More laws coming to tighten offshore regime

| 10/01/2020 | 34 Comments
Cayman News Service

(CNS): Financial Services Minister Tara Rivers is presenting another bundle of draft legislation to her colleagues in the Legislative Assembly to debate when it meets at the end of this month to help the jurisdiction meet the findings of last year’s FATF review. The draft bills deal with changes to the oversight of open-ended and closed-ended funds and address the controversial issue of beneficial ownership.

Officials said the five pieces of legislation are intended to modernise regulation and provide additional surety and transparency for investors and managers of Cayman-based funds and clarify the definition of beneficial owner and corporate service provider responsibilities. Officials said that the legislative changes will also improve best market practices as well as enhancing anti-money laundering and other key regulatory standards.

The Private Funds Bill, 2020 and the Mutual Funds (Amendment) Bill, 2020 seek to adopt sensible and commercially responsive regulation that has been the mainstay of the Cayman Islands open-ended funds regime, and seek to maintain its position as the preeminent jurisdiction for investment funds, officials said in a release about the new bills.

“The publication of the bills signifies the government’s intention to update the investment funds framework while staying mindful of industry realities,” the financial services ministry stated. “The goal is to ensure that the Cayman Islands continue to effectively compete at a high level, allowing for innovation and market development, based on a regulatory framework that effectively supervises the industry and strengthens investor confidence in Cayman Islands fund vehicles.”

The Companies (Amendment) Bill, 2020, the Limited Liability Companies (Amendment) Bill, 2020 and the Limited Liability Partnership (Amendment) Bill, 2020 are expected to further refine and improve the jurisdiction’s beneficial ownership regime.

Drafted in consultation with the working group comprising Cayman-based funds professionals, including accounting, audit, administration, governance and legal firms and associations, the industry has provided input on all the laws. The Cayman Islands Monetary Authority (CIMA) was also consulted.

The Mutual Funds Bill would require those funds not previously covered under the existing Mutual Funds Law, specifically those funds with 15 or fewer investors capable of appointing or removing the operators, to register with CIMA and be subject to regulation.

Under the Private Funds Bill, private funds would also need to register with CIMA and be subject to regulation. Specifically, the bill would require private funds to have appropriate and consistent internal procedures for the proper valuation of their assets. In keeping with what exists currently for mutual funds under the Mutual Funds Law, the Private Funds Bill would also require that a private fund be audited annually by a CIMA-approved auditor in accordance with international audit standards and have proper custodial and cash monitoring processes.

The bills dealing with beneficial owners and related corporate services also make changes to the exemptions and powers of the Registrar of Companies which, officials said, will strengthen the beneficial ownership regime here.

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Category: Business, Financial Services, Laws, Politics

Comments (34)

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  1. Anonymous says:

    They need to approve the Mangrove Species Conservation Plan, which would make unpermitted clearing of mangroves a National Conservation Law offence, as well as a Planning Law offence, and which the DoE could enforce instead of leaving punishment of unpermitted clearing of lands up to the Planning Department. The final approval has been submitted to Cabinet so why isn’t it being approved?

  2. Anonymous says:

    Strangely enough, we’ll be hard-pressed to fill a hypothesized 50 story residential tower with venture cap “private equity managers” that can no longer afford to move their emerging VC label to the Cayman Islands – unless they are running a couple hundred million+ AUM already and have graduated from that category. Alas, this later group are already busy living their best lives, with all the top percentile trappings: principal residences in the best urban neighbourhoods, with various club memberships, country homes, household staff, art collections, Netjets accounts, seasons tickets, ski chalets, vip medical care, private schools, and to which Cayman doesn’t really offer much except a downgrade in lifestyle, services, security, accommodation, shopping, and neighbours. What are we doing here? Do our “leaders” actually know where we fit into the world, and how limited our offering really is? Sometimes I really wonder.

  3. Anonymous says:

    The people of the Cayman Islands should be embarrassed and ashamed to be an accomplice to one of the biggest scams going. We profit off of a racket in which wealthy people and big companies pay little or no taxes but the poor and middle classes do. It’s immoral if not illegal, and we should demand to no longer take part in it.

    Our vocal and energetic Christian community might consider giving gay marriage a rest and devote some thought to this. Many of your fellow Christians are struggling if not suffering terribly in countries that are exploited by the worst kinds of people and companies—and we help by stashing away their cash for them.

    Think about it.

  4. Anonymous says:

    Cayman should transition out of this business of hiding money for foreigners’, dictators, and tax cheats/avoiders.

    There must be other ways to make a living.

    We could have become an ultra-desirable and expensive ecotourism destination, but clearly we don’t have the brains and foresight for that.


  5. Anonymous says:

    I supported the PPM in the last elections and although not completely happy with the coalition formed with Mckeeva, I continue to give my support to Alden and his team,

    However there are two MAJOR issues which I cannot support. One is the enhancement of the Port as presently put forward and second is this change in our legislation.

    These amendments will only serve to drive away more good and honest business from our shores which will go to other jurisdictions who are ready and willing to receive them. Alden and his Government MUST talk to the industry that is intimately involved and NOT just the audit firms who look at these things from a audit perspective. They only see things from their perspective. You have hard working honest working Caymanians with integrity working in the industry whose lives depend on this type of business. To close it down (which this legislation eventually will) is to close down the livelihood of these people.

    At times like these my support for Alden and his team wavers. And while I know that there will always be a balancing act I would prefer if he would stand up for the working class Caymanian and say NO to these people from outside our jurisdiction who are slowly but surely undermining our very existence.

