Cayman Islands: The Cayman Islands Financial Services Regulatory Framework

The Cayman Islands and CIMA actively strive to increase international cooperation and collaboration, without compromising the rights to confidentiality of legitimate clients.

Introduction

The Cayman Islands Monetary Authority (CIMA) is the principal regulator for the financial services industry of the Cayman Islands. CIMA's mission is to provide appropriate, responsive, cost-effective and efficient supervision, in order to enhance the economic wealth and reputation of the Cayman Islands by fostering a thriving and growing, competitive and internationally recognised financial services industry. Maintenance of a stable currency is also an important aspect of CIMA's mission.

The Regulatory Framework

The framework for the authority's regulation and supervision of financial services, and for its international cooperation, consists of several elements. These include the applicable laws and regulations passed by the Government of the Cayman Islands; the rules and statements of principle and of guidance issued by the authority; the regulatory policies and procedures detailed in the Regulatory Handbook and other manuals; the cross- border agreements undertaken by the authority, and the international standards to which CIMA adheres.

The authority has responsibility for registration, licensing and supervision of banks, money-services businesses, cooperative and building societies, trusts, insurance-companies management, corporate services, investment funds and securities services.

Home to 221 banking institutions, the Cayman Islands is ranked fourth internationally and sixth in terms of cross-border assets booked.

The Cayman Islands is the second-largest captive insurance jurisdiction in the world, the leading jurisdiction for healthcare captives, and a leading jurisdiction for catastrophe bonds.

The Cayman Islands also continues to be the premier jurisdiction of choice for fund domiciliation. As at 30 September 2013, the total number of regulated funds under CIMA's supervision was 11,343. It comprised 8,239 registered funds; 2,587 master funds; 404 administered funds; and 113 licenced funds.

At 31 December 2013, there were 385 trust-services companies operating in the jurisdiction, maintaining the country as a leading domicile for the provision of these services.

This thriving financial services industry exists as part of a global system and, as such, the Cayman Islands and CIMA actively strive to increase international cooperation and collaboration, without compromising the rights to confidentiality of legitimate clients. Recent legislative and regulatory initiatives in the United States and Europe are of particular relevance to this jurisdiction.

FATCA

The US Foreign Account Tax Compliance Act (FATCA), aimed at ensuring the reporting of foreign financial assets by US citizens and entities, is naturally significant for a jurisdiction with numerous branches, primarily from the US.

FATCA applies to reporting by US taxpayers about certain foreign financial accounts and offshore assets; and by foreign financial institutions about financial accounts held by US taxpayers, or foreign entities in which US taxpayers hold a substantial ownership interest.

In this regard, the Cayman Islands Government has signed a Model 1B inter-governmental agreement with the US. Foreign financial institutions in the Cayman Islands will now be required to report tax information about US account holders directly to the Cayman Islands Tax Information Authority, the only channel in the Cayman Islands for the provision of tax-related information to other governments.

A similar agreement for tax- information exchange has been signed between the governments of the Cayman Islands and the United Kingdom.

AIFMD

The Alternative Investment Fund Managers Directive (AIFMD), which was implemented across Europe on 22 July 2013, has also been the focus of sustained effort on the part of the authority. This directive is aimed at bringing managers of alternative investment funds, such as hedge funds and private-equity funds managed or marketed in Europe, under similar regulatory arrangements as mutual and pension funds and their managers.

CIMA recently signed memoranda of understanding (MOUs) with counterparts in 27 European countries to permit the continued marketing of Cayman-domiciled funds in Europe until at least 2015. Discussions are ongoing with regulators in other European jurisdictions with a view to executing similar MOUs. These MOUs allow for the exchange of information, cross-border on-site visits and mutual assistance in the enforcement of supervisory laws in the respective countries. In ongoing dialogue with the remaining regulators, CIMA will address other areas of the AIFMD and analyse future opportunities for the Cayman Islands. The authority is working on charting the way forward past 2015 when the passporting rules could come into effect.

Conclusion

CIMA remains committed to helping the financial services industry of the Cayman Islands continue to be a leading global player. As part of this commitment, we are expanding our use of technology, and a number of initiatives in this regard are currently in development, some at an advanced stage.

A director-details portal is being developed to improve corporate governance by requiring all directors appointed to a fund to annually update their personal details along with any specific governance requirements. This is expected to be implemented in the near future.

The authority is committed to improving mutual-fund registration, administration and reporting, as well as enhancing corporate governance. CIMA is currently evaluating proposals to completely revamp our online presence with the goal of eventually eliminating most paper- based transactions between the funds (including auditors, directors and registered offices) and CIMA. An option to permit online payments with escrow accounting, and even credit cards, is under active development.

We continue to work with international standards-setting bodies to ensure compliance with financial services best practice. Another ongoing initiative being undertaken by the authority is a review of corporate-governance standards across all sectors.

Modern infrastructure, telecommunications and political stability; legal- and financial services providers with strong multinational experience and capabilities; a pragmatic, constructive and efficient regulatory body with an outstanding, proven track record; and a sophisticated business environment which consistently maintains strong public and private sector partnerships, allow the Cayman Islands to retain its position as a leading international financial centre and an attractive domicile for business.

About the Author

Cindy Scotland is the Managing Director of the Cayman Islands Monetary Authority. She represents the jurisdiction on all regulatory matters with other international bodies including the Group of International Financial Centres Supervisors, the International Organisation of Securities Commissions, the International Association of Insurance, and the Financial Stability Board Regional Consultative Group.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Maples and Calder
Cayman Finance
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Maples and Calder
Cayman Finance
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions