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Private Client Services in The Cayman Islands – Q&A with Michael Halsey

24th Jun 2020

In our latest Q&A, Michael Halsey, Managing Director of the Cayman Islands, discusses how the jurisdiction is evolving as well as JTC’s service offering in the region

The Cayman Islands has long been one of the most important jurisdictions for funds and wealth services – why is this and where does its offering stand on the global stage now?

Private and international clients are attracted to the Cayman Islands because it has all the necessary ingredients to allow business to thrive, and it is recognised as one of the leading international financial centres.

We are the world’s domicile of choice for offshore hedge funds with a vibrant trust industry. The Cayman Islands has the second largest captive insurance centre and the top international banking centre, as well as other leading services, including yacht registration.

Because it has such a diverse and deep financial industry, it has been able to attract the best talent from around the world. In fact we have people from 135 countries living and working in the Islands.

It is fair to say that our professional infrastructure is not rivalled outside of the large onshore centres. In fact, I saw a statistic recently that said Cayman had more lawyers per head of population than anywhere else in the world. I suspect we are not far behind in number of accountants either!

Added to this we have a modern and flexible legal framework based on English Common Law. We are politically and financially stable as a jurisdiction, and until the recent COVID-19 situation, we were running healthy surpluses, which I am sure we will return to very soon.

It is also important to mention that Cayman is a well regulated centre with an active but approachable regulator that works with industry and Government to ensure Cayman is at the forefront of compliance with international standards, regulations and the fight against money laundering.

Last, but by no means least, we are tax neutral with no personal, corporate or property taxes.

What services does JTC offer in the Cayman Islands, and where geographically does most of the work come from?

JTC offers a full range of services for both institutional and private clients.

On the fund side we are end to end and everything in between. We guide clients through the set up process all the way to launch, and provide insight and guidance on the appropriate legal structure and drafting of the offering memorandum. We do this in conjunction with their legal advisors.

We provide NAV, accounting and compliance services to the fund as well as the directors and officers including MLRO and AMLCO. We provide full registrar and transfer services, corporate and board support, CRS and FATCA.

Due to our proximity of South & Central America we see a lot of interest for Cayman funds, but we also have a large number of clients from Europe and the Far East.

For private clients we provide a very personable bespoke service. Through Private Trust Companies, Corporate, Foundation Companies and Trusts we are able to provide a wide range of structuring options to meet clients’ needs, including preservation of wealth, succession planning, avoidance of forced heirship and asset protection.

Our Private Client base is truly global and right now, we are seeing an increase in Caribbean and South American businesses too.

To what extent does JTC employ directly from within the Cayman Islands – why is this important?

Whilst we do attract the very best talent from around the world, that talent does tend to be transient. Many individuals, including myself, come to Cayman for 2 years and then end up staying for life, but a lot do leave for personal or professional reasons so it is imperative for the industry, and more importantly our clients, who expect continuity of service from their providers, that we have developed local talent for stability of service.

As a Caymanian with Caymanian children, I want to ensure there is a strong and vibrant financial services industry which provides jobs for the local population. This will only continue if we have sufficient local resources that are able to maintain international standards. I am committed to providing opportunities and the necessary training both internally and professionally for young Caymanians to develop their skills to the levels expected by our clients.

I’m incredibly proud of the outstanding local talent that we have in our team here. Indeed JTC Cayman is one of the few employers in the Fund and Trust space here in Cayman that has an almost entire workforce made up of Caymanians or those with Cayman Status.

What trends are you seeing within the trust business in the Cayman Islands, and how do you expect the jurisdiction to evolve?

As a result of the COVID-19 pandemic, we’ve seen many individuals question their mortality and think more about their succession planning. This has resulted in a significant increase in enquiries for structures that will meet this need.

I think, as always in a crisis, there has been a ‘flight to quality’ and individuals want to feel safe, not only in their service provider, but also the jurisdiction. JTC Cayman is therefore an obvious choice.

Clients are certainly getting more sophisticated and a lot more of them are coming to us well informed about the type and use of structures.

With the introduction of the Foundation Law in Cayman in late 2017, we have seen an increase in the demand for structures that include Foundation Companies. A Foundation Company has features and flexibility that are designed to allow a company retaining separate legal personality and limited liability, to function like a civil law foundation or common law trust. This has filled a gap for the new sophisticated client or clients coming from civil law jurisdictions.

What does the future hold for JTC’s presence in the Cayman Islands – will there be new services or areas of focus?

I am very bull-ish, and I believe the future looks very good for JTC in Cayman as we have everything that we need to grow the business.

We have recently added Global Custody to our suite of services, which will allow us to hold a wide array of securities through our relationships with CIBC Mellon and BoNY for our clients.

This is the missing piece for a lot of our private and institutional clients. For private clients it will allow us to custody the structure’s assets without going through the extended process of setting up accounts at another financial institution.

For institutional fund clients it will create efficiencies for the administration and investment of the fund, whilst providing the flexibility to appoint and change the investment managers without having to move the assets.

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