Cayman Islands: Cayman Islands Financial Account Reporting For Investment Funds – Preparing For The CRS

On 29 October 2014, the government of the Cayman Islands signed the OECD sponsored Multilateral Competent Authority Agreement and made a commitment to implement the new common reporting standard on automatic exchange of information (CRS).

The CRS is the standard for automatic exchange of financial account information developed by the OECD which provides for systematic and periodic automatic exchange between governments of such information reported by financial institutions, such as Cayman Islands investment funds (Reporting FIs). As at the date of this alert, more than 90 countries (for the list click here) have committed to its implementation.

The Cayman Islands government recently enacted regulations to implement the CRS into Cayman Islands law (CRS Regulations) which will come into force on 1 January 2016 (click here for the full text of the CRS Regulations).

Under the CRS Regulations, Cayman Islands Reporting FIs must report information on the holders of 'Reportable Accounts' which are tax resident in 'Reportable Jurisdictions' to the Cayman Islands Department of International Tax Co-operation (the DITC) and that information will then be sent to the home tax jurisdiction of the account holders.

What should managers, operators and promoters of Cayman Islands investment funds be doing right now to comply with CRS?

Cayman Islands Reporting FIs should be adding compliance with the CRS Regulations to their existing compliance programs for FATCA and 'UK FATCA' (together, Cayman FATCA). For existing and new investment funds, this will include looking at subscription documentation to ensure that the account opening procedures for new investors allow the fund to harvest the information or obtain self-certifications necessary to identify subscribers' tax residency and report on an ongoing basis.

Fortunately, there are no other additional registration requirements provided that the Reporting FI is already compliant with Cayman FATCA and has obtained a GIIN and registered with the DITC on the Cayman Automatic Exchange of Information online portal (AEOI Portal).

It is important to note that some categories of Non-Reporting FIs under Cayman FATCA will be Reporting FIs under CRS and, as such, they will need to consider the impact of the CRS Regulations and may need to put in place compliance programs and register with the AEOI Portal.

During the course of 2016 and 2017, these procedures will need to be expanded to carry out due diligence on Pre-Existing Entity Accounts and Pre-Existing Individual Accounts.

What are the rules for Pre-Existing Accounts?

Pre-Existing Accounts are those that are in place as of 31 December 2015. In practice, for investment funds, this means that, generally speaking, if an investor is invested in the fund on 31 December 2015 and remains invested on 1 January 2016, that account is a Pre-Existing Account.

Unfortunately for investment funds, all Pre-Existing Individual Accounts must be reviewed irrespective of investment size. There is, however, a financial minimum threshold for Pre-Existing Entity Accounts (US$250,000) which means that accounts held by entities under that value need not be reviewed at all unless they later become higher value accounts. However, Reporting FIs can voluntarily elect to dispense with this threshold and review all accounts.

The importance of designating accounts as Pre-Existing or New is that FIs have a grace period within which they are able to carry out due diligence. The relevant timing deadlines are set out at the end of this note.

What about New Accounts?

Any account opened on or after 1 January 2016 will be a New Account under the CRS Regulations. In practice, this means any new subscriber to an investment fund admitted to the fund on or after 1 January 2016 will hold a New Account. As noted above, additional subscriptions to a Pre-Existing Account will not generally change the status of the account to a New Account.

CRS is similar to Cayman FATCA in that the Reporting FI must obtain self-certification forms regarding tax residence from the account holder at or around the time that the account is opened and confirm the reasonableness of the self-certification based on a review of the documentation provided by the investor, including any AML/KYC documentation. For example, if the self-certification form confirms that the individual is not an Austrian taxable person, but they provide a French contact address, this should be investigated before the account is classified.

For New Entity Accounts, the Reporting FI must do the following and then classify the account accordingly:

  • determine the residence of the entity for tax purposes;
  • determine if the entity is a Reportable Person (among the carve outs are any entities that themselves are Financial Institutions, so custodians which are Financial Institutions in the Reportable Jurisdictions are not Reportable Persons);
  • if the entity is a Reportable Person, determine whether it is an Active or Passive NFE (non-financial entity) (the definitions are complex but broadly Active NFEs are operating entities and Passive NFEs are investment holding vehicles); and
  • determine the residence of any natural person(s) exercising control over a Passive NFE.

