With the growing recognition by various non-G7 governments
that there are significant economic benefits to be gained by
implementing effective governmental governance procedures and a
system that is recognised by the international community as
adhering to the law, cross-continental capital flows for
investment and the creation of private wealth have increased
The refocusing of large portions of investment capital to
the emerging markets of Asia and Africa have presented
challenges to financial institutions, banks, non-financial
business and regulators as to how best to implement balanced
regulatory mechanisms across continental borders. The
recognition of a universal regulatory system is gaining
Precedents of how best to achieve this difficult task can be
found by an examination of international banking regulations
(Basel 1 and Basel 2), various pieces of legislation such as
the Sarbanes Oxley Act, the US Patriot Act, the Foreign Corrupt
Practices Act of the US and the Application of the US Office of
Foreign Asset Control, and other pieces of legislation
implemented by various G7 governments. Not all have been
The Sarbanes Oxley Act has adversely affected the US,
shifting large parts of its worldwide capital markets function
from New York to London and causing the loss of the
international prestige that New York enjoyed as a premier
jurisdiction for public issues. Other efforts, such as the OECD
attempt to implement worldwide excessive taxation systems, have
been met with scepticism and failure.
One of the most successful internationally accepted
regulatory regimes has been the implementation of "Know
Your Customer Rules", anti-money laundering and
anti-terrorism legislation. The Cayman Islands, as one of the
worlds leading financial centres, has been a leader in the
implementation of this type of legislation. This has helped
identify undesirable use of its financial systems. Sadly, the
leading role of the Cayman Islands has been given little
international recognition and few G7 countries (if any) have
followed its lead.
"The Cayman Islands, as one of the worlds leading
financial centres, has been a leader in the implementation of
this type of legislation"
One of the difficulties experienced in the implementation of
a globalised regulatory system has been the continuing efforts
by many high-tax developed countries and international
NGO's controlled by them to force emerging market economies
to collect tax and/or report tax information back to them. This
has been a serious stumbling block to the implementation of a
globalised regulatory system.
Perhaps this will change in the future as international
financial institutions and global manufacturing entities move
into the emerging markets and their dependency on earnings from
these areas increase. The stark reality of the global shift of
the world's economic engines may dawn upon some of G7
politicians prior to redomiciliation out of their
jurisdictions, permitting debate and eventual resolution of
While governments stall, global leaders in private industry
have implemented policies across borders and these are having a
profound effect on the implementation of worldwide standards in
the regulation and operation of various market functions. These
policies appear to have gained wide acceptance despite cultural
differences. This may provide the starting point for a globally
acceptable system capable of providing market regulation
without sovereignty issues
Cayman Leads The Way
Cayman continues to lead in this field and regularly reviews
and adjusts its laws, policies and procedures to meet new
international challenges. This sensible balance has continued
to attract a multitude of international business
Regulation for the sake of regulation imposes unnecessary
costs and bureaucratic procedures, and impedes markets
– usually forcing them to move to friendlier
Failure by leading western democracies to sensibly engage on
these issues may result in the process proceeding without them
taking the leading role. Not exactly what they envisage at the
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general guide to the subject matter. Specialist advice should
be sought about your specific circumstances.
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