Lost paradise. And this time we are not talking about the Garden of Eden or the sins of man, but, much more prosaically, about tax havens. The Cayman Islands, a small Caribbean archipelago (but British territory) south of Cuba, known throughout the world for the absolute inaccessibility of their accounts much more than for the beaches, would in fact be marching quickly towards a new and greater transparency on hedge funds, opening up controls on the thousands of companies and hedge funds domiciled on the island.
An historic turning point that comes on the very day in which the US Treasury included in the new rules against tax evasion the obligation, on a global level, for banks to notify the Internal Revenue Service of the activity of U.S. citizen accounts, and the proposal to create a database of Cayman-domiciled funds and their managers, whose capacity as investor trustees will now be thoroughly scrutinized.
“An important step forward” as defined by Peter Heaps, managing director of Carne, a company that supplies directors and managers for funds in the Caymans. A decision, this, which rests its foundations in the search for a better reputation on the part of the Islands, afface of political pressure from Europe and the United States, and their criticisms of the Islands' virtually non-existent reporting requirements on companies and hedge funds.
But even more important, in the dynamics that led to the breakthrough in transparency, at least according to the Fincancial Times, were the pressures of investors in hedge funds, which at the moment cannot verify either the way in which hedge funds in the Caymans invest their money nor, much less, can they exercise any form of control over the managers domiciled on the island.
