When you think of offshore banking, the Cayman Islands is probably one of the first countries that come to mind. It’s what you typically see in the movies. However, the truth about banking in Cayman is far from what Hollywood portrays. It’s no longer a place for unscrupulous characters to hide money and the compliance standards only continue to become stricter.
Now there is a reason for the reputation that banking has in the Cayman Islands. They are a world financial leader, coming in as the 5th largest financial center. They hold near $7 billion in deposits and three-quarters of the world’s hedge funds.
There’s also a reason it’s getting harder to open a bank account there. Since they’re not really desperate for your business, they can afford to enforce strict compliance laws to ensure that all incoming money is clean and from only the best customers.
In terms of offshore jurisdictions, banking in the Cayman Islands is the crème de la crème. It’s among the most expensive places to incorporate a company — that’s why all the hedge funds are there. Only the wealthiest set up shop in Cayman.
It’s more expensive than the UAE and Hong Kong. It’s much more expensive than Belize and Seychelles. Simply put, it’s not a place for bargain hunters.
However, if you can afford the fees, have Cayman Island residency or strong ties to the country, and have money to invest, then banking in the Cayman Islands can be a top option for you.
In this article, we’ll discuss the benefits of banking in the Cayman Islands, what type of profile fits well with banking there, how you can open an account, some of the top banks, and then some other options that might better fit your profile.
Benefits of Banking in the Cayman Islands
As one of the world’s top financial centers, it’s no wonder that you’d consider opening a bank account in the Cayman Islands. There are many great benefits to banking there.
It is home to some of the most sophisticated, professional banking professionals. As they regularly deal with international banking, they also offer great knowledge about the international and non-resident banking scene and offer various tools to support your nomad capitalist lifestyle.
Their services are what you’d expect from other top offshore banking facilities. They offer first-rate asset management options such as wealth and estate management, tax planning with a strong emphasis on legal compliance, fantastic investment services, and stable banking options.
In addition to the financial benefits, banking in the Cayman Islands puts you just south of the US and provides easy access to much of North and South America.
The Cayman Islands are a British Overseas Territory, and while some may see this as a drawback if they don’t feel comfortable with western countries having the ultimate say-so, it can also provide some benefits — stable government backing, strong economic links to the outside world, high-quality legal services, health care, and education.
It’s also worth noting that, since things are run so well in the Cayman Islands, the UK has never really stepped in to exercise their control and mostly leave the islands to themselves.
If you are a resident, there are even greater benefits to banking in the Cayman Islands. Beyond its beauty and high quality of life, the Cayman Islands is known for being a tax haven with no income tax, property tax, wealth or inheritance tax, or company tax. So, unless you have tax obligations in other countries, you could feasibly move to the Cayman Islands and reduce your tax burden to zero.
As you can tell, there’s a reason it costs a pretty penny to bank there. There is great stability which has attracted the best banks and encouraged businesses to incorporate locally. It’s also a highly liveable place with beautiful scenery and world-class lifestyle options. The Cayman Islands know how to cater to the high net worth population.
Who should Bank in the Cayman Islands?
In today’s world, if you want to open a bank account in the Cayman Islands you need some sort of connection to the country. If you’re creating an offshore company or looking to become a resident, then there are pretty good options for you.
If your profile type is that of a non-resident, with no ties to the Cayman Islands, you might want to start looking elsewhere. It’s one of the most difficult jurisdictions in which to open an account as a non-resident, both for personal and corporate accounts. They’re just not desperate for your money.
If you can prove ties to the islands it is possible to open an account as a non-resident, even without being present, but not without difficulty. You will be subject to a higher level of scrutiny, requiring more documentation, paperwork, and tracking of funds, so be ready to work for it. But it is a possibility if you have connections.
As far as proving a connection or tie to the islands, it doesn’t mean you have to live there, but you would need to have a residence permit, business, or family ties there.
If you are a non-resident who is planning to create clear ties with the Cayman Islands, you’ll also have a better chance of successfully opening a bank account. If you’re someone looking to establish residency or if you’re becoming involved in a business that’s already there, they’ll at least look at you.
