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Last Updated: Wednesday, 15 September, 2004, 13:37 GMT 14:37 UK
Cayman Islands banks survive Ivan
Power lines down across a street in Georgetown, Grand Cayman
The power is out, but much of the offshore finance keeps working
The fifth largest financial centre in the world is still functioning - despite being hit by Hurricane Ivan.

The Cayman Islands is home to 5,000 funds, almost 400 banks and tens of thousands of companies.

A loss of power across most of the islands means locally-based staff are out of action till electricity returns, planned for 20 September.

But thanks to the offshore nature of the Caymans' financial services, many firms are operating almost unhindered.

With sensitive data routinely backed up elsewhere, many law firms, company agents and banks have simply told clients to contact offices in London, the Bahamas, the US or elsewhere.

The experience, experts say, is a prime example of the virtual nature of modern finance.

The rest of the islands' life, however, has been hit hard by the hurricane.

Few of their 43,000 inhabitants have mains electricity or water supplies, and there is significant damage to homes and businesses.

Communications are also suffering, with most landlines cut off during the day and little mobile phone coverage.

Haven

The Caymans are most widely known as an offshore financial centre - colloquially termed a "tax haven".

The islands' financial industry accounts for the vast majority of their $1.3bn gross domestic product.

The banks - most of which are subsidiaries of major international groups and do not have a physical presence there - hold more than $1 trillion.

The Cayman Islands, a semi-independent overseas territory of the UK, has many more companies than it has people.

Many of these firms exist as shells, functioning as part of complex systems by which companies and rich individuals can manage their tax and financial affairs.

As such, they do no business in the Caymans themselves and are routinely run remotely, experts say.

For years, the territory was seen as a honey-pot for crooks and money launderers.

International regulators such as the Paris-based Financial Action Task Force now say it has substantially cleaned up its act.




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