Summer is here!  Summer for my family has always been a time for summer camps, hockey schools, and campfires at the lake.  It’s a time for spending quality time with friends and family before another school year starts. One change, of many we have all come to adapt, is the delay of those big summer blockbuster movies.  You know the movies I am talking about.  The ones where the bad guy inevitably has money wired to a secret offshore account in the Cayman Islands.  The viewers watch the status bar update as the wire is processed, the laptop closes, and the bad guy makes an escape.

Was it the writer or the director who decided to cut the scene of the lengthy process to open a bank account at a regulated bank in the Cayman Islands?  I can imagine the scene where the bad guy, let’s call him Dennis Celery (after a recent commercial aired by a large US telecom provider), walks into the bank and then is inundated with paperwork.  I am sure it would have received “Rotten” reviews.  What do you mean Dennis just can’t show up with a suitcase of money?  If you have watched The Firm and now consider yourself an offshore financial expert, allow me to elaborate on opening a bank account in the Cayman Islands.

More than ACTION!

Recent regulations have made the process of opening an offshore bank account even more cumbersome.  First, there are many “know your client” and account opening forms to complete, including notarized colored copies of passport and driver’s license as well as identifying the source of funds which is generally a letter from your employer verifying your salary.

I wonder which department at SPECTRE provided those letters?

Dennis is set for the pinnacle of fun completing the declaration of tax residency status for the United States’ Foreign Account Tax Compliance Act’s (FATCA) form.  The scenes of Dennis flipping through the Internal Revenue Code researching his Chapter 3 and Chapter 4 withholding status must have been left on the cutting room floor.  If Dennis is a US citizen, he must also provide the Internal Revenue Service’s Form W9 to the Cayman Islands bank.  This declaration provides the Cayman bank the details to provide The Cayman Island Department of International Tax Cooperation’s Tax Information Authority (TIA) all the requisite information needed to automatically supply the Internal Revenue Code (IRS) as required by FATCA.

Finally, let’s not forget the tax residency status form for the Organisation for Economic Co-operation and Development (OECD) Common Reporting Standard (CRS).  Similar to FATCA, CRS is yet another automatic exchange of information initiative the Cayman Islands has adopted to meet the highest standards of tax transparency. The CRS exchange is similar to FATCA but is utilized by over 100 other OECD member countries.

A Little Anticlimactic, Isn’t it?

I could continue, but frankly I’m sure you would find the process as boring and painful as completing all the necessary documentation yourself.  So, the next time you see Dennis transfer money to an offshore account, understand the rules and regulations required to complete this daunting task.  The account in the Cayman Islands is not secret.  In fact, the bank is already on its way to automatically sharing this information with the IRS.