In recent months, the Cayman Islands government has made amendments and introduced legislation to stimulate and improve the industry, while allowing industry to better serve its clients.
In April 2015, my Ministry passed three bills through the Legislative Assembly that will broaden the scope for business in the aviation sector. The International Interests in Mobile Equipment (Cape Town Convention) Law 2015; The Civil Aviation Authority (Amendment) Law 2015; and The Bills of Sale (Amendment) Law 2015 are intended to increase the international prestige of Cayman's aviation sector and attract additional aircraft finance business to Cayman.
The International Interests in Mobile Equipment (Cape Town Convention) Law 2015 seeks to enable the extension of the Cape Town Convention to the Cayman Islands. The Cape Town Convention is an international treaty that aims to standardise transactions involving movable property, such as aircraft, which often utilise Cayman.
The Civil Aviation Authority (Amendment) Law 2015 intends to add the registration of aircraft mortgages as a function of the Civil Aviation Authority, which that regulatory body currently deals with on a day-to-day basis. However, for historical reasons, this function is presently governed under a UK statutory instrument.
Also in April, government passed The Directors (Registration and Licensing) (Amendment) Law 2015. Although it is a minor change, the legislation adds an additional overseas regulatory body to the list of foreign authorities in the Schedule to the Directors Registration and Licensing Law, 2014 as well as clarifies the section regarding appeals to the Grand Court.
This legislation complements several major laws or amendments that were enacted in 2014, including the Contracts (Rights of Third Parties) Law; the Mutual Funds Law; and the wholesale revision of our Exempted Limited Partnerships Law, which provides a product that better manages the increasing complexity of transactions undertaken in Cayman.
Within the last fiscal year, it should also be noted that our jurisdiction witnessed the introduction of regulations under our Insurance Law to allow for portfolio insurance companies, or PICs. Available for use by the international insurance market, this new product ranks with other jurisdictions, including the Delaware Series LLC.
Developed in conjunction with the Cayman Islands Monetary Authority (CIMA), our financial services industry regulator, we believe PICs offer better value for global captive sponsors and their consultants when considering a cell company structure.
PICs have been structured to achieve all the benefits of an incorporated cell company (ICC) and the Delaware Series LLC. However in addition, PICs operate squarely within fundamental and well-understood principles of corporate law, and do not involve the highly creative and untested jurisprudence involved in an ICC. Moreover, as an extension of our existing segregated portfolio company regime, as opposed to the creation of standalone legislation, PICs have the dual benefit of being as robust as ICCs, while being more efficient and cost-effective.
In addition to these laws, Cayman is modernising its intellectual property regime, by enhancing copyrights, trade marks and patents.
Our improved IP framework is intended to position technology as another pillar of the Cayman economy. Potential investors will have the added security provided by stronger IP protection to safeguard their current works, and to engage in either the development of new business or the relocation of businesses to Cayman.
We achieved an important step when the UK extended its 1988 Copyright Act to Cayman, with the UK Privy Council passing the Copyright (Cayman Islands) Order 2015 in March. The 1988 Act revokes the extension of the UK's 1956 Copyright Act to Cayman. The Order will come into force in the next fiscal year, after a public education campaign has been conducted and necessary arrangements made for local implementation.
With trade marks, we plan to introduce local registration by the second half of 2015, which will make this protection more accessible to local individuals and companies. We are also improving the ability of local trade mark holders to extend rights internationally, through several international treaties and conventions.
With patents, minor updates are currently planned to existing legislation. Our focus is on becoming part of several international treaties and conventions that will assist in securing protection internationally.
Legislatively, we plan to continue developing products that will maintain and strengthen Cayman's position as the premier financial services jurisdiction. In order to deliver total value for clients, the operations which underpin our legislation must be exceptionally strong. With that, Cayman has made two significant operational improvements in technology.
First, feedback from industry has been overwhelmingly positive regarding the Cayman Islands Online Registry Information Service, or CORIS. Subscribers to CORIS have the benefit of tracking their submissions and easily retrieving documents, but perhaps the biggest benefit to industry is that by going paperless, our Companies Registry has significantly reduced turnaround time.
