A Cayman Islands bank account can help protect assets from lawsuits, enhance financial privacy, and in certain cases, lower taxes. This is especially the case when you hold the account in the proper legal tools. The U.S. has under five percent of the world’s population. Yet, it has 80% of the attorneys in the world and an astonishing 96% of global lawsuits. U.S. courts can directly access funds that people hold in U.S. banks. The Cayman Islands banking system, on the other hand, includes privacy provisions to keep nosy neighbors out of your affairs.
When you engage in Cayman Islands offshore banking you are taking one step in moving your funds beyond the reach of your neighborhood attorney. That alone, however is not enough. The reason is, if a local judge commands you to return the funds, they could compel you to do so. Therefore, it is also necessary to establish the bank account inside of a legal tool.
Examples include an offshore LLC and/or an asset protection trust. What happens when the courts order you to return the funds? You have our foreign trustee company / law firm who can step in and protect you. That is, the trustee can prevent that order from being carried out. Thus you keep out of hot water. An offshore trustee company is not under the jurisdiction of your local courts. Therefore local courts cannot require them to comply with orders made in your county, state or country. More on this later. First, let’s look at a little background of the country itself.
Background of the Cayman Islands
The Cayman Islands are located between Cuba and Central America. It is a jurisdiction of three islands that possess a favorable international reputation. Worldometer puts their overall population at over 67.3 thousand as of this writing. The Cayman dollar (KYD) currently has a fixed rate with the United States dollar (USD). The rate is 1.00 KYD to 1.20 USD. There are no income taxes in the Cayman Islands.
Our CEO has been to the Cayman Islands a number of times over the years. Its wealthy economy, robust banking and beautiful beaches makes it one of his favorite islands to visit in the Caribbean. In fact, as of this writing, the United Nations lists the Cayman Islands as the seventh wealthiest country in the world by GDP per capita. That puts it ahead of the United States which sits at number 12.
Most of the money that comes into the country comes from tourism, customs payments, stamp duties (such as fees paid to purchase, lease, mortgage or insure real estate), and annual business fees. The Caymans have a strong political situation and are considered one of the major offshore banking centers in the world. It has 100 accredited banks. Deposits in the banks are worth over 597 billion USD.
Cayman Banks: Trusted Internationally
There are a lot of good reasons that the Cayman Islands banks are so popular. One reason is that they are a trusted international financial center. Appleby cites some of these reasons as a strong reputation, flexibility, central time location, and processing speed. The Islands have adapted their statutes from English common law and have tailored it to their local needs.
As offshore services industry experts know, the Cayman court system has a longstanding, stable caselaw repository. Plus, the Cayman Islands offshore financial services sector has a culture of adapting to the needs of modern demands. That is, it is committed to working with international entities to provide up to date financial services and making changes as the situation dictates. It also maintains anti-money laundering and anti-terrorist financing regulations in cooperation with the Organization of Economic Cooperation and Development (OECD).
Cayman Islands Banking Secrecy
Banking secrecy is often an important consideration in banking internationally. The Law Office of R.J. Mintz says that Cayman Islands banking secrecy is among the strictest in the world. The trust laws in the Caymans are highly developed. As such, they provide a great level of flexibility, protection, and privacy to their account holders. One can form a company with a minimum amount of paperwork. In addition, you can hold the shares in the company in a trust or other privately held vehicle. You can also choose to have nominee officers.
When a company or individual decides to invest in the Cayman Islands, Appleby goes on to cite that one of the great benefits they receive from that account is tax neutrality. The Caymans are not entirely tax free or a tax haven. However, they do not have capital gains or taxes on income, profits, corporation, or withholding. When you incorporate a company within the Caymans, your exempted company gets a substantial tax benefit from the government. The company will remain tax-free for a 20-year period. Exempted trusts or limited partnerships can receive the same statement, but for up to a 50-year period.
-hat said, when we set up a bank account in the Cayman Islands for a client, we set up a company to hold the account, but not one in the Caymans. We typically set up the account in the name of an LLC formed in a neighboring island of Nevis because of the superior asset protection. If asset protection is a goal, we will place the LLC inside of an offshore asset protection trust in Nevis or the Cook Islands. So you can have a bank account in the Cayman Islands held in a company and trust in another jurisdiction for added legal protection.
Options
Before finding out how many banks are in the Cayman Islands, it is important first to know that there are two classes of banks. Corporate Finance Institute describes these two bank types, marked by either an “A” or a “B” license. The government grants an “A” license is to an applicant that is a qualifying branch or major subsidiary of a major international bank. It must have a net worth of no less than $50 million USD. This license lets the bank provide services both to domestic and international markets.
The regulations break “B” license banks into two subcategories: restricted offshore and unrestricted offshore. A restricted offshore “B license” bank only allows service for named non-resident, offshore clients. A holder of this license would need to have a supervised banking entity in another country or a well-established overseas corporate group. An unrestricted offshore “B license”, however, allows non-residents of the Cayman Islands to carry out unrestricted banking anywhere in the world, except for within the Caymans.
