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Cayman Islands - Economy

With no direct taxation, the islands are a thriving offshore financial center. More than 93,000 companies were registered in the Cayman Islands as of 2008, including almost 300 banks, 800 insurers, and 10,000 mutual funds. A stock exchange was opened in 1997. Nearly 90% of the islands' food and consumer goods must be imported. The Caymanians enjoy a standard of living comparable to that of Switzerland.

Tourism is also a mainstay, accounting for about 70% of GDP and 75% of foreign currency earnings. The tourist industry is aimed at the luxury market and caters mainly to visitors from North America. Total tourist arrivals exceeded 1.9 million in 2008, with about half from the US.

From the start, economic activity and growth in the island were affected by the limited availability of natural resources and hindered its remote location. The first major economic activity in the islands was the harvesting of sea turtles to supply ships passing through its waters with turtle meat.

By around the year 1900 the chief industry is turtle catching on the banks, reefs and bars lying for several miles beyond the Mosquito Shore. The fishing rights were the subject of dispute with Nicaragua and are in course of settlement by diplomatic means. Meanwhile certain places in dispute were placed out of bounds for the fishermen and much distress is the result to t le Island in general. The turtle when caught are "crawled" at a convenient place in the locality of the fishing grounds and when a sufficient number (according the the size of the ship) was obtained they are carried to the island, again placed in crawls for varying periods to recover the voyage and then conveyed to Jamaica for shipment to England.

However, the demand greatly outnumbered the supply that before the end of the 18th century, the sea turtle population of the Cayman Islands was depleted. Due to the soil condition, topography and fresh water supply of the islands, farming was limited. The harvest was only sufficient to supply the handful of early settlers in the islands.

There was not much "ready money" in circulation and employment on land was hard to get; this led to considerable emigration to Nicaragua and other places where work could be obtained. Those people returned home periodically and after staying a while sought fresh work abroad.

The beginning of modern transportation and telecommunication in Cayman Islands in the 1950s propelled the islands into what is termed twin pillars of economic growth which pertains to the tourism sector and international finance. The Caymans is home to over 70,000 conglomerates including over 500 banks and trust companies. It is a fact that over 40 of the world’s largest banks have offices in the Cayman Islands. Presently, about 80% of this British overseas territory’s gross domestic product (GDP) is tourism and financial services related.

Survey indicates that over a million tourists visit the islands to enjoy its pristine beaches, experience scuba diving, take part in deep-sea fishing, delight in duty-free shopping and basically enjoy what the islands have to offer.

The Cayman Islands is into diversification of its twin pillars economy. In connection, the Cayman Islands Investment Bureau (CIB) was established for the purpose of promoting economic growth and foreign investment in the territory. The territory has invested in technology and health care. In the East End is medical tourism hospital called Health City Cayman Islands. Wood products are now being manufactured in the islands. A technological, financial and educational investment hub is accommodated at Cayman Enterprise City economic zone.

Offshore bank accounts and other financial dealings in another country can be used to evade regulatory oversight or tax obligations. Companies or individuals often use shell companies, initially incorporated without significant assets or operations, to disguise ownership or other information about the funds involved.

Panama, the Cayman Islands and Bermuda are among more than a dozen small, low-tax locations that specialize in handling business services and investments of non-resident companies Companies or trusts can be set up in offshore locations for legitimate uses such as business finance, mergers and acquisitions and estate or tax planning, according to the global money laundering watchdog, the Financial Action Task Force.

Shell companies and other entities can be misused by terrorists and others involved in international and financial crimes to conceal sources of funds and ownership.

Despite the numerous accolades and high standards claimed by officials here in the Cayman Islands in relation to the jurisdiction’s adherence to multiple agreements and international standards, in August 2014 the UK's Financial Conduct Authority pointed to a US Senate Sub-Committee report and a Homeland Security report that highlighted the vulnerability of Cayman to money laundering, drugs and terrorist finances, and another State Department report on narcotics control which also lists the Cayman Islands as a jurisdiction of primary concern.