It has been a long summer in the Cayman Islands, and it has nothing to do with the tropical weather. Like most offshore financial centres, the Cayman Islands have faced an alphabetical barrage of organisations casting a wary eye on their financial services industry. OECD, FATF, G7, EU, FinCEN – abbreviations and acronyms abound. So what is it all about?
There are two quite distinct issues underlying the recent onslaught on offshore financial centres: tax and money-laundering.
On tax, the world's rich – and high-tax – countries have been getting ever more bothered by the fact that businesses, individuals and capital are much more mobile in the global, technology-based economy. Which makes them harder to tax. The eye of those high-tax countries has fallen on the countries where businesses, individuals and capital are taxed at a low rate or not at all, and those countries have been accused of engaging in 'harmful tax competition'. No matter that in many of those countries, such