According to the Cayman Islands Monetary Authority, there were 10 banks with an “A” license as of the first quarter of 2022. The same quarter shows 90 “B” licensed banks. From this Cayman Island banks list, we’ll examine two of the most well-known banks. One is based in Canada and one is based in the Caymans. Both of these banks have their home offices in the country’s capital, George Town, on Grand Cayman Island. The HSBC Cayman Islands, a previous financial power in the Caymans, is no longer in operation.
Internationally-Based Cayman Banks
The Royal Bank of Canada in George Town is part of an international banking system. That is, as implied by the name, is a branch of a banking system that originated in Canada. The problem is that the Cayman branch will not generally open bank accounts for people who do not live in the Cayman Islands. More pointedly, the Cayman branch will not open bank accounts for US-based people. According to their website, the RBC has operations in 35 countries. It serves more than 16 million clients. The list, the Global 100: Most Sustainable Corporations in the World recognizes the bank for its financial stability.
Corporate Knights compiles this annual list. It recognizes global corporations that have been world leaders in environmental, social, and governance issues. Cayman Islands banking interest rates vary by bank, but RBC has a variety of options. Their certificates of deposit vary from an overnight trust to 5-year period. We will not quote interest rates here, as they vary over time.
Many feel that RBC as one of the top financial choices for people who live in the Caymans. RBC specializes in wealth management, custody, brokerage, private banking, fund administration, and trust services.
Locally Based Banks
If you want a bank that is based in the Caymans, you have options. There are banks that will open accounts for people who do not reside in the jurisdiction. You also have banks available that offer corporate, retail, and premier banking. There are also banks that act as a fiduciary and trust advisory, offering fund administration and investment management. Since these banks do not have foreign parent companies, they can operate independently, offering greater flexibility to depositors. Plus they are small enough in size to provide a personal touch to their clients.
The interest rates on their accounts for a fixed deposit vary by currency and duration. For example the banks offer fixed deposits in USD from $250,000 to $499,000 with competitive interest rates. These CDs have durations between 7 days and 3 years as of this writing. Naturally, since interest rates fluctuate greatly over time, you can reach out and ask by using the number or form on this page.
Cayman-based banks tend to be most favorable for asset protection purposes. The reason is that local branches of foreign banks have been fined until the bank in the offshore safe-haven coughs up the funds. That is a big reason for using a bank that does not have branches in your home country.
Having your bank account held in an LLC that is, in turn, owned by an asset protection trust is the most secure way to title an offshore bank account. Then you will want to make sure that the offshore bank does not have a branch under the control of your local judiciary. This combination in the Cayman Islands has provided asset protection for a multitude of wealthy business people who are victims of aggressive legal attack.
Opening Your Account
Do you want to set up a bank account for financial privacy or perhaps you want to protect the assets of your family? As a on-resident, we can help you open an account at most banks in the Cayman Islands without ever visiting. If your goal is asset protection, as we have stated it’s a good idea to set up an LLC before beginning the process of creating a banking account. An LLC can serve as an extra layer of protection for you; protecting your identity and shielding your assets from seizure by creditors. One can set up Caymans LLC.
Alternatively, the most common place to set up the LLC for a Cayman account is in the Caribbean island of Nevis. So you can set up the company in one country and set up the bank account in another. This both creates an extra layer of security and allows you to use the best jurisdiction suited to your intended purpose.
To maintain its clean reputation and comply with international regulations, Cayman banks need several documents in order to open a bank account. Some of the documents needed to open a personal account are identity verification documents, a current overseas address, the source of the funds going into the account, and banking reference letters from a current bank, in addition to the application itself. If the account is being created for multiple people, one must include reference letters and identification documents from all parties. After setting up an account, some banks will not allow a checking account, but will offer a savings account and a debit card. Most banks do offer easy-to-use online banking platforms.
Corporate Account
The Cayman Islands are most well-known for their services to companies. So, the process of opening a corporate account at a bank begins before ever filling out a bank account application. Anyone wanting to maximize privacy and protection in the Caymans first needs to incorporate, either within the jurisdiction or abroad.
There are certain documents a Cayman Islands bank will need in order to open a corporate account. Some of this information includes the incorporation paperwork, personal reference letter from a current bank, identification documents for each beneficial owner, a letter detailing the reason for the account, proof of a current address, and more. All directors, members, and signatories will need to supply all the necessary information for a personal bank account. Shareholders who own more than 10% will also require identification and references. The minimum deposit to open an account is $2,500 KYD, or the equivalent in USD, British Pounds or other preferred currency. The minimum deposit amount can vary from time to time.
Conclusion
Any individual or company has the right to arrange their affairs to keep their assets sheltered from predators. They can do so as long as they remain in compliance of the tax and other laws of their home country. A bank account in the Cayman Islands can be a good way to take advantage of this advice. Don’t accept the prospect of leaving your hard-earned wealth hanging out there for some hotshot with a legal degree to line his or her own pockets. You can use the number or inquiry form on this page to seek further help on establishing your offshore account in the Caymans and set yourself or your company up for a more secure future.
