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Cayman Secrecy Case Exposes Weaknesses in 'Gateways'

A recent court case has been touted as a setback for transparency in the Cayman Islands. In the light of a money-laundering investigation in the mainland UK, a British bank asked the Cayman Grand Court to sanction the disclosure of confidential information in the Cayman Islands to the British police, only to be turned down.
A recent court case has been touted as a setback for transparency
in the Cayman Islands. In the light of a money-laundering
investigation in the mainland UK, a British bank asked the Cayman
Grand Court to sanction the disclosure of confidential
information in the Cayman Islands to the British police, only to
be turned down.
Business transactions in the Caymans benefit from tight
confidentiality, which emanates both from the common law and the
Confidential Relationships (Preservation) Law (2009 Revision - it
was enacted originally in 1977). Cayman Islands law contains some
"gateways" through both common law and statutory types of
confidentiality. These allow courts to pass confidential
information to investigators in London, the United States and
elsewhere. They are to be found in the Proceeds of Crime Law of
2008, the Monetary Authority Law, as amended, and the Mutual
Legal Assistance (United States of America) Law (1999
Revision).
Section 5(1) of the Confidential Relationships (Preservation) Law
states that whoever, (a) being in possession of confidential
information however obtained, (i) divulges it; or (ii) attempts,
offers or threatens to divulge it; or (b) wilfully obtains or
attempts to obtain confidential information, is guilty of an
offence and liable on summary conviction to a fine of $5,000 and
to imprisonment for two years. This can be waived by a Judge of
the Grand Court sitting alone and in camera (s4). It is by this
process that the British bank seems to have asked the court for a
waiver.
Confidential information is defined quite widely to mean any
'property' whose recipient is not authorised by the principal to
divulge, except in the normal course of business. The bank in
question was responding to a production order issued by the
police under the Proceeds of Crime Act 2002. The Cayman press
suggests that the information, although held on computers in
London, fell under the jurisdiction of the Grand Court. This is
because s3(1) of the Confidential Relationships (Preservation)
Law states "...this Law has application to all confidential
information with respect to business of a professional nature
which arises in or is brought into the Islands and to all persons
coming into possession of such information at any time thereafter
whether they be within the jurisdiction or thereout."