CAYMAN ISLANDS Law and Practice Contributed by: Sailaja Alla, Matt Mulry, Maree Martin and James Mossetto, Appleby
4.9 Double Tax Treaties The Cayman Islands does not have any double tax treaties. The Cayman Islands is tax-neutral and there - fore does not require tax treaties, as there is no tax conflict and no risk of double taxation. 4.10 Foreign Account Tax Compliance Act (FATCA)/Common Reporting Standard (CRS) Compliance Regime The Cayman Islands is a signatory to the Multilateral Competent Authority Agreement to implement the OECD Standard for Automatic Exchange of Financial Account Information – Common Reporting Standard (CRS), and to an inter-governmental agreement with the United States to improve international tax compli - ance and implement the Foreign Account Tax Com - pliance Act (the “US IGA”). The Cayman Islands has enacted laws and regulations to give effect to the CRS and the US IGA (the “AEOI Laws”), and has published guidance notes on the application of the AEOI Laws in the Cayman Islands. The AEOI Laws have established a financial account information reporting regime in the Cayman Islands. All Cayman Islands entities classified as reporting financial institutions under the AEOI Laws must com - ply with registration, due diligence and annual report - ing obligations, including the requirements to: • register with the Internal Revenue Service (IRS); • register with the Cayman Islands Tax Information Authority (TIA); • adopt and implement written policies and proce - dures in relation to CRS responsibilities; • conduct due diligence on their accounts to identify reportable accounts; • report information annually to the TIA on reportable accounts; and • file an annual CRS compliance form with the TIA. The TIA transmits reported information annually to the relevant overseas authorities. Most Cayman Islands funds will be classified as reporting financial institutions for the purposes of the AEOI Laws, and will be required to comply with the registration, due diligence and annual reporting obli - gations under the Cayman Islands AEOI regime. Cay -
man Islands funds are permitted to delegate some or all of their responsibilities under the AEOI Laws to third-party service providers. 4.11 Anti-Money Laundering (AML) and Know Your Customer (KYC) Regime Cayman Islands funds are subject to: • the Cayman Islands Proceeds of Crime Act; • the Misuse of Drugs Act; • the Terrorism Act; • the Proliferation Financing (Prohibition) Act; and • the Anti-Money Laundering Regulations and the Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Pro - liferation Financing in the Cayman Islands issued by CIMA, as well as targeted financial sanctions (collectively, the “Cayman AML Regulations”). To ensure compliance with the Cayman AML Regu - lations, Cayman Islands funds are required to adopt and maintain appropriate policies and procedures, and require investors to verify: • their identity; • the identity of their beneficial owners/controllers Cayman Islands funds are also required to appoint individuals in the positions of money-laundering reporting officer, deputy money-laundering reporting officer and anti-money-laundering compliance officer. Where permitted, and subject to certain conditions, Cayman Islands funds may rely on a suitable person for the maintenance of their anti-money laundering, anti-terrorism and anti-proliferation financing policies and procedures, or may otherwise delegate such functions to a suitable person. CIMA has a discretionary power to impose substantial administrative fines upon a fund in connection with any breaches of prescribed provisions of the Anti- Money Laundering Regulations, and upon any opera - tor or officer of the fund who consented to or connived (where applicable); • their address; and • their source of funds.
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