in this jurisdiction offers services, not unlike those provided by Swiss institutions in bygone years. Expect to be able to access everything from wealth management, tax planning, legal advice, business referrals, and OTC investment services to name a few. Typically, their bankers are quite strong with their international and local compliance knowledge, and they can assist you in staying on the right side of the law.
Another benefit is the general location of the Cayman Islands and their connection with the Americas. They are very easily accessed from multiple locations within both North and Central America and there are multiple flights per day which make getting to the location relatively easy.
However, it should be noted that the island is a British Overseas Territory and, although they operate completely independently of Britain, this may upset some of my readers who seek to completely divorce themselves from the West. The upside to this is that they have a very stable government and banking system which you certainly won’t find in Latvia or Montenegro.
Ultimately, the Island really provides the best of both worlds with a very stable jurisdiction, largely beyond the reach of the West, and a beautiful location to boot. Subsequently, the level of demand for offshore services there is relatively high, and this means increased costs across the board. However, if you have the money to make it worthwhile then the Cayman Islands is a superior option for offshore banking.
Note: If you are a U.S citizen, and your sole reason for banking in the Cayman Islands is to access a zero-tax environment, then think again. The IRS has cracked down significantly in the past few years and you will now find yourself caught in short order given the FATCA disclosure requirements.
How to Open an Offshore Account in Cayman Islands
The general rules to opening an offshore bank account remain the same and you should work with your chosen bank to assess both the opening requirements and the actual fee structure. Contact your chosen bank and get them to assign a relationship manager to you to discuss your needs. Do not be afraid to contact them numerous times to gauge both their responsiveness and their answers.
If you get the opportunity to meet with them in person, I recommend taking up this opportunity. Make sure you are well dressed and come prepared with answers to the typical questions on what it is that your business does and a good rationale on why you wish to bank in the Cayman Islands.
Please understand that given the growing compliance issues around the world that the bank needs to be satisfied that you are not only a trustworthy client but also have a very good reason for going offshore. The days of answering “to protect my money in a private jurisdiction” really do not cut it anymore.
The bank will typically perform all the required compliance and KYC checks on you as well as making sure that you are not listed on any of the global sanctions lists. Many companies and banks use the Thompson Reuters World Check service to undertake these validations.
Assuming you pass all the requisite checks, including a google of your name, you can then expect to be asked to provide a raft of documentation to prove your identity/business details/rationale for banking in the Caymans. This stage can be irritating as they pour over your documents looking for any abnormalities, but it has become part of the process now in 2022.
Ultimately, the bank is solely concerned with risk and the fact that any problems could follow you to the institution and cause issues with their correspondent banking facilities. The bank just wants to make sure that you are the type of client that they are interested in working with.
You can typically expect to be asked for the following documents:
- Passport Copy
- Proof of Address
- Banking History (Including statements) & Bank Reference Letter
- Professional Referee
- Proof of Income (Salary statements etc.)
- Source of Funds (Exact documentation showing how the funds for deposit were derived)
Depending on whether you have a long-term home bank, and can provide a banking history, they may also request a professional reference from a lawyer or accountant. There is normally a cost to obtaining this reference letter and you may also be asked why you require it. Most Cayman Island banks also require this to be mailed directly to them.
You will also be required to demonstrate, to the bank’s satisfaction, that you have some sort of connection with the Caymans. If you are establishing a business/company you will need to show your business plan and why the Cayman jurisdiction factors into your plans. At the end of the day, it really comes down to your relationship with the bank/banker as to how much of a connection you are required to demonstrate.
However, it should be noted that there are a few banks on the island that offer full non-resident services, with no connection to the Cayman Islands, to clients with reasonable deposit amounts. This obviously varies between the banks but, as a rule, expect to require a deposit of US$50k to US$100k to secure full banking facilities.
If you are seeking private, bespoke, banking or wealth management services then you can expect the deposit requirements to grow significantly in size. Some of the leading private wealth managers on the island required minimum deposits of US$250k and up to open investment accounts.
