From the initial draft of the Alternative Investment Fund
Managers Directive (AIFMD) back in April 2009, through to the
adoption of the AIFMD on 21 July 2011 and the long awaited
publication of the Level Two Regulations by the European Commission
in December 2012, the Cayman Islands has been preparing for the
impact of the AIFMD on its regulated funds regime. Working groups
composed of members of Cayman Islands Government, the Cayman
Islands Monetary Authority (CIMA) and the investment funds industry
have assisted in the development of a strategy for the Cayman
Islands in approaching the AIFMD.
The AIFMD provides a European Union (EU) framework for the
regulation and oversight of alternative investment fund managers.
Having been a major source of great uncertainty for several years,
the Level Two Regulations provide the basis for the implementation
of the AIFMD across Europe from July 2013.
Under the AIFMD certain conditions must be met by the Cayman
Islands to allow the marketing of Cayman Islands regulated funds
under the existing private placement regimes of EU member states
after July 2013. The framework for this is now in place,
The Cayman Islands is required to be in compliance with
standards promulgated by the Financial Action Task Force (FATF),
the inter-governmental body which promotes policies to combat money
laundering and terrorist financing. The Cayman Islands has achieved
this. In addition, the Cayman Islands Government announced on 15
March 2013 its intention to enter into an intergovernmental
agreement (IGA) with the United States for the implementation of
FATCA, and that it proposes to adopt the Model 1 form of IGA. Under
the Model 1 IGA, foreign financial institutions are required to
report certain information to the Cayman Islands Government, which
in turn will relay information to the IRS.
The Cayman Islands is required to enter into tax information
exchange agreements with EU member states. A number of these
agreements have already been signed, and the Cayman Islands
continues to negotiate with other EU member states.
The Cayman Islands legislature took a further step forward in
the ongoing process of preparing for the AIFMD on 15 March 2013,
announced on 25 March, by passing The Monetary Authority
(Amendment) Law, 2013. This will facilitate the marketing of Cayman
Islands regulated funds in the EU under the private placement
regimes of EU member states by allowing CIMA to enter into
memoranda of understanding with their counterpart regulatory
authorities in each EU member state using a model memorandum of
understanding agreed and developed by the European Securities
The Cayman Islands continues to demonstrate that, as a
jurisdiction, it is determined to take
the steps necessary for Cayman Islands regulated funds to
continue to market in Europe under the private placement regimes of
EU member states after July 2013.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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