According to a local newspaper report, the Cayman Islands, the Caribbean territory often called an offshore financial haven, could be the site of a future diamond bourse.
The proposed exchange is the brainchild of local jeweler Dennis Smith, who sees it as a way for overseas companies to service the U.S. market, still the largest in the world.
“A diamond trade center in the Cayman Islands would give them same-day access to the U.S. and enable their American clients to visit the Cayman Islands on business and return home the same day,” he said.
A self-governing British territory, the Cayman Islands has become known as a tax haven, given its lack of direct taxes, bank secrecy laws, and minimal government regulations. In a 2009 speech, President Barack Obama noted that 12,000 companies had headquarters registered to one Cayman Islands building. “Either this is the largest building in the world or the largest tax scam,” Obama said.
But the low-regulation environment in the Caymans could prove appealing to diamond and jewelry companies, the article says, noting other jurisdictions are increasingly regulating them like banks, with strict anti–money laundering guidelines.
Jewelry companies “need a more flexible, first-class compliance and tax-neutral, free trade jurisdiction tailored to the industry,” Smith told the paper.
World Federation of Diamond Bourses president Ernest Blom told the paper that Cayman could turn into an important exchange, but noted that it would need to join the Kimberley Process and meet WFDB requirements.