A number of key deadlines and regulatory updates have hit milestones in the second quarter. Here is a snapshot of the most pertinent. As always, seek professional advice or contact us.
Automatic Exchange of Information (AEOI) agreements have been updated in several ways. On 5 April 2023, the Department for International Tax Cooperation (DITC) issued an industry advisory detailing updated lists of Common Reporting Standards (CRS) Participating Jurisdictions and Reportable Jurisdictions. The following jurisdictions have been added for reports due in 2023 and onwards: Jordan, Montenegro, Uganda, Moldova, Thailand and Ukraine.
The DITC also issued a reminder than the upcoming AEOI deadlines are as follows: CRS and FATCA reporting (including any reportable accounts and / or CRS Filing Declarations) is 31 July 2023; and the CRS Compliance Form on 15 September 2023.
In March 2023, the Cayman Islands Monetary Authority (CIMA) published a notice advising financial service providers that, with immediate effect, it will no longer collect annual registration fees on behalf of segregated portfolios for private fund segregated portfolio companies (SPCs). It will also refund fees paid since 2020. It also said it is looking at amending the Private Funds Act and Regulations to implement a statutory based registration fee, subject to discussions with the Ministry of Financial Services.
Russian sanctions extended
Sanctions relating to investment funds owned all or in part by Russian entities or directors, which were due to expire on April 2023, have been extended for a period of six months. The restrictions were detailed in a General License, which was first issued in October 2022. It also relates to certain actions and basic needs payments which may be made by ‘Relevant Investment Funds. The rules relate to what investment funds can and cannot do but also individuals providing trust services and professional and business services.
A revised version of the Cayman Islands Anti-Money Laundering Regulations (AMLR) was published in January 2023 (AMLR 2023 Revision), which consolidates three sets of prior amendments to the AMLR that were made throughout 2020.
The amendments which have been proposed to the AMLRs were as a result of reviews of the AMLRs, which were driven by changes to international AML/CFT standards promulgated by the Financial Action Task Force (FATF) and the need to align the AMLRs more closely with these standards and other best practices.
CIMA’s AML powers
In March 2023, a number of bills were gazetted with the intention of extending CIMA’s sanctions regime. The bills gazetted were: Monetary Authority (Amendment) Bill 2023; companies Management (Amendment) Bill 2023; Directors Registration and Licensing (Amendment) Bill 2023; Insurance (Amendment) Bill 2023; Money Services (Amendment) Bill 2023; Securities Investment Business (Amendment) Bill 2023; and Virtual Asset (Service Providers) (Amendment) Bill 2023.
The intention was to extend its regime to cover to the following types of entities where they fall under CIMA’s supervision: partnerships, limited liability partnerships, exempted limited partnerships, unincorporated associations, and persons concerned in the management or control of any such partnerships or associations.
The Monetary Authority (Amendment) Bill also proposes to expand CIMA’s power to impose administrative fines and provide for the disclosure and sharing of information to the competent authority.
According to a press release from the Ministry of Finance on Friday 23 June 2023, the Cayman Islands has taken steps to satisfy the action plan created by the Financial Action Task Force (FATF) and therefore the Cayman Islands is eligible to be removed from the list of countries the FATF is monitoring for deficiencies in their anti-money laundering and countering the financing of terrorism (AML) regimes, subject to successful completion of an onsite visit by the FATF.
The FATF announced its decision today (Friday, 23 June) following its plenary. The Attorney General, the Hon. Samuel Bulgin, KC; the Minister of Financial Services and Commerce, the Hon. André Ebanks; and the Head of the Anti-Money Laundering Unit, Mr Francis Arana, attended the plenary to represent the Cayman Islands and discuss progress made on the last of the three recommended actions in the FATF Action Plan.
As a standard requirement, the delisting process involves an onsite FATF visit, tentatively scheduled for late August or early September. During the onsite visit, FATF assessors will visit the Cayman Islands to meet in person with local stakeholders to assess the operation of the action plan in practice, and its sustainability.
An onsite visit report then will be presented at the next FATF Plenary, now scheduled for October this year, at which the Cayman Islands will receive confirmation as to whether it will be delisted from the initial listing in February 2021.
To be delisted, FATF require the Cayman Islands to complete three recommended actions. These three actions were what remained from 63 actions, following a Post Observation Period Report to the FATF in February 2021.
“Satisfying all of the 63 recommended actions is a major step towards the Cayman Islands being delisted but, as is the case for other listed countries that met this milestone, there is one more step to complete, and all relevant stakeholders need to remain focused,” Minister Ebanks said.
The Attorney General noted that preparations are already underway for the onsite visit of the Americas Joint Group – a subgroup of the FATF’s International Cooperation Review Group (ICRG), acknowledging that “the FATF process is rigorous with reason. Its purpose among other things, is to ensure that local authorities can effectively deter, detect, investigate and prosecute serious crimes.”
He and Minister Ebanks said the Cayman Islands looks forward to continuing their cooperation with the FATF Americas Joint Group during their onsite visit, in order to complete the last step of the delisting process. A final decision will be made by the FATF at Its October 2023 plenary.
Beneficial Ownership Consultation
The Cayman Islands Ministry of Financial Services and Commerce (Ministry) has circulated the second iteration of the Beneficial Ownership Transparency Bill, together with a further consultation paper on the enhancement of Cayman’s beneficial ownership framework. It has been sent to a wide cross section of the financial services industry for comment and consultation. It was seeking responses by April 2023. As currently drafted, the proposed amendments will increase the burden for reporting for corporate services providers as a suggestion is to amend previously relied upon exemptions and moving towards alternative routes to compliance for investment funds. Paradigm will continue to keep its readers updated as more clarity emerges.
CIMA AML Surveys
Similar to 2022, CIMA has once again issued its annual AML questionnaires to registrants and licensees (securities, trust, company manager, corporate services providers and mutual fund administrators).
There are varying reporting deadlines depending on when the survey was issued.
The surveys can be completed via a secure CIMA portal and published guidance is available here
Directors, operators, registered offices and AML officers are reminded to ensure that these are completed and submitted in accordance with the required timeframe.
FAR Filing Deadline
The deadline for submitting the Fund Annual Return (FAR) along with the audited financial statements for entities with a 31 December year end is approaching. The filings must be made by 30 June and this is relevant for both Mutual and Private Funds.
The responsible parties are reminded to liaise closely with the administrator, auditor, and client to ensure accurate and timely completion of the form,
A reminder of guidance on the reporting requirements and template forms can be located here: