Podcast
June 2024
15/15
• FATCA and CRS Update
• Cayman Islands Monetary Authority ("CIMA") AML Surveys
• CIMA Rule and Statement of Guidance on Market Conduct for Trust and Corporate Service Providers and Company Managers
• CIMA Policy on Virtual Asset Service Provider ("VASP") Registration and Licensing
• Financial Regulatory Authority ("FRA") Updated SARs Guidance
• A 15-minute summary of the latest developments in the regulatory laws of the Cayman Islands released on the 15th day of every month
• A copy of the previous 15/15 released on 15 May can be accessed on our website: Maples 15/15
• Comments and suggestions to format of the 15/15 are always welcome –please email speakers directly
• Ongoing comparison of entities registered on the DITC portal compared to GIIN lists, CIMA regulated entities and GR#, with missing registration notices being issued
• Latest notices are focused on IMs, SPCs and umbrella trusts, with the latter two required to be linked to the SPC / umbrella trust GR# where registration and reporting is done at SP / series trust level
• Breach notices with significant penalties now being issued following non-action of previous reminder notices, with many being a breach of more than one CRS regulation
• Completing DD within 90 days, accounts being closed / frozen with no payments being made to investors where outstanding items, and ensuring completing before reporting is due
• Regularly following up for missing TINs for pre-existing account holders, and using specific replacement TINs for reporting of US accounts to identify reason for not having TINs
• Ensuring DOB is obtained for CRS reportable accounts (DITC notice March 2024)
• Notice from Jersey authority earlier this year, which reflects the OECD's view, that validating a GIIN to the IRS website is not enough to accept an entity is a RFI – DD procedures should be carried out fully and reasonable checks conducted of self-certification forms against documents collected in account opening and publicly available information
• Jersey recently updated their list of reportable jurisdictions (reporting deadline is 30 June); Cayman Islands' list was updated 12 April 2024
• Timing of registration compared to reporting – explanations will be required:
• DITC will issue missing reporting notices for entities registered on the portal before 30 April 2024 that do not file 2023 returns / declarations;
• Where nil reports and compliance forms with no account holders and zero NAVs are filed
• CIMA has issued its annual AML surveys (securities, trust, company manager, corporate service providers, mutual funds administrators)
• The timetable for such surveys is now consistent under CIMA's reporting schedule
• AML surveys assist CIMA in the collection of AML / CFT / CPF and sanctions data from regulated financial service providers ("FSPs")
• Surveys are distributed to the designated AMLCO, MLRO, registered office and 'principal contacts' of FSPs based on CIMA's records
• Surveys must be completed online by a relevant recipient accessing the link contained in CIMA's email
• Majority of the questions are business-specific / factual and need to be completed by or with the input of the FSP's AMLCO
• CIMA has published guidance for completing each AML survey https://www.cima.ky/regulatory-forms-guidance-notes
• If you have not yet received the survey, contact CIMA atAMLSurveys@cima.ky
• Published on 22 May 2024 as a supplement to the Cayman Islands Gazette
• Applies to Trust and Corporate Services Providers and Company Managers
• Rule and SOG will replace the existing Statement of Guidance dated March 2019 and comes into effect on 25 November 2024
• The new Rule creates binding obligations, the breach of which may lead to enforcement, whereas SOGs are, at least nominally, no more than guidance
• The Market Conduct Rule and SOG incorporates important refinements in relation to client documentation, segregation of client monies and maintained policies and procedures, including (but not limited to):
• Where a 'Regulated Person' (for these purposes a CIMA-regulated entity) acts as a nominee shareholder on a 'Client' structure, the Regulated Person must ensure there is a written agreement (rather than just a document) reflecting the nominee agreement and that agreement must be retained as part of the Regulated Person's records
• As a general principle, money ceases to be, or never becomes, 'Client Money' if it is:
• paid to the Client or a duly authorised representative of the Client
• paid into a bank or other account in the name of the Client
• paid otherwise at the direction of the Client
• received by a Regulated Person for payment of fees, disbursements or other liabilities owed by the Client as contained in the terms of business
• As a normal business practice, CIMA expects that any Client's money is held separately from another Client's money, except where to do so is impracticable or impossible and the interests of Clients are adversely affected
• Where Client Money is held on trust, the account where the Client Money is held must not be operated until the Regulated Person has obtained the necessary written confirmation from the entity holding the Client Money that:
i. the account is a Client account, and that money standing to the credit of the account is held by the Regulated Person as a fiduciary;
ii. the entity is not entitled to combine the account with any other account or exercise any right of set-off or counterclaim against money in the account in respect of a debt or other obligation owed to it by the Regulated Person;
iii. interest earned on the account will be credited to that account or to an account of that type
• Where a Regulated Person is responsible for administering or holding Client assets other than Client Money, the Regulated Person must develop appropriate documented policies and clear procedures that ensure:
• it acts with professional skill, care and diligence in administering those assets
• Client assets are segregated from those of the Regulated Person
• there are documented systems, controls and procedures to effectively reconcile any receipt or movement of a Client assets
• Regulated Persons must ensure that Client Money accounts are reconciled promptly
• Regulated Persons must reconcile the balance on each Client's account with the balance on that account as set out in the statement issued by the entity in which the Client's Money is held under which the reconciliation is made. Any differences should be corrected without delay
• Published on 15 May 2024 as a supplement to the Cayman Islands Gazette
• Effective on publication except for the licensing component which will become effective on commencement of the licensing regime for virtual asset trading platform operators and virtual asset custodians
• The VASP Policy includes:
• General considerations for prospective applicants to consider before applying for registration or licensing
• The procedure for registration and licensing of VASPs
• CIMA's assessment criteria for registering and licensing VASPs, including:
• the fitness and propriety of shareholders, proposed directors and senior officers
• the fitness and propriety of persons having ownership or control of a VASP
• a sound and prudent management system and oversight of a VASP's operations contained in a draft corporate governance framework
• a sufficiently detailed business plan
• details of proposed risk management, internal operational systems and control frameworks
• Guidance on Preparing and Submitting High Quality Suspicious Activity Reports ("SARs") was originally issued by the FRA on 21 February 2020 and recently amended on 28 May 2024
• The amendments update legislative and guidance references and how one can file a SAR
• The FRA currently accepts SARs through the following means:
• Via AMLive Reporting Portal (which allows Reporting Entities to submit SARs electronically)
• Via encrypted email (In the event you are not registered for AMLive, SARs should be submitted through the FRA's email address (financialreportingauthority@gov.ky) using the SAR Form and must be password protected. The password can be provided via a voice message at the extension (345) 244-5711)
• Physical delivery (e.g. hand delivery, post or courier) to FRA's office address: 4th Floor, Government Administration Building, 133 Elgin Avenue, George Town, Grand Cayman, Cayman Islands (*This option should only be used if the first two options are not possible*)
• The SAR Form is available for download here: https://fra.gov.ky/file-a-report/
This presentation was presented on, and is only accurate to 13 June 2024. The information within this presentation is provided for general guidance only, is not intended to be comprehensive and does not constitute legal advice or give rise to an attorney / client relationship.
Specialist legal advice should be taken in relation to specific circumstances. If you require legal advice, please reach out to your usual Maples and Calder contact.
Published by Maples and Calder (Cayman) LLP.
