The Cayman Islands are an overseas British territory in the Caribbean Sea. The distant location of the Islands played a major role in shaping the economy of the territory. Self-sustainability is very weak and 90% of goods and consumer products are being imported. Being isolated, as cut off from the rest of the world, the beautiful Islands have two major sectors which spur the economy.
Tourism and financial services are the two most promising economic branches which account for 70-80% of the country’s GDP. To attract international investments, the British did not introduce any direct taxes in the country. Numerous banks and other companies in the financial sector seized the opportunity to benefit from the tax-free environment. No wonder that many Forex companies rushed into the country to establish their businesses. The economic plan to focus on the two industries worked for the Islands, and in order to keep the companies in line and in control, the government established a public body to supervise the activities.
The CIMA Regulatory Body
The Cayman Islands Monetary Authority (CIMA) was established in 1997 on the basis of the Monetary Authority Law. It is completely in the ownership of the government and it consists of the Board of Directors whose members are personally selected by the Governor. The Governor is quite involved in the organization’s work and may issue directions and hire a neutral person to review the work of CIMA.
CIMA, as a governmental institution, is financed from the state budget which is approved by the Legislative Assembly of the Cayman Islands. CIMA is responsible for budget expenditure to the Assembly and is subjected to an annual audit. The main objectives of CIMA include ensuring and protecting the reputation of the Cayman Islands as an international financial center. The body is also in charge of maintaining the stability of the national currency, supervision and monitoring of the financial sector and implementation of international standards. The national currency is the Cayman Islands Dollar (KYD) and is strong against the USD (1KYD equals 1.21950 USD) since it is pegged to the USD since the 1970s. In 2014, the KYD was ranked as the 9th strongest currency in the world.
CIMA gained operational independence in 2003, and since then, it gained more power and moved more quickly towards fulfilling international standards. CIMA tries to control the financial market of the Islands in a similar manner as European and American agencies, based on best business practices and the highest standards. This means that CIMA maintains the safety of the market, consumer protection, transparency, fair conditions and healthy competition. All of these characteristics are the main goal of every decent regulatory agency. CIMA also acts as the government advisor on financial and monetary issues, and it is actively involved in money laundering prevention activities.
Caymans as Popular Offshore Destination
CIMA is the ultimate national authority that regulates Forex companies in the islands. CIMA is a major international financial center and cooperates with international financial companies. Companies who want to register in the islands have to fulfill a certain set of criteria. In order to apply for a license, all necessary documentation has to be provided, as well as information on disposal of capital, business plan, internal and external procedural plans, organization, management and structure of the business, etc.
The procedure might take some time until the final decision is made. Since the procedure is rather complex, it is advised to hire a consultancy firm to help Forex companies with the application procedure. Many international and already prominent Forex broker companies have opened a regional office in the Cayman Islands in order to enjoy lower taxes. This means that the Cayman Islands are a very popular offshore business destination. Many other popular offshore countries have rather loose legislation, and the market can be easily manipulated, but CIMA makes sure that the Cayman Islands are pretty much safe for traders. CIMA registered brokers, as we mentioned, have to fulfill a long list of criteria and comply with internationally accepted rules and standards.
Top CIMA Registered Brokers in the Cayman Islands
If you are looking to register with a broker in the attractive and lovely island country, then you should follow few steps in order to find the best broker for you. Of course, the first thing to pay attention to is the license of the broker. Sometimes, it is good to find a broker who has more than one license. For example, you can choose a Forex broker who has the national CIMA license, but who is at the same time registered with, for example, the UK FCA. In that way, you will feel more protected and safer when you know that the broker company qualifies for some of the strongest and strictest licenses worldwide.
A good broker is a good broker anywhere, so you might find out which broker has a world-wide reputation to feel safe to register. Due to many scammers in the industry, it is sometimes hard to trust even decent brokers, but that does not mean that all of them are the same. Many decent brokers have to make a double effort to prove themselves. Still, they manage to distinguish themselves from fraudsters and manipulators through accurate and fair collaboration. Their traders are their business partners who get paid on time, notified on time on market events, and who are protected from malversations.
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Regulation as a Key to Attracting New Businesses
The Cayman Islands sound very promising for Forex companies and traders. Given their relation to the British government, they are perceived as a well-regulated territory that has the ability to enforce the law when necessary, unlike many Asian offshore Forex centers. The Cayman Islands government is aware of the significance of international companies, and therefore they handle their operations responsibly to attract more and keep the present investors. The government makes sure that proper rules are in place not to discourage one of the two major pillars of economic development which accounts for domestic profits.