Jude Scott, the new CEO of Cayman Finance, the association representing the financial services industry, says the industry has grown and has been very successful, “but we all now have to reinvest.”
It is not the time to sit on the sidelines and not participate with ideas or funding while others do the work that they also benefit from, he adds.
To achieve, this Cayman Finance needs to be inclusive and representative, and encourage organizations throughout the financial services industry to become members of Cayman Finance. That will allow the organization to have the funding to actively promote and defend the Cayman Islands and give each member input into the process.
“It’s time for us to refocus. We have growth opportunities and challenges that we face. Some are going to put in more than others, but if we each put in, spend the time sharing knowledge, we are going to build something that is even better that everyone is going to benefit from,” he says.
Scott takes over an organization that in the past called for more government funding to promote the jurisdiction. Two years ago, Cayman Finance signed a memorandum of understanding with government, and for two years, government committed a small amount, compared to its tourism promotion budget, for joint initiatives.
“We do need government to invest more in the industry,” notes Scott. “They are aware of that and they have multiple challenges, but I think we are also at the point – recognizing how important the industry is – that this is the time to properly invest in the industry.”
The CEO says the relationship with government is a strong and positive one that he intends to continue to build.
“They are holding us accountable for delivering value, being representative of the industry, and growing and developing the industry. And we are also holding them accountable for helping us do those things.”
For the time being, Cayman Finance has to work with the available resources and the tasks are complex. The organization has to communicate with external business partners, a sometimes hostile foreign media, policymakers, the local government, the association’s own member firms and also the public, which according to a Cayman Finance survey is not fully aware of the size of the industry and the opportunities it can offer.
“The good thing is that throughout the industry we have people willing to step up.” Scott says, which allows him to leverage knowledge and support to shape the right messages for the industry.
His goal is to develop simple, accurate and clear messages about the benefits of the industry that can be delivered by everyone. Locally there has already been a campaign to emphasize the size of the industry, which makes up about half of the economy and half or more of government revenue.
“We need to explain what we do in a language that resonates with people, to understand what we do and why we are important in the world and to the local economy.”
Cayman Finance plans to work with the Ministry of Education so that high school leavers have a good understanding of the industry and the work opportunities it offers and to equip students with the skills needed when they come into the workforce. “So they are work-ready to be successful in the industry,” says Scott. “And we have to make sure that the industry is providing opportunities for people coming in.”
He believes the industry already has many success stories from helping Caymanians on their career path with scholarships and training.
“These are the things the industry allows us to do. It allows us to leverage education with globally transferrable skills, with career pathing, upward mobility. Those are the things that we want our people to aspire to.”
External communication has become more complicated. Where previously tax evasion and tax avoidance were clearly separating the illegal from the legal, the terms are now commonly used synonymously by the public and in the media.
Scott thinks this is unfortunate. “What has happened over time as jurisdictions have gone through difficult economic times, political rhetoric has gained a lot of momentum which starts using the term tax avoidance to indicate that although it is legal, it may be unpatriotic or overly aggressive.”
However, Scott believes Cayman nonetheless has a positive message to share. Cayman’s service providers are focused on Cayman law and not tax experts for the home jurisdictions of their clients, he explains.
“We want to ensure that our providers are working with clients who they believe are following the tax rules in their home jurisdictions, and where tax advice is necessary, that those clients use tax experts in their home jurisdictions to advise them.”
From Cayman’s perspective, it is a highly technical and subjective judgment to determine which legal transactions may be entering a gray area that is against the spirit of what was intended by law. Scott says, “Our experts should not be the ones who determine where the gray area is.”
Scott aims to strengthen and build relationships, even with those who do not see eye-to-eye with the offshore industry, by sharing information and by being transparent and open.
Cayman’s financial services need to have a clear brand and deliver those messages consistently. It will be impossible to change how Cayman is portrayed in the movies, but it is possible to contribute to the other side of the discussion with accurate information, he says.
Still, he also acknowledges that negative news sells and that there will always be people willing to attack Cayman despite all the information that is available to disprove their detractions.
Regulatory initiatives like the OECD’s Base Erosion Profit Shifting project, which aims to eliminate certain tax avoidance measures resulting from gaps in domestic tax laws, tax treaty abuses or insufficient controlled foreign company rules, will not be a major threat to Cayman, according to Scott.
“I think we’ll be fine. A large portion of our business does not evolve around the subtle changes that will take place.” Scott also thinks that the discussion is healthy because rather than accusing others of wrongdoing, it attempts to close perceived loopholes.
In terms of tax information exchange, Cayman has positioned itself as an early adopter, but it has also pushed back on U.K. demands to implement a public register of beneficial ownership.
For Scott, this balance is the right approach in an industry that is changing rapidly around the world.
“We have to always be innovating and evolving, and it’s challenging. But as we continue to focus on fulfilling our role, whether it is adopting new regulations or resisting ones that we believe are detrimental, we have to understand what we do and what the global requirements are and make sure that we are adopting best practice.”
Published by The Journal