    Remember Alden it is us who put you where you are. We put you there to serve us NOT rule us. Wake up and do the right thing. Say NO!

  6. Anonymous says:

    Just more pointless legislation that is unlikely to ever be enforced.

    • Anonymous says:

      I have an opinion about something I know nothing about … zzz…

      • Anonymous says:

        The CFATF Report described years of Suspicious Activity Reports that CIMA didn’t even follow up on. Years. So, commentator has empirical data that supports their conclusion, and you may not like that, but it’s spot-on nonetheless.

      • Anonymous says:

        …would that be an opinion about the Cayman Islands then uk clown?????

  7. Anonymous says:

    The title should be “Cayman continues to issue every piece of legislation forced on us by the EU with little or no resistance.”

    • Des says:

      “Local lawmakers mindlessly pass European legislation designed to eliminate the country from an overpriced market”

  8. Aubrey Stillwell says:

    If you build the cruise port and irritate the foreign investments, all you will have to do is figure out how to run the country on cruise ship visitors. The rest of us will be gone

  9. Say it like it is says:

    We are determined to kill the goose that laid the golden egg every year since 1967.

  10. Anonymous says:

    great, new Private Funds bill should provide the means for a few more funds lawyers to retire early, buy a vinyard and marry a model half their age

    • Anonymous says:

      Mmmm the accountants will benefit from this not the lawyers!

      • Anonymous says:

        Yes, the audit firms definitely will. It will mean more jobs in Cayman for professionals. Not a bad thing.

        • Anonymous says:

          Very interesting comment from Minister Rivers at the MSF update on Friday at the Ritz. When pressed Minister River admitted that the requirement for private funds to be audited was a “political” decision made by Cabinet. Interpret that as you wish.

      • Anonymous says:

        The lawyers will benefit from this as well as they process the CIMA registrations and by and large already act as the RO’s, which therefore means they have already been doing well out of the legislation in the last 3 years for FATCA/CRS, AML/KYC, the new Economic Substance requirements, and now the PFL along with amended MFL. The accounting firms have had a relatively small piece of the pie over recent years with minimal increase, if any, in work from the other legislation mentioned. This pie is necessary to ensure the Cayman FS industry remains robust, compliant with all necessary international standards and initiatives and contributes by far the largest percentage of GDP to the economy. Also other jurisdictions, such as Bermuda, are enacting similar legislation. They have to or they will gradually go out of business.

  11. Anonymous says:

    “Farewell – to the emerging and startup manager industry. It was nice to have you until now. We are sorry it got so expensive that you can no longer operate from here. Anti-competitive behaviours, here we come.”

    • Anonymous says:

      I’m guessing this was written by a young associate at one of the large law firms

      So….the new law basically requires filing audited FS with CIMA. And that is it. Nothing more.

      The ‘Oxbridge’ lawyers need to see the big picture.


    • BeaumontZodecloun says:

      The way I grew up, that was the optimal behaviour. “He’s such a hard-WORKING boy..”

      I acknowledge the little enterprises I’ve been involved in hardly compare to the hard-driving frontal boundary of investment funds and esoteric things like liquidity restrictions.

      I understand these schemes, but primarily trust .. a product for a price. Oldschool shyte, yo. ;o)

    • Anonymous says:

      Really? Having to register and annually provide audited accounts to CIMA is going to kill fund startups? Alarmist nonsense.

      Wait until the accounting firms start providing legal services (at more reasonable rates). Then Cayman law firms will have something to fear.

      • Anonymous says:

        hurry already

      • Anonymous says:

        Consider the startup manager targeting $5M in AUM, now being required to register. There are many new costs that did not figure, prior to this bill including: Least expensive auditor with Cayman office: ¬$15k (as opposed to potentially operating unaudited for the first 2-3 years), add CIMA annual fee ($4.268k), add 2xDRLL registrations ($1.6k) and now you have an additional expense carry of 0.42% of NAV each year. That is a huge new cost to the investors (or the manager, should it choose to absorb it). Fine for large funds, not fine for startups.

  12. Anonymous says:

    Please stop signing us up to laws specifically designed to kill our financial industry and/or any other financial industry that does not follow the punitive taxation and income re-distribution model.

  13. SSM345 says:

    11:59, your suggestion of “tax on off shore investments and holdings” would kill our offshore finance industry overnight, that’s the very reason why we have one in the first place….shall we kill the goose with the golden egg and then bank on the piers?

    Govt continues on an annual basis to raise fees for these services and if they keep doing it then we will lose that pillar, just ask BVI how its going at the moment with regards to their financial services revenue.

  14. Anonymous says:

    …and how will CFATF view the fact that there are (still) no enacted basic anti-corruption Standards for Cayman Islands lawmakers and their friends? Pretty dimly I expect.

    • Anonymous says:

      No it’s fine when a government does it. Look at the EU. No mercy for businesses that they judge to be anti-competitive but no hesitation in trying to put entire countries out of business to fund their bureaucrats pensions.

  15. Leaky Boat says:

    What about plugging the money & other hard assets laundering holes in the real estate and SEZ arenas or turn a blind eye as usual?

  16. Anonymous says:

    Financial Services Minister Tara River

    Cayman implementing laws to stop smaller laundering while keeping larger corporations laundering billions no problems.

    Yeah we need a specialized task force for money laundering in Cayman.

    How about a tax on off shore investments and holdings.

    Bring a tax to Cayman, duty on perishable and food is stupid and illogical.

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