123=Argentina

Los Angeles

·

Cayman

·

London

·

Dubai

·

Cebu

REQUEST A CALLBACK +1 (310) 388-3430

Offshore Banking in the Cayman Islands

David Bonellie

David Bonellie

Last updated: March 13, 2023

Offshore Banking in the Cayman Islands 

Offshore banking in the Cayman Islands is famous for individuals and businesses seeking financial privacy, tax efficiency, and access to global financial markets. As a British Overseas Territory, the Cayman Islands has developed a strong reputation as a leading offshore financial center, offering a sophisticated and well-regulated banking industry committed to upholding international standards for transparency and compliance. 

This article will explore the critical features of offshore banking in the Cayman Islands, including its regulatory framework, tax benefits, and investment opportunities. There are some challenges and risks associated with offshore banking. However, with careful planning and following legislation, there is a practical solution for individuals and businesses considering a Cayman Island bank account and general offshore banking. Using a citizenship by investment program to obtain a second passport and getting a Cayman Island bank account can be strategically advantageous for clients. 

The Significant Benefits of Offshore Banking in the Cayman Islands

The raw data on the Cayman Islands’ offshore banks and their global quality speaks for itself. There are around 75,000 residents on the island, well over 100,000 registered companies, and offshore banking and financial services contribute around 55% of the Caymans’ annual GDP. According to a 2020 report by the Cayman Islands Monetary Authority (CIMA), the total value of banking assets in the Cayman Islands was approximately $1.9 trillion. 

Reasons for Cayman Islands Offshore Banking

The Cayman Islands offers a unique combination of financial, regulatory, and tax benefits, along with a stable and secure environment, which makes it an attractive location for individuals and businesses looking for offshore banking solutions.

Strong Financial and Regulatory System

The Cayman Islands has a robust and sophisticated financial and regulatory system designed to ensure the stability and integrity of the industry. The country is known for its strict compliance with international regulations and is committed to combating financial crime.

Tax Benefits

The Cayman Islands has no income, capital gains, or corporate taxes, making it an attractive location for individuals and businesses looking to reduce their tax burden.

Economic and Political Stability

The Cayman Islands is a politically stable jurisdiction with a robust legal system. The Cayman Islands, a British Overseas Territory, the United Kingdom has jurisdiction or sovereignty but is not part of the United Kingdom itself. The close links to the United Kingdom and greater privacy on finances and offshore banking make it an attractive location for individuals and businesses looking for a stable and secure place to bank. 

Access to Global Markets

The Cayman Islands is a leading offshore financial center with access to global markets and a wide range of financial products and services. Offshore banking in the Cayman Islands allows individuals and businesses to diversify their investments and assets, which can help reduce risk and increase returns.

Global Financial Skills and Expertise

The Cayman Islands has a highly skilled, international, and experienced workforce. The skills in financial services are well-versed in the complexities of offshore banking on the Cayman Islands and can provide clients with expert advice and guidance on a wide range of financial matters.

The Legal and Regulatory Framework for Offshore Banking in the Cayman Islands

Offshore banking regulations have been in place in the Cayman Islands for several decades, as the jurisdiction has been a hub for international finance. The Cayman Islands government has continually updated its regulatory framework to keep pace with evolving international standards and best practices.

Laws and regulations have been introduced to strengthen further the regulatory framework, including the Monetary Authority Law, the Anti-Money Laundering Regulations, and the Tax Information Authority Law, among others.

Laws and Policies that Govern the Cayman Island Banking Industry

Offshore banking in the Cayman Islands is governed by a comprehensive legal and regulatory framework that aims to ensure the stability and integrity of the financial industry while maintaining the confidentiality of client’s personal and financial information.

The key legislation governing banking in the Cayman Islands includes the Banks and Trust Companies Law, the Companies Law, the Mutual Funds Law, and the Securities Investment Business Law. Additionally, the Cayman Islands Monetary Authority (CIMA) oversees the regulation and supervision of financial institutions, including banks, trust companies, and other financial service providers.

The regulatory framework aims to promote transparency, accountability, and compliance with international standards for anti-money laundering and countering the financing of terrorism. The Cayman Islands is committed to meeting its obligations under the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA), which require financial institutions to report on accounts held by foreign taxpayers to their respective tax authorities.

US Citizens Using Cayman Island Bank Account

The Foreign Account Tax Compliance Act (FATCA) is a US federal law that requires foreign financial institutions, including banks in the Cayman Islands, to report information about their US account holders to the Internal Revenue Service (IRS). This law has significant implications for US citizens who bank in the Cayman Islands.

