Beneficial Ownership Transparency Regime
The enforcement of new requirements set out in the Beneficial Ownership Transparency Regime (BOTA), which commenced on July 31, 2024, will come into force from January 1, 2025. It replaces a prior regime that had been in place since 2017.
Previously spread across multiple pieces of legislation, this new regime pulls everything into one place and consolidates the beneficial ownership requirements into a single statute.
There are some new rules to be aware of, while other areas have been tightened up. Exemptions to the act are far more limited now with partnerships have been brought into the scope of the regime. There are also increased obligations on corporate services providers and a mechanism for public access to certain information has been introduced.
It is noteworthy that BOTA imposes obligations on the in-scope vehicle to identify, and monitor changes to, its natural person beneficial owners and report legal entities unless an alternative route to compliance is available and applied.
Equally, a corporate services provider must make monthly filings with the competent authority on behalf of all legal persons who are subject to BOTA, including those legal persons who are relying on an alternative route to compliance.
Please read our blog here on some of the wider implications of the regime. Please contact us for more detailed information or advice.
Anti-Money Laundering (AML) updates
Amended Anti-Money Laundering (AML) Regulations were published in April 2024 – but some of the implications of those changes are coming into force in January.
The Proceeds of Crime Act (POCA), for example, provides defences to certain money laundering offences for persons who become suspicious of certain activity and file a suspicious activity report (SAR) with the Cayman Islands Financial Reporting Authority.
From January 2, 2025, amendments to the Act make such defences subject to having filed a SAR and received consent from the Financial Reporting Authority.
CIMA’s report on corporate governance
In November, the Cayman Islands Monetary Authority (CIMA) released a report, called ‘THEMATIC Corporate Governance Review Report’ which summarizes where it has observed best practice and where there is room for improvement when it comes to corporate governance in Cayman.
The context and benchmark for this is a set of rules and statements of guidance for CIMA-regulated funds introduced in April 2023, though most became effective in October 2023.
The 2024 report establishes a number of areas where it feels best practice is taking place but also a number of areas where there is room for improvement, which are also ranked.
It observed weaknesses in certain selected entities in areas. Top of the list was where the corporate governance framework does not evidence measures in place to ensure
that the relevant regulator/s is notified, within ten days of any substantive issues
which could materially affect the Regulated Entity.
Next on the list was inadequate policies and mechanisms in place to ensure that non-executive directors devote sufficient time to the role needed for effective and efficient execution of associated responsibilities.
Another issue was a failure to evidence the review and approval of key policies and procedures. Another was a failure to identify potential successors for the members of the board members and senior management.
It also observed that: objectives and strategies were not readily documented and communicated well; that board of directors held meetings informally and not consistently prepared detailed minutes; and that conflicts of interest and code of conduct policies did not address key conflict of interest management practices.
Key dates and deadlines for Q1, 2025
January 1
The deadline for full compliance with the Beneficial Ownership Transparency Act (BOTA), which commenced on July 31, 2024. Registrable beneficial owners should be identified, required particulars should be with an appointed corporate services provider, which should have a beneficial ownership register.
January 15
The deadline for paying the annual CIMA fees. Payment should be made by the registered office provider.
January 15
For mutual funds and SIBA registered entities: deadline for the renewal of the annual CIMA director registration. Payment should be made via the CIMA Director Gateway.
January 31
The deadline for filing the annual return and paying the annual government fee to keep the entity in Good Standing. Before the annual return can be filed and the annual government fee be paid – the economic substance notification also needs to be filed.