CAYMAN ISLANDS Trends and Developments Contributed by: Dan Beckett, Iain Anderson, Joni Ebanks, Christina Gordon and Alex Howard, Maples Group
• The Rule – Corporate Governance for Regulated Entities, which requires regulated entities (including private funds) to establish, implement and maintain a corporate governance framework commensu - rate with their size, complexity, nature of business,
istrative penalties and sanctions that are intended to be effective, proportionate and dissuasive, the FATF has determined that the Cayman Islands has the highest compliance rating with respect to all 40 FATF recommendations relating to AML and countering the financing of terrorism, and that it has satisfied all of the FATF’s recommended actions for the jurisdiction, recognising that the Cayman Islands has a robust and effective AML and counter-terrorist financing regime. Beneficial ownership and transparency The Beneficial Ownership and Transparency Act (As Revised) (BOTA), the Cayman Islands’ new beneficial ownership regime, was brought into force on 31 July 2024. BOTA modifies the beneficial ownership regime that had been in place in the Cayman Islands since 2017 in a manner that aligns with equivalent regimes in other jurisdictions. BOTA extends the reach of the beneficial ownership regime to most Cayman Islands entities and removes most of the exemptions previously relied upon. The new regime applies to all “legal persons”, which includes companies, LLCs, LLPs, limited partner - ships, ELPs, foundation companies and certain other legal persons prescribed in regulations, with such persons being required to complete and maintain a beneficial ownership register at their Cayman Islands registered office with a licensed corporate service pro - vider. Cayman Islands trusts and non-Cayman Islands vehicles, including foreign entities that are registered in the Cayman Islands, are out of scope of BOTA. The regime also provides certain legal persons with an alternative route to compliance (meaning the legal person would not be required to report its beneficial owners or establish a beneficial ownership register, but rather report limited “required particulars”). This route is available to a legal person that is: • listed on the Cayman Islands Stock Exchange (CSX) or an approved stock exchange (including subsidiaries of a listed entity); or • licensed under certain Cayman Islands regulatory laws.
structure, risk profile and operations. Automatic exchange of information
The Cayman Islands has implemented the compre - hensive automatic exchange of information (AEOI) regimes of both the OECD’s Common Reporting Standard (CRS) and the US Foreign Account Tax Compliance Act (FATCA). Reporting financial institu - tions have customer due diligence and annual report - ing obligations in the Cayman Islands, and an annual requirement to file a CRS Compliance Form. Reports, as well as the annual CRS Compliance Form, are filed with the Cayman Islands Tax Information Authority (TIA) administered by the government’s Department for International Tax Cooperation. The TIA, in turn, provides account information automatically to the tax authorities of over 100 jurisdictions. Tax Information Authority (International Tax Compliance) (Country-by-Country Reporting) Regulations, 2017 The Cayman Islands introduced the Tax Information Authority (International Tax Compliance) (Country- by-Country Reporting) Regulations in 2017. These regulations implement in the jurisdiction the model legislation published under the OECD’s Base Erosion and Profit Shifting Action 13 Report (Transfer Pricing Documentation and Country-By-Country Reporting). Anti-money laundering regulations The Cayman Islands continues to review and revise its anti-money laundering (AML) regulations and related guidance from time to time, to ensure they remain in line with current Financial Action Task Force (FATF) recommendations and global practice. The require - ments of the AML regulations include the appointment of natural persons as AML officers to entities carrying on “relevant financial business” (which includes Cay - man Islands investment funds vehicles) to oversee the effective implementation of AML programmes carried out by or on behalf of such entities. As a result of the Cayman Islands’ continued enhancement of its AML/ CFT regime, including by way of introducing admin -
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