Cayman Islands: The Cayman Islands Financial Services – Regulatory Framework

Last Updated: 18 February 2016
Article by Cindy Scotland

Prudent and robust regulation is central to the Cayman Islands being an international financial centre of repute. As the principal regulator for the financial services industry of the Cayman Islands, the Cayman Islands Monetary Authority (CIMA) takes its responsibilities very seriously. Part of the CIMA's strategic planning process for the period 2014-16 included the crafting of a new mission statement to reflect CIMA's evolving role, and the dynamic nature of the industry which it regulates.

CIMA's renewed mission is, "To protect and enhance the reputation of the Cayman Islands as an International Financial Centre by fully utilising a team of highly skilled professionals and current technology, to carry out appropriate, effective and efficient supervision and regulation in accordance with relevant international standards and by maintaining a stable currency, including the prudent management of the currency reserve."

In addition, CIMA developed its first vision statement to reflect its dedication to continuous improvement, which reads: "Committed to continually enhancing the Cayman Islands Monetary Authority's position as a financial services regulator of excellence, consistent with the jurisdiction's standing as a leading international financial centre."

The Regulatory Framework

There are several elements which make up the framework for CIMA's regulation and supervision of financial services, and its cooperation with fellow regulators. Among these elements are the relevant laws and regulations passed by the government of the Cayman Islands; the rules and statements of principle and of guidance issued by CIMA; the regulatory policies and procedures detailed in CIMA's Regulatory Handbook and other manuals; the memoranda of understandings (MOUs) undertaken by CIMA; and the international standards to which CIMA adheres. The relevant international standards are those set by the Basel Committee on Banking Supervision; the International Organisation of Securities Commissions (IOSCO); the International Association of Insurance Supervisors (IAIS); and the FATF's 40 Recommendations.

CIMA takes a combined rulesbased and risk-based approach to regulation and supervision of financial services. CIMA processes licence/registration applications and performs due diligence. CIMA's remit includes responsibility for registration, licensing and supervision of banks, money services businesses, cooperative and building societies, trusts, insurance business, companies management, corporate services, investment funds and securities services.

A major development which occurred since our last update for this publication is the coming into effect of the Directors Registration and Licensing Law (DRLL). Under this legislation, non-resident directors and Cayman Islands-based directors of entities regulated under the Mutual Funds Law are now required to be either registered or licensed with the Cayman Islands Monetary Authority. This requirement is also applicable to certain "excluded persons" under the Securities Investment Business Law.

The filings must be done electronically through CIMA's Director Gateway portal. This requirement is expected to improve data quality and significantly enhance the CIMA's ability to effectively carry out its mandate under the Monetary Authority Law.

Status of Cayman's Financial Services Industry

The Cayman Islands is home to 195 banking institutions. The jurisdiction is ranked fifth internationally based on the value of cross-border liabilities booked from the Cayman Islands and sixth in terms of cross-border assets booked.

With regard to captive insurance, the Cayman Islands is the second largest 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 31 December 2014, the total number of regulated funds under CIMA's supervision was 11,010. It comprised 7,835 registered funds; 2,685 master funds; 386 administered funds; and 104 licensed funds. Such numbers indicate the strength of the hedge funds industry and also the confidence the global community has in the jurisdiction. It is therefore abundantly clear why the Cayman Islands was named the Best Hedge Funds Services Jurisdiction at the Hedgeweek 2015 Awards in London.

There were 137 trust services companies operating in the jurisdiction at 31 December 2014, thus maintaining the country's standing as a leading domicile for the provision of these services.

International Cooperation

The Cayman Islands Monetary Authority is very cognisant of the fact that the jurisdiction's thriving financial services industry exists as part of a global system. Therefore, every effort is made to increase international cooperation and collaboration, without compromising the rights to confidentiality of legitimate clients in order to ensure compliance with financial services best practice.

CIMA is represented in various bodies, including: the Group of International Financial Centre Supervisors (GIFCS) (formerly the Offshore Group of Banking Supervisors (OGBS)); Caribbean Group of Banking Supervisors (CGBS); Association of Supervisors of Banks of the Americas (ASBA); International Association of Insurance Supervisors (IAIS); Group of International Insurance Centre Supervisors (GIICS); International Organisation of Securities Commissions (IOSCO); and the Financial Stability Board's Regional Consultative Group for the Americas.

CIMA keeps abreast of relevant legislation in other jurisdictions which has an impact, or potential impact, on the Cayman Islands. This is done with a view to reassessing the adequacy of the jurisdiction's regulatory regime. For example, the Alternative Investment Fund Managers Directive (AIFMD), which was implemented across Europe on 22 July 2013. 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 funds and pension funds and their managers.

In order to ensure that Cayman domiciled funds continue to be marketed in the European Union (EU) under the AIFMD, CIMA has entered into MOUs with 27 EU countries and the Monetary Authority Law was amended in March 2013, to give CIMA additional powers to provide assistance to EU regulators pursuant to AIFMD requirements.

CIMA is looking at the suitability of the current regulatory framework in light of the potential extension of the passport regime to third countries (countries outside the EU – including Cayman) by the European Union during the course of 2015. In August 2014, the Authority's board commissioned the establishment of a working group to examine how the regulatory framework for funds and fund managers can be adapted to meet the needs of funds that would like to market their units in the European Union under a potential passporting regime. The working group met in December 2014 through February 2015 and examined potential amendments to the Mutual Funds Law and the Securities Investments Business Law, including the creation of new regulations.

In January 2015, CIMA issued two surveys to solicit the views of the financial services industry on matters relating to the AIFMD. One survey was intended to determine the needs and views of industry relating to the impact of the delegation provisions of the AIFMD on the Cayman Islands funds industry. This feedback will help CIMA to assess whether there is a need to strengthen the regime for fund managers that are delegates of European Union managers.

The other survey looked at depositaries and managers. The AIFMD requires a fund manager to appoint a depositary for each fund it manages. There is currently no regulatory regime for depositaries in the Cayman Islands, and any such regime implemented in the jurisdiction must meet the requirements for depositaries contained in the AIFMD.


CIMA is committed to playing its part in helping to ensure the continued success of the Cayman Islands financial services industry. A significant development in the first part of 2015 was the establishment of a dedicated Onsite Inspection Unit. This Unit is focussing primarily on high-risk entities and developing best practices and standards for onsite inspections across all regulatory divisions.

Another component of CIMA's role is continued enhancement of our processes to make it easier for industry stakeholders to do business, primarily through the use of technology. CIMA launched a new online portal in January 2015, which enables registered companies and licensees to submit applications and make change requests electronically. The system is called Regulatory Enhanced Electronic Forms Submission (REEFS).

The Cayman Islands – with its modern infrastructure; legal and financial services providers with strong multinational experience and capabilities; efficient regulatory body with an outstanding, proven track record – is well known as an attractive domicile for business. In fact, the Cayman Islands regularly receives high ratings and ranks well in the Global Financial Centres Index (GFCI), placing 39th in the GFCI 17 publication, which was released in March 2015.

Working together with government and industry, CIMA has been an active participant in the National Risk Assessment (NRA) currently being conducted for the Cayman Islands. This NRA will assist in identifying any deficiencies, which exist in how the jurisdiction identifies, assesses and understands money laundering and terrorist financing risks, and contribute to efforts to maintaining Cayman as a leading international financial centre.

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.

Originally published in Cayman Finance Magazine, 2015-2016, Issue 2

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”

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
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 you may opt out by clicking here

    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.

    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.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    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.

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