Under FATCA, US citizens must report their offshore financial accounts on their US tax returns, including bank accounts in the Cayman Islands. Failure to report these accounts can result in significant penalties and other consequences, including the risk of criminal prosecution.

For US citizens who hold bank accounts in the Cayman Islands, FATCA requires that the bank report information about their accounts to the IRS. The IRS uses the data to ensure that US taxpayers correctly report their foreign financial assets and pay any taxes on these assets.

Critical Considerations for Choosing a Bank and Account Type in the Cayman Islands

Whether you are an individual who wants a Cayman Islands bank account, or a corporation needing a full bouquet of financial services, there are considerations to reduce risk. 

Considerations for Individuals and Businesses Should Keep in Mind

Reputation and Regulatory Compliance

Choose a bank with a good reputation and is licensed and regulated by the Cayman Islands Monetary Authority (CIMA). CIMA ensures that the bank is operating in compliance with local laws and regulations, which is essential for maintaining the integrity of the offshore banking system.

Services Offered

Consider the bank’s services, including online banking, credit cards, and investment products. Choose a bank that provides services that meet your specific needs.

Bank Account Type

Choose an account type that is appropriate for your needs. For example, a personal account may suit individual banking needs, while a business account may be necessary for companies or corporations.

Bank Fees 

Consider the fees associated with opening and maintaining an offshore bank account in the Cayman Islands. Make sure you are aware of any account maintenance fees, transaction fees, or other charges that may be applicable. Consider the accessibility of the bank and its services. Ensure the bank offers online banking and other features that allow you to manage your account from anywhere in the world.

Security and Transparency

Consider the security measures at the bank to protect your account and personal information. Look for banks that have strong security protocols and offer two-factor authentication. Ensure the bank provides transparent information about its fees and is open about compliance with local and international regulations.

These factors can help individuals and businesses choose a bank and account type in the Cayman Islands. Cayman Banks need to meet their needs and provide a secure and compliant offshore banking experience. 

What are your Options for Offshore Banking in the Cayman Islands

With over 100,000 registered companies in Cayman, there is a vast demand for quality banking services. There are two types of banking licenses available, and your bank account depends on if you are a local Cayman resident or not. 

Category A Banking Licence offers domestic and international services to residents and non-residents. The category B Banking Licence allows banks to serve non-residents in global markets.

Only eleven category A banks and around ninety category B banks are in the Cayman Islands. 

Category A Licence Cayman Island Offshore Banks:

  • Butterfield Bank (Cayman) Limited;
  • Cainvest Bank and Trust Limited;
  • Cayman National Bank Ltd;
  • Fidelity Bank (Cayman) Limited;
  • First Caribbean International Bank (Cayman) Limited;
  • First Caribbean International Bank and Trust Company (Cayman) Limited;
  • MUFG Alternative Fund Services (Cayman) Limited;
  • NCB (Cayman) Limited;
  • RBC Royal Bank (Cayman) Limited;
  • RF Bank & Trust (Cayman) Limited; and
  • Scotiabank & Trust (Cayman) Ltd.

The below list of category B offshore banks in the Cayman Islands is not exhaustive. Full list.

Category B Licence Cayman Island Offshore Banks:

  • Summit Community Bank (Cayman) Ltd;
  • Harbour Equity Partners Ltd;
  • Canara Bank (Cayman Islands) Ltd;
  • Quorum Merchant Bank Ltd;
  • Banque Havilland (Cayman) Ltd;
  • LGT Bank (Cayman) Ltd;
  • First Cayman Bank Ltd;
  • Community and Workers of Jamaica (Cayman) Ltd; and
  • Xander Finance (Cayman) Ltd.

It’s important to note that the suitability of any particular offshore bank will depend on an individual’s specific needs and circumstances. Prospective clients should do their research and due diligence before selecting an offshore bank in the Cayman Islands.

Routes to Obtain Residence in the Cayman Islands 

Citizenship and residence by investment programs are an excellent opportunity that complicates offshore banking. Several options are available to applicants and investors to obtain residence in Cayman. There are benefits to getting certain types of residence versus others, such as an easier route to becoming a British Overseas Territory Citizen (BOTC). 

Residence for Persons of Independent Means & Investors

Four distinct types of long-term residency are available for individuals of independent means and investors; some have nearly identical titles. To be precise, the official names of these options are: 

  • Global Citizen Concierge Program;
  • Certificate of Direct Investment; 
  • Residency Certificate (Substantial Business Presence); 
  • Residency as a Person of Independent Means, and 
  • Certificate of Permanent Residency for Persons of Independent Means.

