In this chapter of our Annual Insurance Review 2022, we look at the main developments in 2021 and expected issues in 2022 for offshore.
Key Developments in 2021
The offshore world is dominated by tax, trusts and transparency. Of long-term interest is the decision by the G20 to sign off on 15% Global Minimum Corporate tax rate. This could have a significant impact on incoming business to the offshore jurisdictions of Cayman, BVI, Channel Islands and elsewhere.
The local regulators are also showing their teeth against leading Trust and law firms in offshore jurisdictions, especially relating to Anti Money Laundering issues. Intertrust was fined $4.2million in Cayman for AML breaches, essentially failure to identify beneficiaries under trusts or to carry out proper due diligence on clients. Recently, the Cayman Islands Monetary Authority imposed AML obligations on Maples Group who in turn has sought to have the decision judicially reviewed. CIMA has called the press release issued by Maples as "inappropriate, professionally irresponsible and crafty"!
The judicial review proceedings look set to be a hard-fought battleground with the regulator making it clear it will enforce AML obligations in order to preserve the reputation of Cayman's financial services sector.
What to look out for in 2022
The continued relocation of ultra high net worth individuals (UHNW) is expected to be the focus as it has done in previous years. Cayman and Jersey have been particularly active in marketing the benefits of the UHNW set relocating to a low tax country. Also being attracted are businesses in the Fintech, blockchain and cryptocurrency spaces. Legal and other professional advisor firms are, in turn, seeking specialists in these areas. This could pose risks of claims arising out of these relatively unknown markets and related products and services.