Bermuda's offshore competitor the Cayman Islands has dismissed claims the British colony would opt for independence rather than open the records of its banking system to outside scrutiny.

The Caymanian Compass newspaper quoted "a high level Cayman government official'' and said the source of the story, published in the UK Portfolio International magazine, "does not speak for the Cayman Islands' government''.

The Royal Gazette reported last month that Portfolio International had quoted a "top level government consultant'' in the Caymans warning that independence was on the horizon.

The consultant said: "Cayman will go for independence rather than open bank records which will destroy their banking industry.'' But the Caymans official -- not named by the Compass -- insisted: "The UK Government has consistently said they are not going to put any overseas territory out of business as a financial centre and that they have no hidden agenda for dealing with offshore financial centres.'' The Caymans -- which traditionally suffers from a much poorer image as a financial centre than Bermuda because of its reliance on `brass plate banks' -- is under the same pressure as the Island to ensure a squeaky-clean business environment.

Lined up against so-called tax havens are the European Union and the international Organisation for Economic Cooperation and Development.

Both want to see a crackdown on dodgy offshore jurisdictions and more openness about financial dealings.

The report in The Royal Gazette added that a decision by the Caymans government to insist on a "dual criminality test'' for alleged offences added weight to the view it was preparing to go it alone.

That means activity alleged by one country to be illegal must also be illegal in the Caymans -- which rules out tax offences as the islands have no direct taxation to legislate on.

The Compass article added that Cayman has, like Bermuda, money laundering legislation and a Proceeds of Criminal Conduct law.