New legislation to cut charity risks

| 26/03/2019 | 9 Comments

Cayman News Service(CNS): Several pieces of legislation will come into force next week that are designed to protect non-profit organisations and charities from financial crime and clarify the regime surrounding NPOs and civil organisations that could be misused. The Non-Profit Organisations (Amendment) Law, 2018 (Commencement) Order, 2019 and Non-Profit Organisations (Registration Application) (Amendment) Regulations, 2019 will come into effect on Monday, 1 April, according to the financial services ministry.

The Beneficial Ownership (Limited Liability Partnership) Regulations, 2019 will come into effect later this year.

The gazettal of NPO-related legislation facilitates the enactment of the NPO (Amendment) Law, 2018. This law was created to clarify the organisations that are in scope of the law and those that are exempt. It will also provide the registrar of NPOs with the power to periodically assess Cayman’s NPO sector in order to identify any potential jurisdictional vulnerabilities to terrorist financing activities, and allow for expedited processing of applications.

The amendment to the NPO regulations reduces fees for filing changes.

These pieces of legislation supplement the legal framework created by the Non-Profit Organisations Law, 2017, which formed part of the local preparations for the Caribbean Financial Action Task Force (CFATF) assessment. While charities in this jurisdiction are generally considered low-risk, the CFATF evaluation necessitated a local NPO registration process to gather empirical evidence on NPOs operating in the Cayman Islands to prove their risk is indeed minimal. 

In their report the task force found that while the authorities here believe that Cayman’s level of risk from terrorist financing is low, given the significant volume of funds passing through the jurisdiction, there is an inherent vulnerability to it and charitable entities, as well as businesses, were noted as structures that can be exploited.

“The Non-Profit Organisation (NPO) sector requires oversight and, in an effort to improve this sector’s understanding of the risks, the authorities have been interacting and engaging through outreach,” the report stated.

Meanwhile, the Beneficial Ownership (Limited Liability Partnership) Regulations, 2019 were approved by Cabinet in preparation for the commencement of the Limited Liability Partnership (LLP) Law later this year. The regulations will require LLPs to file their beneficial ownership information with the General Registry in accordance with the current filings being done by limited liability and other types of companies.

See the legislation in the CNS Library, under ‘Charities and non-profit organisations’

See the CFATF report in the CNS Library here

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Category: Business, Financial Services, Local News

Comments (9)

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  1. Anonymous says:

    It is illegal to have a Charity from the states not registered in the states nor here?
    …only for some folks, depends who ‘ya know?

  2. Anonymous says:

    Has there ever been any case where a Cayman charity was used for terrorist financing? If not why create useless paperwork and fees?

    • Anonymous says:

      Maybe not, but how would you know if they did not get exposed? More worrying is NPO money not being used for the intended purpose, e.g. being used for personal expenses, etc.
      Annual accounts, signed off by every board member, should be required to continue to be an approved NPPO. These can be provided to and published by the relevant government authority.

    • Anonymous says:

      There are a few charities around here that pay their head people huge salaries. That needs to be looked into. Especially those that have relatives in govt pushing the charity at every corner.

  3. Anonymous says:

    Anonymous church donations gotta go!

    • Anonymous says:

      Biggest frauds in all of the land

    • Anonymous says:

      Just church needs to go

      • Anonymous says:

        Especially churches where only the Pastor has access to the account…

      • Anonymous says:

        6:12 Amen.
        Bogus in congregations, those who finds ways to curtail Tithing by forming Companies to hide their incomes.
        God fearing? Nah ~ they think God does not see ‘cause they know the Bible…knowing the Bible is not the same as living as a ‘Christian’. Thievery and lies make the Devil happy, not God.

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