Cayman Islands Try to Clean Up Image, but Doubts Remain

By Debusmann, Bernd | American Banker, September 3, 1991 | Go to article overview

Cayman Islands Try to Clean Up Image, but Doubts Remain


Debusmann, Bernd, American Banker


Cayman Islands Try to Clean Up Image, but Doubts Remain

GEORGE TOWN, Cayman Islands - For years, the Cayman Islands have been trying to shed their image as a money-laundering center.

One tactic: The islands adopted rules on large cash deposits similar to those in the Untied States and Britain.

"You would find it very difficult to walk into a bank here and deposit a suitcase full of money," said John Atkinson, inspector of banking in the Cayman Islands. "We have strict checks on currency."

If estimates by the United States and other members of the Group of Seven industrialized countries are correct, the world drug trade generates $34 million an hour, mostly in small notes.

How to deal with that money is a question that occupies drug barons, bankers, and police officers around the world.

Logistical Problems

All agree that the logistics of handling large amounts of dirty money are becoming more complicated.

The Caymans, one of the world's premier offshore banking centers and tax havens, have signed a mutual legal assistance treaty with the United States. The pact, one of a dozen that resulted from intense U.S. pressure on major banking centers, allows government investigators to pry the lid off bank accounts otherwise covered by tight secrecy laws.

Despite the treaty, Washington views the Cayman Islands and their banking enforcement with suspicion.

Reluctance to Change

A State Department report on money laundering last year said Cayman officials were reluctant to limit the features - from banking secrecy to liberal laws on the formation of corporations - that attracted over 500 banks to the Cayman Islands and turned them into a major world financial center.

"This caution," the report said, "allowed laundering to gain a strong foothold in the [financial] industry.

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Cayman Islands Try to Clean Up Image, but Doubts Remain
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