The Cayman Islands Tax Information Authority
("Cayman TIA") issued the first official
version of the Cayman Islands FATCA Guidance Notes (the
"Guidance Notes") on 22 July 2014. A
copy of the Industry Advisory and the Guidance Notes can be found
Defined terms and abbreviations not otherwise described herein
have the same meaning given to them in our prior updates.
The Guidance Notes have been prepared over the past six months
by the Working Group which was constituted from members of the
private and public sector, and included Maples and Calder. The
Guidance Notes provide further explanation in relation to
principles underlying the intergovernmental agreements between the
Cayman Islands and the US and UK (the
"IGA's"), in addition to the Tax
Information Authority (International Tax Compliance) (United States
of America) Regulations, 2014 and the Tax Information Authority
(International Tax Compliance) (United Kingdom) Regulations, 2014
(collectively, the "Regulations") issued
on 4 July 2014, which provide legal obligations in relation to
FATCA as a matter of Cayman Islands law.
Copies of the US and UK FATCA Regulations can be found here:
Although we shall be issuing more comprehensive updates in
relation to key aspects of the Regulations and Guidance Notes over
the coming weeks, we note the following important points:
The Regulations and Guidance Notes assist Cayman Islands
entities in determining their status as either a Financial
Institution ("FI") or a Non-Financial
Foreign Entity ("NFFE").
The Regulations set out the fundamental obligations on a
Financial Institution in relation to: (i) registration with the US
IRS (for the US Regulations); (ii) notification of status to the
Cayman TIA, by 31 March of the first year of reporting; (iii)
identification of reportable financial accounts; (iv) initial and
ongoing due diligence requirements, including timeframes; and (v)
reporting of financial accounts by 31 May annually.
The Regulations also provide the Cayman TIA, as the competent
authority, with appropriate enforcement powers including the
ability to compel disclosure of information and to inspect
The Regulations also provide penalties for offences and
non-compliance, including vicarious liability provisions for
directors, officers etc.
The Guidance Notes expand on each of these areas while also
addressing the approach under both the US and UK FATCA regimes, as
well as the OECD Common Reporting Standards (for certain
The Guidance Notes particularly focus on the classification of,
and distinction between, FIs and NFFEs, Reporting FIs and
Non-Reporting FIs, as well as Registered Deemed Compliant and
Certified Deemed Compliant entities.
The Guidance Notes import certain defined terms and concepts
available under the US FATCA Regulations, including Owner
Documented FIs and Limited Life Debt Investment Entities.
For Investment Entities, the Guidance Notes clarify the use of
the exemptions for Collective Investment Vehicle, Sponsored
Investment Entities and Sponsored Closely Held Investment Vehicles,
as well as more generally for Trustee Documented Trusts.
The Guidance Notes provide comprehensive explanation of the due
diligence procedural obligations for pre-existing and new
As noted in the Industry Advisory, the Guidance Notes (and to a
certain extent the Regulations) are dynamic and will be subject to
ongoing review, with the Working Group continuing to meet to assess
further amendments with a view to reissuing a second version of the
Guidance by Q4 2014.
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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