update of October 2015 we summarised the provisions and
application of the Cayman Islands Monetary Authority's
("CIMA") Statement of Guidance on the
outsourcing of material functions by regulated entities (the
The Guidance applies to entities regulated by CIMA (with the
exception of regulated mutual funds, Excluded Persons under the
Securities Investment Business Law and private trust companies)
One of the key requirements under the Guidance is that CIMA
expects Regulated Entities to have assessed their outsourcing risk
management and to have addressed any deficiencies in outsourcing
policies and arrangements by September 2016.
Regulated Entities are also expected to carry out risk
assessments and reviews of their outsourcing arrangements at least
annually, and more frequently, subject to the level of risk or
materiality of the relevant outsourced functions.
We therefore expect an analysis of compliance with the Guidance
to be a focal point of CIMA inspections of Regulated Entities and
for CIMA to require remediation in cases of non-compliance.
Although stated as not being exhaustive or prescriptive, the
Guidance nevertheless prescribes minimum requirements both as
regards a Regulated Entity's governance and the contents of its
outsourcing agreements (whether or not they are with related
parties) and includes requirements which may not necessarily be
common in the course of outsourcing negotiations. For
instance, Regulated Entities are expected to ensure that their
delegate service providers maintain adequate insurance cover.
Maples and Calder's Regulatory & Financial Services team
is able to assist both with a review of a Regulated Entity's
outsourcing framework, policies and procedures and to update or
draft outsourcing agreements for the purpose of compliance with the
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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