1 January 2017-Hedge Funds domiciled in the Cayman Islands, inclusive of Cayman Islands RFI and Non-Reporting Financial Institutions (NFRI) are subject to updated rules and reporting requirements, including those that may or may not have obtained ISIN codes for respective private placement issuances.  Below summary from international law firm Maples and Calder is provided as a courtesy for those entities that have not received notification from their respective attorneys.

The Cayman Islands Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2016 (the “Regulations“) were issued on 19 December 2016.

The Regulations amend the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations, 2015 currently in force in the Cayman Islands and contain the enforcement powers of the Tax Information Authority (“TIA“) and related penalty provisions.

Preliminary points of note include the following:

(a)  All Cayman Islands Financial Institutions now have obligations under the Regulations, albeit these differ as between Reporting Financial Institutions (“RFIs“) and Non-Reporting Financial Institutions (“NRFIs“)

NRFIs are now required to register with the TIA by 30 April 2017 (or by 30 April of the year following their becoming a Financial Institution).  NRFIs continue not to have due diligence or reporting obligations.

Both RFIs and NRFIs have the ability to delegate the carrying out of their duties and obligations under the Regulations to an agent.

(b)  RFIs are required to file nil returns if they have no Reportable Accounts in respect of the previous calendar year.

(c)  RFIs are required to have written policies and procedures for the purposes of complying with their Common Reporting Standard (“CRS“) obligations.

(d)  Significant penalty and enforcement powers are available to the TIA for general offences and compliance breaches.  We understand that these are generally in line with the OECD expectations under the CRS, as well as other participating jurisdictions’ regimes.

The Regulations have been issued prior to 31 December to comply with the Cayman Islands’ commitment to the OECD.  While the financial industry in the Cayman Islands provided a number of comments on a prior draft of the Regulations, not all such comments have been materially reflected in the published Regulations.  It is likely therefore that industry will continue further dialogue with the Cayman Islands Government and the TIA to understand better the scope of the Cayman Islands’ commitment and whether that merits additional amendments to the Regulations in due course.

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The above is an extract of  22 December publication by Maples and Calder, a leading Cayman Islands based international law firm advising financial, institutional, business and private clients around the world on the laws of the Cayman Islands, Ireland and the British Virgin Islands.

Cayman Islands RFI and NRFI New Rules and Regs 2017: ISIN Update