Charities bill passes into law

(CNS): The financial services minister led the charge in the Legislative Assembly on Wednesday as members began working their way through the government’s marathon agenda for this parliamentary meeting. Wayne Panton presented ten bills, most of which related to the offshore sector, including the non-profit legislation to register and regulate charities and other non-governmental organisations not dealt with under other laws.

The bill was steered through the Legislative Assembly, with an eye on the Financial Action Task Force review that Cayman will undergo next year, but the legislation has been in discussion for years as charities have never been regulated or obligated to account publicly for the money they collect and spend.

Outlining the new law, the minister said that in preparation for the FATF evaluation Cayman had to ensure that the anti-money laundering and terrorist financing laws were all in line with international standards and this bill was needed to mitigate the perceived risk of charitable institutions being misused.

“We may think there is little risk,” he said, noting that charities have been used to disguise the illegitimate use of money, and that institutions established to do good are susceptible to misuse because no one expects charities to be involved in unsavory financial deals, even though in Cayman they are low risk.

Panton said that while there had been some public comment that the law was unnecessary, it was very clear why it was needed. For most charities the requirements are straightforward and not difficult to comply with, due to considerable input from stakeholders, he said.

Around 30 charities had been invited to attend consultative meetings but ten had taken the opportunity, the minister said, noting that nine were fully in favour and only Rotary felt the law should not apply to them because they are an internationally recognised charity.

He said there was a lot of misunderstanding about who must be audited. All the charitable entities are required to maintain proper accounts but they only need to be audited if they take in more than $250,000 a year, with 30% or more being paid outside Cayman, he explained, pointing out that the movement of money from the jurisdiction is where the risks of abuse occur.

The government was not going to take any chances or be ill prepared for the forthcoming assessment, the minister told the LA. “We want the best possible assessment and need to have this law in place as there will be very real consequences if we don’t do it,” he explained, stressing that there would be “dollar and cent ramifications if we don’t get through the review”.

Panton said that for many years successive governments had tried to deal with the law and it needed to be done, because the legislation eliminates the potential for bad actors in the not-for-profit sector and makes charities more transparent, allowing the public to know where donations are going and how they are being spent.

The attorney general gave his backing to the minister and the legislation, saying that the threat of abuse of non-profit organisations was real and not imaginary.

“It is imperative that the law is in place to monitor the possible risk,” he said, adding that the bill is not about government trying undermine or make life difficult for charities but to provide confidence for people to safely make donations.

Although a number of the opposition independent members raised a few questions about how onerous the bill was, they accepted that they may have misunderstood and acknowledged the need for the legislation.

See the draft legislation in the CNS library