Additionally, there are bank/incorporation agents that have pre-existing relationships with certain banks and can make your application process significantly easier. Expect to pay anywhere from US$500 to US$1k for the introduction. Also, be wary of anyone that offers you a “Guarantee” as nothing of the sort can be given to you. The banks make their own rules and even introducers are unable to guarantee a result.
Having said that, our consulting arm www.ocbfconsulting.com offers replacement options if you fail to be granted your chosen bank account. We would never leave you high and dry without a banking facility.
Leading Cayman Banks
There is a huge number of licensed banks in the Cayman Islands…well over 100. Subsequently, we simply cannot cover every single option for you in a short blog post. Additionally, it really depends on what service you are seeking as to which bank is appropriate for your need. Therefore, we often recommend talking to us as we may be able to suggest something to fit your requirements.
However, here is a short list of banks that you can approach (or talk to us about):
Cayman National Bank
The Cayman National Bank is an excellent general option for anyone looking to establish corporate banking facilities within the islands. The bank offers a plethora of services and most of your traditional transactional banking needs are likely to be covered by them. They are also happy to open non-resident accounts but often require significant documentation, including current financial statements, to assess your application. The minimum deposit is typically only US$1k but the downside is that the wire fees can be quite step at around US$72.00 for an outgoing wire.
Fidelity Bank Limited
https://www.fidelitygroup.com/caymanislands
Fidelity Bank also offers comprehensive banking services but is one of the banks that requires some sort of direct connection with the Cayman Islands and proof of a local address. This is potentially surmountable for someone that has a full corporate setup and substance on the island.
Butterfield Bank
https://www.butterfieldgroup.com/
Butterfield bank offers a range of private banking services and has multiple locations throughout the Caribbean. In addition to traditional private banking services, they also offer trust and fiduciary services, which can be an excellent add on. Their asset management team is excellent and can provide some very high-end private wealth services. This institution is one of the few that you almost need to have a contact or an introducer to see a successful application.
CIBC First Caribbean International Bank
Although this bank is fully licensed by the Cayman’s it largely operates out of Canada. They provide a variety of banking services focused upon corporate and business banking. They do offer personal accounts, but they are less common than corporate ones. Expect to have to demonstrate a connection to the Cayman Islands.
Trident Trust Company
https://www.tridenttrust.com/locations/cayman-islands/
Trident operates in many locations around the world and is multi-jurisdictional in their reach. Within the Cayman Islands they have a B Class banking license and are also trust and mutual fund operators. They are particularly experienced at the settling of private family trusts.
Alhambra Bank & Trust Limited
Alhambra is probably my favorite private bank on this list and provides a huge range of services to non-US individuals. Unfortunately, if you hold a passport from Uncle Sam, you may find it impossible to obtain an account. Not only do they provide full private banking services, but they also have a wealth and trust department. In short, they are a full-service operator and can help you not only bank but manage your wealth.
Why You May Want to Look Elsewhere
Should You Even Open an Offshore Account in Cayman Islands ?
As mentioned previously, banking and doing business within the Cayman Islands can be very expensive and unless you have a strong business case for accessing this jurisdiction you might be best to be looking elsewhere. The Cayman’s is really for people looking to set up closed end funds, insurance, and reinsurance operations, and for those seeking a secure bolt hole close to the Americas. However, it comes at great cost, and you can be expected to be saddled with many more times the cost of what you would get if you banked in one of the other jurisdictions.
I often counsel people to consider their actual aims and needs first before considering on one jurisdiction or another for banking and incorporation. Once you have your ultimate goals worked out then it’s quite simple to narrow down the list to somewhere that fits both your needs and your budget.
This is something we regularly do here at the Roving Entrepreneur through our consulting company OCBF (www.ocbfconsulting.com) and we are happy to help sort out what your critical needs are.
The Roving Entrepreneur, and our consulting arm OCBF, comprise a team of multi-skilled individuals covering tax advice, business formations, trust establishment, and nominee director and Trustee services. Please talk to us for any queries you might have:
Steven James
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