One profile that would match well with banking in the Cayman Islands are trust and investment entities. Customers with trust funds to manage and invest, especially those with some tie to the islands can find banking options there.
Now, with all this being said about having a connection to the islands, if you call up Butterfield, which has banks around the world, and let them know you have $5 million to deposit, then they might talk to you about investing in the Cayman Islands. Or if you have an account with CIBC, a Canadian bank, then they might talk to you.
Simply having a lot of money to deposit or invest, or having a relationship with a bank can get you a foot in the door for banking in the Cayman Islands.
Another important factor to note is if you’re a US citizen. If you’re looking to bank in the Cayman Islands in order to enjoy the zero tax policies, know that you will not be hiding anything from the US taxman. The US has significantly cracked down on reporting, especially in these well known tax havens, and you will need to report any interest or income earned in your Cayman accounts. There is no hiding anything.
So to review, the general requirements for a profile that matches with banking in the Cayman Islands are having some kind of personal, business, or residential connection to the Cayman Islands, a relationship with a bank, or a lot of money to deposit or invest.
How to open a bank account in the Cayman Islands
There are some general rules to know when opening up an offshore bank account, and the Cayman Islands are no different. Call your bank, get to know what they expect, and come well dressed and prepared to answer their questions.
Specifically for the Cayman Islands, the banks are looking for sufficient rationale why you want to bank there (again, the ties to the country are important) and they want to assess the risk they’re taking in giving you an account.
They’ll perform their mandatory due diligence as well as quite an extensive check on who you are and where your money came from and where it will continue to come from. Gone are the days of hiding dirty money and creating shell companies to keep your name off of accounts. You’ll need to be upfront and honest.
The first set of documentation a bank will ask for is your banking history. Your new bank will want to know how long you’ve banked with your home bank, your average balance over a multiple-year period, and details on your transactions to get an understanding of how you managed your account.
If you don’t have a home bank, they’ll ask for a professional reference which must be mailed as the original copy to the bank in the Cayman Islands. If you’re married, your spouse must also be referenced in the letter to be eligible for the new account.
Next, you’ll need to provide documentation showing the source of your funds. These include things like a rental agreement showing your income from rental properties or a letter from your job stating your salary.
You’ll also need documents to verify who you are and where you’re coming from. For proof of identification, you’ll need to provide either a driver’s license or passport. For proof of residence, you’ll need to provide a recent (less than 3 months old) utility bill.
You’ll be asked to describe and demonstrate your ties to the country. Banks are serious about this requirement and will verify your claims. If your ties to Cayman are somewhat looser, this is where it would help to have a relationship with a bank or banker where sometimes they can be a little more lenient on what qualifies as a tie to the country.
If you’ll be involved with a business in the Cayman Islands, you’ll need to provide a letter from your Cayman employer stating when you’ll start working, your position in the company, as well as your salary.
As noted above, some banks offer services that allow non-residents to open bank accounts in Cayman without visiting the islands. You will be required to submit several certified documents to prove your identity, along with a current overseas address and extra documentation explaining the source of your funds. Last but not least, they’ll also ask for bank references.
It goes without saying that to open an account, you’ll need a significant amount of money for an initial deposit. This will vary from bank to bank and can also depend on your relationship with your banker, but in general, you can expect the deposit to range from $50,000 to $100,000 for a reputable bank.
If you’re looking at private banking options in the Cayman Islands, the deposit amount will be significantly higher.
There are a lot of companies that charge you $1,000 or so to help you get an account in Cayman. Many will guarantee you an account. Good luck. Opening an account there is getting harder and the compliance laws stricter. Don’t fall victim to other’s claims of guaranteed success.
Here at Nomad Capitalist, we don’t guarantee opening an account in a certain place, but we’ll find a replacement one in another great (perhaps even better) location if necessary. This is often where you’ll actually be treated best, not just a name brand in banking like the Cayman Islands. Not everyone can do that.
Top banks in the Cayman Islands
There are 158 banks in the Cayman Islands, but not all banks operate the same or provide the same services. There are several different types of licenses a bank can get from the Cayman Island Monetary Authority. The two types that are important to know for opening an offshore account are:
- Category A Banking Licence — with this license a bank may offer domestic and international services to both residents and non-residents. There are only 11 banks in the Cayman Islands with this type of license which mainly focus on serving the local domestic population.
