FROM THE OFFICE OF PUBLIC AFFAIRS

Today Treasury Secretary Paul O'Neill signed a new agreement with the United Kingdom, including the Cayman Islands, that will allow for exchange of information on tax matters between the United States and the Cayman Islands. The agreement was signed by Treasury Secretary Paul O'Neill, United Kingdom Ambassador Sir Christopher Meyer and Cayman Island Governor Peter J. Smith CBE.

At the signing ceremony, Treasury Secretary Paul O'Neill delivered the following remarks:

"I would like to thank you all for being here today and welcome our friends from the United Kingdom and the Cayman Islands, especially the Governor of the Cayman Islands, Mr. Peter J. Smith CBE, and the British Ambassador to the United States, Sir Christopher Meyer. I want to thank specially the Attorney General of the Cayman Islands, Mr. David Ballantyne, the Cayman Islands Financial Secretary, Mr. George McCarthy, and Linford Pierson, Deputy Leader of the Caymans Islands government, all of whom participated personally in negotiating the tax information exchange agreement we are here today to sign.

"The Cayman Islands has a long-standing relationship with the United States, including partnering with the United States in a mutual legal assistance treaty effective since 1990 under which we've already been cooperating in the hunt for terrorist assets. Since September 11^th, cooperation between jurisdictions is more important than ever before, as we work to disrupt terrorist financing.

"The Cayman Islands is undeniably the most important financial center in the Caribbean and ranks among the largest and most important financial centers in the world. This tax information exchange agreement we are signing today represents a significant development in the cooperative relationship between the Cayman Islands and the United States and in our efforts to prevent our financial institutions from being used to further illegal activities.

"As I have said previously, we have an obligation to enforce our tax laws because failing to do so undermines the confidence of honest taxpayers in the fairness of our tax system. The use of offshore entities or accounts by U.S. taxpayers to evade their tax obligations is likely to increase because of the Internet and other tools which may allow significant fund transfers that do not create a paper trail. The primary obstacle to enforcement of our tax laws in these cases remains ineffective information exchange.

"This summer I publicly expressed my intention, in Congressional testimony, to quicken the pace for obtaining new tax information exchange agreements. Today's signing is an important milestone of this new concerted effort.

"We commend the Cayman Islands for emphatically demonstrating that those who seek to engage in tax evasion or other financial crimes are not welcome within its jurisdiction. It is my sincere hope that, with the signing of this agreement, the Cayman Islands will be recognized as a leading financial center that is committed to upholding international standards.

"I hope that the Cayman Islands' cooperation with the United States in developing this tax information exchange agreement will set a precedent, and that other major financial centers will enter into similar agreements in short order. I am confident that we will be entering into additional important agreements in the future."