CAYMAN ISLANDS Law and Practice Contributed by: Daniel Lee, Sophia Scott, Kimberly Robinson and James Turner, Maples Group
Automatic Exchange of Financial Account Information The Cayman Islands has signed an inter-govern - mental agreement to improve international tax compliance and the exchange of information with the United States (US IGA). The Cayman Islands has also signed a multilateral competent authority agreement to implement the OECD Standard for Automatic Exchange of Finan - cial Account Information – Common Reporting Standard (CRS and together with the US IGA, AEOI). Cayman Islands regulations have been issued to give effect to the US IGA and CRS (collec - tively, the “AEOI Regulations”). Pursuant to the AEOI Regulations, the Cayman Islands Tax Infor - mation Authority (TIA) has published guidance notes on the application of the US IGA and CRS. All Cayman Islands “FIs” are required to comply with the registration, due diligence and report - ing requirements of the AEOI Regulations, unless they are able to rely on an exemption that allows them to become a ”Non-Reporting FI” (as defined in the relevant AEOI Regulations) with respect to one or more of the AEOI regimes, in which case only the registration requirement would apply under the CRS. The different types of Non-Reporting FI under each AEOI regime are specified in the applicable AEOI Regulations. Anti-Money Laundering and Countering of Terrorist and Proliferation Financing In common with other financial centres in the world, the Cayman Islands has enacted legisla - tion that is aligned with international principles in preventing and detecting money laundering (AML) and combating terrorist and prolifera - tion financing (CFT and CPF respectively) and breaches of applicable sanctions regimes.
The legislation is also contained principally in the Misuse of Drugs Act (As Revised) of the Cayman Islands, the Proceeds of Crime Act (As Revised) of the Cayman Islands (PCA), the Terrorism Act (As Revised) of the Cayman Islands and the Pro - liferation Financing (Prohibition) Act (As Revised) of the Cayman Islands. These statutes create a number of offences in relation to activities involv - ing the laundering of the proceeds of crime. The Anti-Money Laundering Regulations (AMLRs) apply to anyone carrying out “rele - vant financial business in or from the Cayman Islands”, forming a business relationship or car - rying out a one-off transaction. What constitutes ”relevant financial business” is set out under Section 2 of the PCA and includes, among oth - ers, the following activities: • banking or trust business carried out by a person who is licensed under the Banks and Trust Companies Act (As Revised); • insurance business and the business of an insurance manager, an insurance agent, or an insurance broker within the meaning of the Insurance Act (As Revised); • mutual fund administration or the business of a regulated mutual fund within the meaning of the Mutual Funds Act (As Revised); and • various other investment, financial, trading and lending activities falling within Schedule 6 of the PCA. As a general rule, entities that are registrable under FATCA/CRS will also be subject to the AML Regime. The AMLRs provide that a financial services provider carrying out relevant financial business in or from the Cayman Islands cannot form a business relationship or carry out a one-off transaction, with or for another person unless
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