THE
Podcast
REGULATORY 15/15
November 2024
Speakers
+1 345 814 5666
chris.capewell@maples.com
345 814 5429
jennifer.parsons@maples.com
Content
• Department for International Tax Cooperation (DITC) Enforcement
• Beneficial Ownership Update
• Cayman Islands Monetary Authority (CIMA) Update
• Financial Action Task Force (FATF) Update
• Economic Substance Update
• Year-End Reminders
Introduction
Introduction to the 15/15
• 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 August 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
DITC Enforcement
DITC Enforcement
• We are seeing an uptick in DITC enforcement in the recent months and the DITC has confirmed that this trend is expected to continue as they move to the next phase of ensuring effectiveness in the regimes they administer
• AEOI
• Recent breach notices and penalties
• Economic Substance
• Compliance letters issued (rather than breach notices)
• In addition to the above, more enhanced compliance reviews of individual entities are anticipated going forward (desk audits)
• We can help with enforcement issues as well as ensuring ongoing compliance with these regimes
Beneficial Ownership Update
Beneficial Ownership Update
• In September 2024, the Ministry of Financial Services & Commerce released its new Beneficial Ownership Enforcement and Appeal Procedures Manual
• On 11 October 2024, the Ministry released for industry consultation:
• the Beneficial Ownership Transparency (Legitimate Interest Access) Regulations, 2024 – initial consultation
• the Beneficial Ownership (Access Restriction) Regulations, 2024second consultation
• These consultations deal with public registers
• Consultations closed on 25 October 2024
• We anticipate final Regulations will be passed by year end
• Reminder that now is the time to ensure your entities are compliant with the new regime. Maples would be pleased to assist in this regard
CIMA Update
CIMA Update
• Interesting to note that as of 4 September 2024, the total number of registered investment funds in the Cayman Islands is 30,038 (17,080 private funds and 12,958 mutual funds) with further growth projected
• In October 2024, CIMA released an updated version of the CIMA Regulatory Handbook. Broadly, the updated Handbook includes:
• additional commentary on CIMA's authorisation process (including assessment of fitness and propriety)
• additional commentary on termination and cancellation of registration and licences
• additional guidance on change of name requirements
• new guidance on approved actuaries
• clarity on the effect of CIMA's letters of good standing
• updated guidance on CIMA's approach to inspections
• updated guidance on the risk-based approach to AML / CFT / CPF / TFS oversight
• updated appendices (including in relation to divisional responsibility for various applications and filings)
CIMA Update (cont'd)
• Also in October, CIMA published its Supervisory Circular on Complaints handling and Regulatory expectations which sets out how regulated entities ("REs") should implement and embed effective complaintshandling policies / procedures within their organisation
• CIMA encourages REs to review:
• the Rule and Statement of Guidance on Internal Controls for Regulated Entities (in particular, Sections 12.11 and 12.12)
• the Rule on Corporate Governance for Regulated Entities (in particular, Section 5.7.5)
• CIMA will be assessing compliance during future onsite inspections
• Any RE that has not already ensured compliance with these new regulatory measures in their entirety should do so urgently. Maples would be pleased to assist in this regard
FATF Update
FATF Update
• The latest FATF Plenary was held in Paris from 21-25 October
• The Plenary dealt with matters of direct relevance to the Cayman Islands including listing and delisting of countries, beneficial ownership and virtual asset standards, as well as jurisdictional updates leading into the next round of mutual evaluations
• For the first time, two jurisdictions were invited to participate in the FATF Plenary and Working Group as guests – the Cayman Islands and Senegal
• demonstrates significant progress on the FATF's priority to increase its inclusivity and broaden the diversity of perspectives represented
• The FATF has also reformulated its criteria for listing and delisting of countries which should hopefully better target countries that pose the greatest risk to the international financial system
Economic Substance Update
Economic Substance Update
• Reminder of upcoming filing deadline for entities with 31 December fiscal year end
• The economic substance notification ("ESN") must now include both the start and end dates of the fiscal year – important to advise if nonstandard
• DITC is reviewing economic substance returns (ESR) and financial statements to ensure classifications are correct. If change in relevant activity required
• may be done by updating the ESN via the registered office within 12 months of filing the ESN
• after that date, may only be done via the ESR filing, which must include a detailed explanation for the change in relevant activity as well as supporting documentation to substantiate it
Economic Substance Update (cont'd)
• Important points to be aware of:
• Change of responsible person or their email address must be done via the registered office, and accounts must be activated for ESR filing or appointment of secondary users
• All relevant entities (other than holding companies) completing ESRs are now required to answer questions relating to governance – even if there is no relevant income to report
• Generally, information relating to structure including parent and intermediary companies is required as well as whether the entity is part of an MNE Group for Country-by-Country reporting (CbCR) purposes
• However, ultimate beneficial owner (UBO) information is not required to be provided unless the entity is conducting intellectual property (IP) business or if any of the confirmations and declarations are answered negatively
Year-End Reminders
Year-End Reminders
• Economic Substance – Upcoming ESR filing deadline for entities with end of December fiscal year end
• Beneficial Ownership – Be aware of the new Act and requirements. Determine your obligations and provide information to your CSP now!
• Terminating Entities – Regulatory Obligations
• AEOI – Must complete filings and deactivate from the DITC Portal
• AML – Ensure all CDD records are complete prior to making final distributions and terminating the entity
• Economic Substance – Must satisfy all obligations (including the economic substance test) until wound up or dissolved
• CIMA-regulated entities (including mutual funds and private funds) must comply with all CIMA deregistration obligations
This presentation was presented on, and is only accurate to 13 November 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.
November 2024
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