Cayman Finance, the Cayman Islands financial services body, has hit back at what it calls “unsubstantiated” claims that Cayman-domiciled funds are re-domiciling to European nations, particularly Ireland.

The response follows fears that the EU’s Alternative Investment Managers Directive could result in upheaval in non-EU jurisdictions. In particular there were fears for the Caymans regulatory model which “may come under a bit of stress” according to Martin Cornish, partner at law firm Katten Muchin Rosenman Cornish, who in October last year described the legislation as a "sledgehammer to crack a nut".

Cayman Finance has insisted that the jurisdiction’s funds industry remains as strong as it was before the EU Alternative Investment Fund Managers Directive and pre-crisis.

“The Irish fund industry states that they have doubled their registered funds to 7.4 per cent, but these statistics pale in comparison to the Cayman fund industry, which continues to grow by approximately 95 funds per month,” said the agency, citing figures from the Cayman Islands Monetary Authority.

Cayman Finance pointed out that the de-registration rate, of approximately 5 per cent, has been the typical rate for several years, which it viewed as an indicator of stability in the Cayman industry. Of the four funds cited as re-domiciling to the EU, two went to Malta and two to Luxembourg.

“For institutional investors and managers, the well understood path of the Cayman fund - non-bureaucratic, quick set up times, high quality service providers and its solid reputation - is well-known and that familiarity breeds trust,” said Simon Osborn of International Fund Investment.

“A number of managers believe that the AIFMD could drive managers out of the EU… only managers serious about EU distribution will have EU-domiciled funds. The rest will continue to use offshore structures,” said Osborn.

The Caymans has been vocal in defending the centre's continued competitiveness compared to other jurisdictions as well as the offshore industry in general in recent years. In August 2010 Cayman Finance rebutted claims by a prominent US business group, Business and Investors against Tax Haven Abuse, which said that the Caribbean jurisdiction is a harmful tax haven and that low or no-tax centres hurt the US economy because they encourage tax evasion.