- Category B Banking Licence — this license allows banks to serve non-residents in international markets. The remaining 147 banks have this type of license and these banks focus on providing individuals and businesses services for offshore banking.
The deposit requirements for opening will be different for each bank. Even within a bank, it can be negotiable and people will throw around different numbers. Having a contact at the bank can change the deposit requirements. Again, that’s why it’s important to do your homework to get to know your bank, what they’re looking for, and any connections you can make.
The following are some of the top banks in the Cayman Islands that you might want to consider:
Cayman National Bank
The Cayman National Bank holds a Category A banking license and offers premier domestic and international financial banking services such as online banking, asset and trust management, company formation, and more. It also has the largest ATM network on the island.
Fidelity Bank (Cayman) Ltd
Fidelity Bank (Cayman) Ltd requires a connection to the Cayman Islands: permanent residence (e.g. a utility bill not older than six months or a real property tax bill not older than 12 months). Personal presence is not required but power of attorney is requested. An initial deposit and a minimum balance of $500 is needed. The account will be activated within 1-2 weeks. They offer Visa cards.
Butterfield is an international bank offering great asset management services, private banking, trust and estate planning, and more. As one of the top banks, you may want to have a contact before they are likely to even consider you and good reference letters from your bank and employer showing your income and management of funds for the past 3 years will be essential.
CIBC FirstCaribbean International Bank
CIBC FirstCaribbean International Bank is based out of Canada but offers a variety of services in the Cayman Islands including corporate and investment banking services, investment portfolio customization and management, as well as premium personal and business accounts.
Alhambra Bank & Trust Ltd
Alhambra Bank & Trust Ltd is a newer bank as of 2014 with a Category B business license. It focuses on serving the needs of non-US, high-net-worth individuals and requires a minimum initial deposit of $1,000,000. Their client-focused approach seeks to create a family-like feel, address individual needs while providing world-class banking services.
Trident Trust Company (Cayman) Ltd
Trident Trust Company (Cayman) Ltd is an international bank with strong worldwide connections. It holds a Category B business license. It provides corporate, trust, and fund services with a special focus on the formation and administration of corporations and the setting up of private family trust funds.
Why you might want to look elsewhere
Many people who only consider the Cayman Islands for banking are living in the old world and only do so because they’ve heard of it in the movies. If you’re in this group, you would benefit from looking at better jurisdictions. As mentioned before, the Cayman Islands is at the top of its class — expensive, elite, and for the big people and companies.
This is why, at Nomad Capitalist, we increasingly tell people who don’t want to put a lot of money into an offshore bank that they need to start looking past the name brands. There’s nothing wrong with these name brands or the Cayman Islands if your profile fits, but if you expand your sights, you’ll find better options.
We recommend several countries that are more open to non-residents.
A smart, fast, and easy move is to get started in Georgia by creating a priority banking relationship with a deposit of $20,000.
Armenia is another great place to look if you’re wanting to invest or bank.
Serbia has some of the highest interest rates in all of Europe.
Ecuador has great credit union options that continuously offer the highest rates in the region and is a great option if you’re looking to get residency by opening a bank account.
An unexpected, but great place to open an account remotely is the United States — if you can get in there. If you can find the right banker that has an international outlook (i.e., a clue that there are other countries outside of the US), then opening an account in the US can be a great option.
Canada could also be a better option for non-resident banking. Both the US and Canada, as they’re not under the scrutiny of well-known tax havens, can actually give you a little leeway, in addition to great bank options. They don’t have to dot every “i” and cross every “t”.
The point is, don’t just go for offshore banking in the Cayman Islands because you’ve heard of it. While it offers a premium banking experience for high-net-worth individuals and companies with ties to the islands, if you don’t fit that profile, there are better options.
Like most things in the offshore industry, the answer to the question of which bank and which country are best will depend on what you want and what you need.
If you’re looking to open an offshore bank account for your business or need help deciding where to open a personal account, feel free to reach out to our team of experts.