CAYMAN ISLANDS Law and Practice Contributed by: Jason Ta, Gemma Walters, Paul Walters and Ben Magahy, Travers Thorp Alberga
information on tax matters and exchange that infor - mation with other Competent Authorities pursuant to relevant international agreements. Broadly speaking it covers supervision of: • the Common Reporting Standard, which is the global standard for the automatic exchange of financial account information for tax purposes; • the Foreign Account Tax Compliance Act, which is the mechanism for reporting information on financial accounts held by US persons to the US Internal Revenue Service (IRS); • the Crypto-Asset Reporting Framework, which is the global standard developed by the OECD, working with G20 countries, to promote tax trans - parency and address tax evasion with respect to digital assets; • the Cayman Islands Economic Substance Act which contains the rules for satisfying the interna - tional standard for substantial activities require - ments; • Country-by-Country Reporting which implements the requirements of Action 13 of the OECD/G20 BEPS actions and country-by-country reporting requirements that are filed by certain multinational enterprises with domestic tax authorities; and • the Exchange of Information on Request which takes place when the tax authority of a requesting jurisdiction asks for particular information from the competent authority of a partner jurisdiction. Finally, the Office of the Ombudsman is the supervi - sory authority for data protection-related matters and is empowered to investigate, mediate and decide complaints under the Data Protection Act. 2.7 No-Action Letters CIMA does not currently issue “no-action” letters. 2.8 Outsourcing of Regulated Functions While outsourcing is permitted to regulated or unreg - ulated entities, CIMA emphasises that responsibil - ity and accountability for effective oversight of all regulated activities, whether outsourced or not, rests with the governing body and senior management of the regulated entity. The recent Statement of Guid - ance – Outsourcing Regulated Entities (April 2023) applies to most entities regulated by CIMA. The Guid -
ance applies regardless of whether the outsourcing arrangement established by a regulated entity is with a related or unrelated entity. A regulated entity should assess the materiality of its outsourcing arrangements, and without limiting the scope of its assessments, should consider: • the impact of the outsourcing arrangement on its finances, reputation and operations, or a significant business line, particularly if the service provider, or group of affiliated service providers, should fail to perform over a given period of time depending on the nature of the outsourced function/service; • its ability to maintain appropriate internal controls and meet regulatory requirements, particularly if the service provider were to experience problems; • the cost of the outsourcing arrangement; • the risk of potential loss, temporarily or permanent - ly, of access to important data; and • the degree of difficulty and time required to find an alternative service provider or to bring the business activity in-house. 2.9 Gatekeeper Liability The extent to which fintech providers are deemed to be “gatekeepers” will depend on the nature of the platform. If, for example, the platform is unregulated and is merely a venue to share information, then it is expected that there would be little in the way of “gatekeeper” responsibility. If, however, the informa - tion being shared on the platform amounts to invest - ment advice (either from the platform provider or between users of the platform) then the platform may be subject to licensing or registration requirements under SIBA. 2.10 Significant Enforcement Actions CIMA may take action to enforce the requirements of the regulatory laws and other relevant legislation. Enforcement options available to CIMA include: (i) suspension of the licence of a licensee and preser - vation of its records, (ii) revocation of the licence of a licensee, (iii) requiring the substitution of a direc - tor, operator, senior officer, general partner, promoter, insurance manager or shareholder of the licensee (as applicable), (iv) appointing a person to assume control of the affairs of the licensee, (v) appointing a person
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