Global Citizen Concierge Program

Obtain a two-year residence permit for remote workers. Applicants must show proof of employment with an entity outside of the Cayman stating their position and annual salary. Minimum salary requirements are as follows:

  • Individual applicants with an income of $100,000;
  • Individuals with a spouse/civil partner must make a minimum annual income of $150,000; and
  • Individuals with a spouse/civil partner and a child must earn a minimum yearly income of US$180,000.

Certificate of Direct Investment 

Receive a twenty-five-year renewable residence permit for investing a substantial sum in an employment-generating business or businesses in the Cayman Islands. 

  • Applicants must demonstrate an investment (or imminent investment) of a minimum of CI$1,000,000 ($1.25m) in an employment-generating business. 

Residency Certificate (Substantial Business Presence) 

Applicants can obtain a twenty-five-year renewable residence permit through a Residency Certificate (Substantial Business Presence). The permit is available to individuals who own at least a 10% share in an approved business category or will be employed in a senior management capacity within such a business. There is no minimum investment requirement, but the government must authorize the investment and business. 

Residency as a Person of Independent Means 

There is a twenty-five-year residence permit for persons of independent means. The applicant needs to fulfill the following requirements:

  • The primary applicant needs to show proof of annual income of CI$120,000 ($146,000);
  • Make a bank deposit of CI$400,000 (487,000);
  • Complete an investment of CI$1,000,000 ($1.25m), of which
    •  At least CI$500,000 ($608,000) must be in developed real estate; and
    • The remaining CI$500,000 ($608,000) must be invested in a company or property–and simply holding assets with a broker.

Certificate of Permanent Residence with Right to Work 

The certificate of Permanent Residence with the right to work from an investment is the ultimate residence in the Cayman Islands. Typically permanent residence requires waiting for the usual eight years before becoming eligible. The applicant needs to:

  • Invest a minimum of CI$2,000,000 ($2.5m)  in developed real estate and possess sufficient financial resources to maintain themselves and their dependents (at least CI$120,000 per annum);
  • A final non-refundable CI$100,000 government fee when the applicant receives approval.

Unlike Residency for Persons of Independent Means, this option has no expiry date. It qualifies the holder to become eligible for Naturalisation as a British Overseas Territories Citizen (BOTC) once they have been resident in Cayman for five years. There are no restrictions on dual citizenship for BOT citizens.

Final Thoughts on the Cayman Islands Offshore Banking 

Offshore banking in the Cayman Islands can offer a range of benefits to individuals and businesses. It can protect their assets, maximize returns, and take advantage of a stable and well-regulated financial system. With A strong reputation for privacy, confidentiality, expertise, and innovation, the Cayman Islands continues to attract many high-net-worth individuals. It is a leading offshore financial center, attracting clients worldwide.

Click and Contact us to set up a consultation. Global Residence Index will give insight into how to open a Cayman Islands bank account and obtain permanent residence.

FAQs

Can I open a Cayman Island Banking Account as a Non-Resident?

Yes, you can open offshore bank accounts even if you do not reside in the Cayman Islands.

Is there a Minimum Deposit Required to Open a Cayman Islands Bank Account? 

Yes, each bank is different with their minimum deposit amounts. However, the minimum personal account is normally $10,000

Can My Company Make Use of Offshore Banking in Cayman?

Yes, hundreds of thousands of companies use bank accounts in the Cayman Islands. There is a document collection process which is quite stringent to ensure the authenticity of your business. 

What is the Best Residence Option while using Cayman Island Banks

The certificate of Permanent Residence for significant investors is the best option. Permanent Residence holders can obtain British Overseas Citizenship after five years of residence, which can be converted to full British citizenship by registration. 

Need help?

Navigating through golden visa & citizenship by investment programs can be complex and overwhelming, regardless of the country or program you’re interested in. If you’re struggling to find clear, accurate information, you’re not alone. Our team is here to offer you clarity and reliable advice across a wide range of immigration programs.

By scheduling a consultation, you’ll receive personalized guidance tailored to your unique situation. We’re dedicated to helping you understand the details of various immigration programs, making them more straightforward so you can proceed with confidence.

GET PERSONALIZED GUIDANCE

During our call, we will:

Here is what to expect from a call with our advisory team:

1

We’ll answer your questions about the program and the application process, providing you with the clarity you need.

2

We’ll break down each stage of the immigration process, ensuring you know exactly what to expect.

3

We’ll help you determine if the chosen program is the right fit for you or suggest alternatives that may better align with your goals.

4

Gain access to our network of recommended local lawyers, as well as providers of eligible investment options.