Instead of taking three to five days to register a company, regular incorporations now take fewer than 48 hours through CORIS. An expedited service is also available within four hours, compared to the previous time of 24 hours.
In order to continue to provide a more robust platform for service providers, the next phase of CORIS is now being developed. We will share the full details later this year, but in brief it is a portal platform that will revolutionise access and delivery of information to clients of the jurisdiction and will even allow information in relation to non- Cayman Islands companies in client portfolios to be maintained in the client's secure portal platform and accessed 24/7.
Over at CIMA, the first phase of the Regulatory Enhanced Electronic Forms Submission system, known as REEFS, is now being piloted. CIMA officials expect the online system will allow their analysts to devote more time to financial oversight and review.
Phase 1 of REEFS, which was launched in January 2015, focuses on the fiduciary and insurance divisions. Once it goes fully live, REEFS will allow industry to prepare and submit financial filings; facilitate new applications and registrations; and submit any changes to existing licencee information already on file. The next phase of REEFS, which will focus on both the banking, and investments and securities divisions, will roll out later this year.
In addition to legislation and operations, Cayman continues to be engaged in the exchange of information (EOI) for tax purposes. In March 2015, we announced the opening of our portal for automatic exchange of information (AEOI), which completes our process for building an AEOI compliance framework.
The portal enables Cayman financial institutions to comply with their reporting obligations under domestic law, and in accordance with intergovernmental agreements including US FATCA; and it permits the secure transmission of the reported information, direct by the Cayman Tax Information Authority to the US IRS. Moreover, the portal positions us to respond to future global AEOI initiatives.
The portal opening is another indicator of the strength of Cayman's EOI position, which is based on our consistent global engagement, spanning decades, in these matters. Our extensive network now includes nearly 100 EOI relationships, all of which are in line with the global standard. This figure includes partners covered by the OECD Multilateral Convention; and Cayman's own 35 bilateral agreements.
Cayman is a member of the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes, which is the largest tax body in the world, with 127 member countries. We sit on the Global Forum's 19-member Steering Group, which prepares and guides the Global Forum's work; and we are one of the 30 members, and one of the four vice-chairs, of the Global Forum's Peer Review Group, which carries out extensive Peer Reviews to evaluate the tax information exchange regimes of OECD and non-OECD countries.
In addition to the Global Forum, Cayman's engagement in international regulatory initiatives includes our participation since 2005 in the EU Savings Directive; and our membership through CIMA in the Offshore Group of Banking Supervisors; Working Group on Cross Border Banking; Caribbean Group of Banking Supervisors; and the Association of Supervisors of Banks of the Americas (ASBA), among others.
Cayman's legislative and regulatory framework makes it absolutely clear that Cayman is a progressive country. We have a demonstrably strong track record of thinking globally and acting locally, in response to international financial services initiatives.
We are applying this same process to the subject of beneficial ownership. Following a period of international public consultation, on 30 December last year the Cayman Islands government published a report stating that Cayman will continue with our current method of providing beneficial ownership information to law enforcement, tax and regulatory authorities, through licenses and regulated corporate service providers.
Our stance is validated by the fact that Cayman's regime is firmly in line with the G20's High-Level Principles on Beneficial Ownership Transparency, which were issued in November 2014; in other words, we align with principles that the G20 countries themselves uphold. Cayman's current system also is consistent with the global standard, as defined in the Financial Action Task Force Recommendations.
We conclude our report by stating that in light of evolving, current international discussions, we will make further improvements to our financial services regime. As such, Cayman has identified specific steps – including enhancing the accuracy, accessibility, availability and monitoring and enforcement of ownership information – that will further strengthen our beneficial ownership framework.
In Cayman, we appreciate our Islands are recognised as a worldclass international financial centre because of our strong and sustainable infrastructure. With our recent amendments and new legislation; and our continuing engagement and adherence to global regulatory standards, we will maintain our strength and attractiveness for clients, both now and in the future.
Originally published in Cayman Finance Magazine, 2015-2016, Issue 2
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