In our latest Cayman Island regulatory update, we will bring you up to speed on relevant developments in the jurisdiction during the first six months of 2023, including an update on FATF, AML enforcement, CIMA publications, CRS Jurisdictions Lists, and Reporting Deadlines, as well as highlighting upcoming reporting dates and regulatory reminders.
In February 2021, the Financial Action Task Force (FATF) added the Cayman Islands to a list of countries whose AML regimes were under strict monitoring. To be removed from the list, the FATF required the country to address three recommended actions out of a total of 63 points raised by the Caribbean Financial Action Task Force (CFATF). We’re thrilled to share that last month, the Cayman Islands fully implemented the action plan agreed upon with CFATF and is eligible to be delisted at the next FATF plenary in October 2023 pending the successful completion of routine follow-up visits.
Steve McIntosh, CEO of Cayman Finance, said, “Cayman Finance welcomes the announcement by the FATF that the Cayman Islands has now fully satisfied all 63 recommended actions with respect to Anti Money Laundering regulations and the effectiveness of our enforcement regime. While we recognise that there remains work to be done during the upcoming onsite inspection, on behalf of the Board and Members of Cayman Finance, we warmly congratulate the entire government delegation and all those in the many departments and agencies that contributed to reaching this final milestone on the road to de-listing.”
Read the article here.
AML Enforcement and Information Sharing
On March 27, 2023, the Cayman Islands Monetary Authority (CIMA) proposed seven bills to strengthen its powers to apply proportionate and dissuasive sanctions to all types of legal persons within its supervision.
Further, the bills seek to extend CIMA’s sanction regime to legal persons that fall under its regime, including partnerships, exempted liability partnerships, limited liability partnerships, and unincorporated associations other than a partnership.
The proposed bills are:
- Monetary Authority (Amendment) Bill, 2023
- Companies Management (Amendment) Bill, 2023
- Directors Registration and Licensing (Amendment) Bill, 2023
- Insurance (Amendment) Bill, 2023
- Money Services (Amendment) Bill, 2023
- Securities Investment Business (Amendment) Bill, 2023
- Virtual Asset (Service Providers) (Amendment) Bill, 2023
Additionally, amendments to the Monetary Authority Act allow CIMA to share non-public information of criminal conduct uncovered during the carrying on of its duties with an overseas regulatory authority.
Read the full overview here.
Upcoming CRS Reporting Deadlines and Jurisdiction Lists
On 5 April 2023, The Department for International Tax Cooperation (DITC) published the lists of CRS Participating Jurisdictions and CRS Reportable Jurisdictions in the Cayman Islands Gazette.
Below is a list of the CRS and FATCA reporting deadlines in 2023 for the 2022 calendar year:
- CRS and FATCA Notification (registration): up to Monday, 1 May 2023 (as the statutory deadline of 30 April 2023 falls on a Sunday
- CRS and FATCA reporting (including any reportable accounts and/or CRS Filing Declarations): 31 July 2023
- CRS Compliance Form: 15 September 2023
New Participating Jurisdictions: Albania, Ecuador, Georgia, Jamaica, Kazakhstan, Kenya, Liberia, Maldives, Moldova, Montenegro, Morocco, New Caledonia, Nigeria, Oman, Peru, Thailand, Uganda and Ukraine.
Removed as Participating Jurisdiction: Trinidad and Tobago
Read the full update here.
Regulatory Measures for Regulated Entities
On April 14, 2023, CIMA released a series of new regulatory measures for regulated entities.
- Rule and Statement of Guidance (“SOG”)– Internal Controls for Regulated Entities
- Rule – Corporate Governance for Regulated Entities (together, the “New Measures”)
- SOG – Corporate Governance for Mutual Funds and Investment Funds
- SOG – Outsourcing Regulated Entities
- Rule and SOG – Cybersecurity for Regulated Entities
- SOG – Nature, Accessibility and Retention of Records
The updated measures continue to apply to the same regulated entities they previously applied but with one addition. Investment funds are now within the scope of the SOC on corporate governance that previously applied only to mutual funds.
The Updated Measures are in effect from April 14, 2023. The New Measures come into effect on October 14, 2023.
The New Measures do not include any material changes, except that Corporate Governance guidance now applies to investment funds, as further discussed below.
New Rule and Statement of Guidance on Internal Controls
The New Rule and SOC are divided into two parts. Part One contains general rules and guidelines for all regulated entities. Part Two contains sector-specific rules and guidelines specifically in relation to fiduciary service providers.
The five components that an internal control framework should address are:
- The control environment
- Risk identification and assessment
- Control activities and segregation of duties
- Information and communications
- Monitoring activities and correcting deficiencies
The SOG also includes documentation and reporting requirements and enhanced risk assessment and response measures for governing bodies.
New Rule on Corporate Governance
The new Corporate Governance rule applies to all regulated entities, including mutual funds and investment funds. The rule requires a regulated entity to establish, implement, and maintain a corporate governance framework that addresses:
- Its objectives and strategies
- Structure and governance of the governing body
- Appropriate allocation of oversight and management responsibilities
- Independence and objectivity
- Collective duties of the governing body
- Duties of individual directors
- Appointments and delegation of functions and responsibilities
- Risk management and internal control systems
- Conflicts of Interest and Code of Conduct
- Remuneration policy and practices
- Reliable and transparent financial reporting
- Transparency of communications,
- Duties of senior management
- Relations with CIMA
In addition, governing bodies of regulated entities are required to meet annually to review and revise aspects of their corporate governance and internal control practices and frameworks to ensure there are no gaps in compliance with CIMA’s measures.
Read the full update here.
July 31: FIs must file their CRS and FATCA reports for the 2022 reporting year with the DITC.
September 1: The strike-off application must be submitted for an Entity to be dissolved by 31 December.
December 1: An Entity must be put into voluntary liquidation to avoid 2024 annual fees.
How Suntera Global Can Help
Suntera Cayman Islands Corporate Services team offers a comprehensive suite of services to assist investment funds with their regulatory obligations. Learn more about our services here.