It is not an overstatement to suggest that while people generally support populism, their governments often support globalism.
Being lighthearted (but only for a moment) the world saw the contrast vividly on stage at the White House Friday when Ms. Globalism (Germany’s Chancellor Angela Merkel) appeared with Mr. Populism (U.S. President Donald J. Trump). Arguably it was the world’s most powerful woman in the presence of the world’s most powerful man.
The only thing they had in common (apart from their mutual claims that each had been wiretapped by former president Barack Obama) was that they both needed new barbers. Ms. Merkel appears to cut her own hair, and Mr. Trump, well, it’s anybody’s guess …
But this editorial is not about tonsorial malpractice. It’s about more serious matters.
For Cayman, the tension between globalism and populism is not an academic argument. As a small territory, what we do in Cayman relative to our financial services industry has effects disproportionate to our diminutive geographical acreage.
The pressure to please – if not appease – our foreign masters may well be eroding the very foundation upon which the Cayman Islands economy has been erected, namely legitimate privacy and confidentiality expectations when it comes to managing the affairs of our investors and depositors.
Consider the recent example of the accelerated passage of legislation regarding “beneficial ownership” (just in time for Premier Alden McLaughlin to catch his plane for the U.K. where he would tout this so-called “accomplishment” to our foreign overseers). The legislation clears the way for the creation of a central (we would contend, “hackable”) beneficial ownership registry (a vestigial remnant of former U.K. Prime Minister David Cameron’s bucket list).
Notably, neither the U.K., nor the U.S., nor the whole of Europe has incorporated Mr. Cameron’s dream into their own legislation – but Cayman has, discarding our long-held position of demanding a “level playing field” before signing on to such initiatives.
Then there is, under the Trump administration, a renewed opportunity to repeal the Foreign Accounts Tax Compliance Act (better known as FATCA), a particularly onerous confection that requires “foreign financial institutions” to share U.S. account-holder information with the IRS.
It appears FATCA was acceded to by the Cayman Tax Authority in 2013 without meaningful (or perhaps any) resistance. It is estimated that FATCA directly affects 6,000 Cayman residents and nearly 30,000 locally based financial institutions. It was a gift of Santa-like proportions to lawyers and accountants who reaped (and continue to reap) substantial fees to assist in bringing their clients into compliance.
Cayman authorities should do everything in their power to work with the Trump administration in Washington to repeal this law. FATCA, it is fair to say, has the capacity to engender more “fishing expeditions” in the Cayman Islands than Red Sail Sports could ever aspire to.
On another matter (forget that the Legislative Assembly passed the wrong bill; see Page One), there was never a justification for Cayman’s passing a law regulating nonprofit organizations, requiring those with gross annual revenues in excess of $250,000 to have their accounts reviewed by accountants who will, in turn, report their findings to government.
Since there were no examples of abuse by Cayman nonprofits, why would our lawmakers pass such legislation? Apparently it was a pre-emptive move to satisfy Caribbean Financial Action Task Force watchdogs, who will be examining our money laundering and anti-terrorist efforts later this year.
Increasingly the contours of our financial services industry are being influenced or shaped by those who would sacrifice legitimate financial privacy for a global standard of tax harmonization that ultimately is not in our – or the world’s – best interests.
Chancellor Merkel and the globalists would be pleased.
Hopefully President Trump and the populists would not.