Banking Secrecy In The Cayman Islands

The offshore jurisdictions are commonly thought to be highly secretive, with banking secrecy being an important part of what those jurisdictions offer to businesses and individuals who use them. For example, in 2000, the US Treasury Department issued an advisory notice stating that extra vigilance was required in doing business in the Cayman Islands: "The Cayman Islands remains committed to strict bank secrecy, outside of a limited suspicious transaction reporting and international cooperation regime".

The Confidential Relationships (Preservation) Law was introduced in the Cayman Islands in 1976. There had been a previous 1966 Law seeking to establish banking secrecy, based on a piece of Bahamian legislation introduced the year before. In proposing the new legislation in 1976, the major concerns were firstly, the then recent Field case in the US (in which a Cayman banker had been served with a subpoena at Miami Airport and was held in contempt for refusing to answer questions which would cause him to commit an offence in the Cayman Islands under the 1966 Law) and secondly, the activities of foreign investigators on the Islands (see the US Supreme Court decision of Payner 447 US 727 for a discussion of thefts by IRS agents in pursuit of information offshore around this time, as part of "Operation Trade Winds").

The current law is contained in the Confidential Relationships (Preservation) Law (2009 Revision). The Law creates offences of (1) divulging confidential information or (2) attempting, offering or threatening to divulge confidential information or (3) wilfully obtaining or attempting to obtain confidential information (Section 5). Section 3(2) sets out the 8 exceptions to the offence.

In April 2013, the Financial Services Division of the Grand Court heard an in camera application which put the Confidential Relationships (Preservation) Law back in the spotlight. A Magistrates' Court in England had granted a Production Order against a London Bank pursuant to the Proceeds of Crime Act 2002. The application had been made in support of a money laundering investigation by the Metropolitan Police.

Section 4 of the Law expressly refers to the holder of the information's obligation to apply for directions where they intend, or are required, to "give in evidence in, or in connection with, any proceeding being tried, inquired into or determined by any court, tribunal, or other authority (whether within or without the Islands) any confidential...