All the money you build up as an entrepreneur isn’t worth anything if you can't protect it. That's why many high-net-worth individuals choose to open Cayman Islands bank accounts.
You hear about setting up offshore bank accounts on these picturesque islands, so it has to be a stellar strategy, right? Not necessarily. Truth be told, there are plenty of better jurisdictions in which to open an offshore bank account.
Let’s break down how to open a Cayman Islands bank account, plus go over the benefits and downsides of banking in this overpraised island territory.
Opening a Cayman Islands Bank Account
Opening a Cayman Islands bank account follows a similar process to opening a bank account in many other jurisdictions that are popular for asset protection. While some banks allow you to open an account from afar or totally online, many require you to visit the branch in which you want to open an account for a personal visit.
More specifically, you have to show ties to the country. All the banks in the Cayman Islands are very serious about this requirement and will perform comprehensive due diligence to verify any claims. Because of this, simply creating a short-term limited liability company based in the Cayman Islands isn’t enough.
You may have to spend a lot of time and effort actually moving business operations into this jurisdiction for it to be worthwhile.
This aspect alone makes opening a bank account in the Cayman Islands much more limiting than you may expect. Contrary to its reputation, the Cayman Islands is not a very free or open place in which to manage your financial goals.
Naturally, you'll need to provide lots of documentation regarding your finances, your work, and your citizenship before you can qualify. Furthermore, you'll only be able to open a Cayman Islands bank account if you become a resident or you set up an offshore company there.
Assuming you don't want to live in the Cayman Islands for most of the year, setting up an offshore company will require lots of extra paperwork, time, and fees.
Once you set up a Cayman Islands bank account, you can theoretically use that account for asset protection, legal defense, business purposes, and many other reasons.
Why Open a Bank Account in the Cayman Islands?
Let’s be frank; most people open a bank account in the Cayman Islands because they’ve heard that it’s a good place to do so from the movies, the Internet, or even their less informed friends.
In theory, if you open up a bank account in the Cayman Islands and you don't reside there, that offshore account could provide some measure of legal defense against creditors, lawsuits, and other forms of financial attack.
Furthermore, having a bank account in some territory other than the one in which you live as a resident could open up additional business options and flexibility.
Problems with Opening a Cayman Islands Bank Account
However, there are more flaws with Cayman Islands bank accounts and offshore asset protection strategies than there are advantages. At Dominion, we are very well experienced with which jurisdictions are really worth your time and attention and which are not.
Overly High Regulations
For starters, the Cayman Islands banking industry is subject to extremely high, strict regulations. All that red tape isn’t actually there for your protection; it’s in place because the government wants to overcompensate for its reputation as being unscrupulous or a financial center for less than legal activities.
High regulation can be advantageous in some circumstances, but not in cases where it limits your options or makes it overly onerous to open a bank account, manage your assets, etc.
In our opinion, these regulations do more harm than good and only highlight the overall truth: you're better off banking elsewhere than in the Cayman Islands.
In addition to the above, the Cayman Islands is home to some of the highest fees in the world for asset protection and bank accounts. If you want to protect your assets or your finances in the Cayman Islands, expect to spend a bit of your wealth to do so.
Those high fees aren't even worthwhile. You can get the same or better services for your assets and financial protection in other jurisdictions than the Cayman Islands for less money.
Now that you know this information, you'd be hard-pressed to still choose to set up a Cayman Islands bank account when there are other options.
Just How Expensive Are the Cayman Islands?
Very. Compared to other offshore jurisdictions, opening a bank account in the Cayman Islands is more expensive than opening a bank account in Hong Kong, the United Arab Emirates, Belize, and so much more.
There’s a reason why some hedge funds and larger companies do bank in the Cayman Islands, and it’s because they can afford to do so.
But even in that case, there's still no reason to waste your money. No smart business person ever earned millions of dollars by wasting money when they didn't have to.
Ask yourself: if your overall goal is to save money, whether from aggressive litigation or from other potential hazards, why would you waste it in a jurisdiction as expensive and overall unworthy of your time as the Cayman Islands?
Brand is Misleading
The overall asset protection and banking brand for the Cayman Islands itself is pretty misleading. It’s been built in Hollywood, perpetuated by endless stereotypes about financial moguls, entrepreneurs, and other people or companies stashing their money in the Cayman Islands as though it’s a steel trap of a territory.
You don’t need to be fooled by this branding. You can get the same protection elsewhere, plus get better results, when you work with the experts at Dominion and let us help you choose the right jurisdiction for an offshore bank account.
Services Are Available Elsewhere
To reiterate, all the financial protection services you can find in the Cayman Islands are also available elsewhere, oftentimes for less money and with better results. The tax and investment options available in the Cayman Islands are practically indistinguishable from those available in other places.
Bottom line: there’s no need to put all of your eggs in the Cayman Islands basket when:
- It’s overly expensive
- The regulations can harm you more than help you
- The security of the Cayman Islands isn’t exactly accurate or as durable as the branding would suggest
- You can find all the asset protection you need in more affordable, better jurisdictions
Find a Better Banking Jurisdiction with Dominion
At the end of the day, the Cayman Islands are something of a false lead. They attract people who are new to having lots of money, like those who have just earned $20 million for the first time, and trick them into expensive, laborious banking arrangements that end up not being nearly as protective as they ought to be.
You can avoid this fate by working with the experts at Dominion. At Dominion, we are nation-agnostic and don't have loyalty to any single jurisdiction. That's because asset protection requires an individualized, unique approach for everybody. What works for one client may not work for you and vice versa.
Therefore, when you partner with us, we will do in-depth research and plenty of due diligence to make sure we find the perfect jurisdiction for offshore banking, asset protection, and any other needs you may have. Get in touch with one of our specialists today and we will get started.