Activities and growth registered by the Cayman Islands Monetary Authority (CIMA) in its second full year of operational independence have revealed the high standard at which the authority carries out its functions, Members heard in the House on Monday (4 December) morning.
Tabling the CIMA report for fiscal year 2004-2005, the Financial Secretary, the Hon. Kenneth Jefferson, noted that the level of operation and growth seen in the year not only validated the granting of operational independence but also proved CIMA's value to Cayman's financial services industry in particular and the economy as a whole. He also reported on the growth in the industry relating to the various activities that the CIMA performs.
Stressing that the financial statements for the reporting year received a clear or unqualified opinion from the Auditor General, Mr. Jefferson said CIMA earned a net income of $2.4 million for the fiscal year which began on 1 July 2004 and ended 30 June 2005. All of the $2.4 million was transferred to the General Reserve. In keeping with the Monetary Authority Law, $0.28 million was also transferred from the CIMA s paid-up share capital reserve to the General Reserve. This elevated the General Reserve account to $10.9 million, he stated.
Total assets of the authority in the reporting year stood at $92.9 million; of this currency reserve assets comprised $90.2 million.
The captive insurance and mutual funds sectors registered the most growth in the authority's licensing and registration activities during fiscal 04-05. The total number of captive licences rose from 663 at 30 June 2004 to 709 at 30 June 2005, resulting in a seven per cent increase. Mutual funds grew in number from 5,399 to 6,527 during the same period.
While there was a decline in the total number of banking and trust licences by 22 to 312 due to consolidations worldwide, the assets and liabilities of licensees increased. Total international assets booked through banks in the Cayman Islands stood at US$1,265 billion as at 30 June 2005 and liabilities totalled US$1,250 billion on the same date. Trust licences fell by one, from 147 on 30 June 2004 to 146 the same date a year later, Mr. Jefferson reported.
"The Annual Report also notes the Authority's commitment to elevating the Cayman Islands' status as a respected jurisdiction through active involvement in international regulatory organisations. This involvement also enables the Authority to keep abreast of international regulatory developments and helps to give the Cayman Islands a voice in the development of new standards," the Financial Secretary told Members.
Completed negotiations resulted in the Authority signing bi-lateral Memoranda of Understanding (MOU) with regulators in Bermuda and the Isle of Man as well as multi-lateral MOUs with nine Caribbean regulators to cover the cross-border supervision arising out of the creation of First Caribbean International Bank, he detailed.
The CIMA also entered a cooperative undertaking with the US Securities and Exchange Commission (SEC) and agreed to participate in the International Monetary Fund's Information Framework Initiative. Under the framework, aggregate statistical information is supplied to the IMF, facilitating the dissemination of global financial sector data, Mr. Jefferson explained.
During the reporting year, the Authority's enforcement activity resulted in two revocations, five instances of appointment of controllers and two other enforcement actions against regulated entities, he said.
Additionally, the Authority processed 101 requests for assistance from overseas regulatory authorities. Its money laundering reporting officer filed 17 suspicious activity reports with the Cayman Islands Financial Reporting Authority.
Outlining CIMA's ongoing efforts to enhance its regulatory regime, Mr Jefferson stated that its task forces (dealing with its banking; insurance; investments and securities; and fiduciary services) completed their review of financial sector legislation and the way in which the Authority carries out its supervisory functions.
"Much work was done on the preparation and issuance of one amended and five new statements of guidance covering measures for banks, trust companies and for the investment and securities sector," Mr. Jefferson said, adding: "The Authority also revised the Interim Regulatory Handbook and added six new sections to it, including the Enforcement Manual." The manual "describes the policies and procedures for the Authority's exercise of its enforcement powers in the event of non-compliance with the regulatory laws," he explained.
Initiatives to augment its operational efficiency have included developing a strategic plan incorporating its mission and goals to guide its ongoing development. "Groundwork was laid for the upgrade of the information management system and for an electronic filing system for funds regulated under the Mutual Funds Law," the Financial Secretary reported. The process of implementing a business continuity/disaster recovery plan that was adopted began in June 2006, he added