In order to be able to classify New Accounts appropriately, investment managers and funds should now be updating subscription packages to make sure that in addition to any IRS Form W8 or W9 form that may already have been requested, the subscription package contains a self-certification form which covers both the UK FATCA and the CRS.

There is a Cayman Islands working group which is considering updates to the existing guidance notes issued by the DITC (Guidance Notes). However, it is unlikely that any new approved self-certification forms will be available soon. As a result, relevant questions must be included in the subscriber questionnaires that are contained in subscription packages to obtain the correct information or existing self-certification forms should be updated.

Until the Guidance Notes are updated, the industry is being advised to rely on all official publications by the OECD which can be found here.

What if a Pre-Existing Account is closed before the due diligence and reporting is complete?

If a Pre-Existing Reportable Account is closed after 1 January 2016 but before the due diligence work has been completed, it must be included in any subsequent filing with the DITC.

What if the FI has no Reportable Accounts?

If the Reporting FI has no Reportable Accounts, the CRS Regulations state that no return is required.

This is the same as the position under the remainder of Cayman FATCA. So-called 'nil returns' are not required.

When do filings with the DITC need to be made for the CRS?

2016 is the first reporting year for the CRS and, subject to the due diligence deadlines noted below, reports should be submitted to the DITC on or before 31 May 2017.

Are there any material differences between FATCA, UK FATCA and the CRS?

On the whole the manner in which the CRS operates is broadly similar to both FATCA and UK FATCA. In fact, since the UK is a signatory to the CRS, UK FATCA is likely to fall away eventually.

One key difference between FATCA on the one hand, and CRS and UK FATCA on the other, is that FATCA includes provisions requiring US withholding agents to withhold 30 per cent on certain US source payments made to FIs which are deemed non-compliant by the IRS whereas CRS and UK FATCA have no equivalent sanctions.

Another important difference is with regard to investment managers/advisers. Whereas under FATCA and UK FATCA, Cayman Islands investment managers/advisers were generally classified as Non-Reporting FIs, and therefore not required to make any filings with the IRS or the DITC, under the CRS an investment manager/adviser will be a Reporting FI. However, such a Reporting FI is not likely to have any 'Financial Accounts' and therefore no 'Reportable Accounts' in respect of which it must make a report. This will always depend on an analysis of the structure of the relevant investment manager/adviser.

As a result, this does technically require investment managers/advisers to appoint a principal point of contact and to make a registration on the AEOI Portal as a Reporting FI. The content of any report they make would depend on their structure, but generally there would be no reporting if there are no Reportable Accounts. This may change in practice when the updated DITC Guidance Notes are released, but this is the current situation.

What will happen to UK FATCA and FATCA now that the CRS is in place?

The UK is a part of the 'early adopter' group of countries, including the Cayman Islands, Bermuda and the British Virgin Islands, which has committed to the first exchanges of information under the CRS by 2017. As noted above, UK FATCA is likely to fall away eventually.

As for the US, although it is a member of the OECD, it is expected that it will retain FATCA and not become a signatory to the CRS, at least in the short to medium term.

Current Key Dates for Cayman Reporting FIs

Date Action
1 January 2016 CRS Regulations in force. All Financial Accounts opened on or after this date are New Accounts and Cayman Reporting FIs must classify account holders.
31 December 2016 Due diligence reviews of Pre-Existing High-Value Individual Accounts to be completed.
31 March 2017 Deadline for Cayman Reporting FIs to notify their CRS reporting status to the DITC on the AEOI Portal.
31 May 2017 Deadline for first reporting on the AEOI Portal in respect of Reportable Accounts.
30 September 2017 The DITC will exchange information on New Accounts and Pre-Existing Individual High-Value Accounts with Participating Jurisdictions.
31 December 2017 Due diligence reviews for identifying Pre-Existing Individual Low-Value Accounts and for Pre-Existing Entity Accounts to be completed.

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

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

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 Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.