Cayman Islands: Policy Update

When I consider the body of work accomplished by the Ministry of Financial Services ("the Ministry"), and the full slate of activity that we are preparing for the coming fiscal years, three words repeatedly come to mind: Energy. Vision. Results.

This is exactly what's needed in today's context of global financial services, and this is exactly what the Government, through the work of my Ministry, intends to continue delivering for our financial services industry, and for our jurisdiction.

Cayman Finance, as a leading industry association in our Islands, has an important role in this success as it provides valuable input to the Ministry via an appropriate, robust consultative process. When prudent to do so our industry regulator – the Cayman Islands Monetary Authority (CIMA) – also participates in this process.

THE VALUE OF THIS APPROACH IS EVIDENT IN RECENT COMMERCIAL AND REGULATORY LEGISLATION

Commercially, the Ministry oversaw the passage of The Limited Liability Partnership Law; The Foundation Companies Law; and The Trusts (Amendment) Law, all of which are important to retaining this jurisdiction's competitive edge in financial services. The Limited Liability Partnership Law (LLP), which is a new corporate vehicle for conducting business, is anticipated to commence in Q1 2018. The LLP is the equivalent of a partnership with separate legal personality that provides limited liability for its partners.

While the LLP may be used for a range of purposes, it is particularly attractive to professional providers such as legal and accounting firms. The law permits registration of new entities, conversion of existing general partnerships into LLPs and the continuation of foreign LLPs into Cayman. The Trusts (Amendment) Law resolves technical issues in the current legislation, while also extending certain statutory powers of trustees that would normally be granted under the terms of a trust deed. The Foundation Companies Law is a welcome complement to legal structures available in Cayman. Similar to how a Cayman Islands limited liability company (which is a variant of a company) is infused with features of a partnership; a foundation company is a variant of a company that blends certain key advantages of a trust in one vehicle.

Foundation companies can therefore be used in a wide variety of situations; including commercial and philanthropic. Foundation companies are, of course, subject to the same transparency, and anti-money laundering and combating the financing of terrorism provisions, as a company. This law has recently come into force and has already generated a fair amount of interest by some industry professionals.

Speaking of Cayman limited liability companies (LLCs), it is worth noting that this product, which was introduced under The Limited Liability Company Law in July 2016, continues to be very successful. As of 30 September 2017, 652 LLCs were registered, which translates to almost two LLCs being formed per business day since commencement.

Turning to regulatory legislation, the Ministry and other Government entities, including those who participate in Cayman's Anti-Money Laundering Steering Group, have been steadily preparing our Islands for the Caribbean Financial Action Task Force (CFATF) evaluation, which is to be held in December 2017.

Key legislation that was in place prior to the evaluation includes the updated Anti-Money Laundering Regulations, which better aligned Cayman's regime with the FATF's 40 Recommendations and best practices. The Monetary Authority (Amendment) Law, which is another central component to our regime, gives CIMA the power to impose administrative fines for noncompliance on persons (entities and individuals) subject to Cayman's regulatory laws (including CIMA rules) and the Anti-Money Laundering Regulations. It is also important to note that other legislative enhancements have been and will be brought forward by the Attorney General in relation to the upcoming CFATF assessment.

Importantly, Cayman also passed several pieces of beneficial ownership-related legislation, as significant accomplishments in our CFATF preparations. The legislation allowed Cayman to develop a system that further reduces the timeframe in which government, through legal mechanisms, shares information with competent authorities in other jurisdictions. The new system complements and enhances our already robust regime, which is based upon corporate service providers collecting, verifying, updating and maintaining beneficial ownership information. While a number of proposals were advanced, the option selected was one developed in consultation with Cayman Finance. I therefore particularly thank Cayman Finance for its participation in this process.

In all likelihood, Cayman's CFATF evaluation will be underway or just completed at the time this magazine is published. While our CFATF rating won't be publicly available until December 2018, the Ministry will continue throughout 2017 to develop policy, legislation and regulation that ensures our industry is founded upon and operates under a strong, effective, balanced regime. Strong jurisdictional ratings from global regulatory bodies undoubtedly bolster reputations, which in turn draws sound business and builds socioeconomic resiliency. For this reason, Cayman is proud of the largely compliant rating that we received this year from the OECD's Global Forum on Transparency and Exchange of Information for Tax Purposes.

We are particularly pleased that we maintained this rating in light of the Global Forum's strengthened terms of reference. Countries including Australia, Canada and Germany also received largely compliant ratings. We received this rating while engaging with the European Union in relation to their intention to develop a list of non-cooperative tax jurisdictions. Earlier this year the EU contacted more than 90 jurisdictions, including the Cayman Islands, and requested information on their respective tax regimes.

Our engagement with the EU has included written responses to their questionnaires; and the Premier, the Hon. Alden McLaughlin, and I led a Government delegation to Brussels in September 2017 to speak with EU officials and Permanent Representatives of EU Member States. During those discussions the EU decision makers recognised Cayman's commitment to tax transparency and our overall track record on international regulatory standards, including our commitment to the OECD's BEPS (base erosion and profit shifting) tax initiative, which the EU will consider as a factor in its listing process. They also considered our largely compliant Global Forum rating as a positive result.

We believe our engagement – which includes two previous visits to Brussels – will help the EU have a greater understanding of the Cayman Islands, especially ahead of their decision in relation to their list. However, while providing technical input regarding our regime was necessary as part of the EU's process, we are aware that the ultimate decision will be political. We trust that the decision makers will draw on this information and understanding in making their determination. Engagement has also improved understanding in the US. While I was in Brussels, other members of the Ministry team were in Washington, DC, to discuss US tax and financial services reform with key Congressional staff members and advisors. Both tax and financial services reform are of great importance to the Cayman Islands, again from a reputational and business development standpoint. Based upon feedback, our message that Cayman is a tax-neutral, well-regulated financial services centre with world-class professional services firms is resonating in the US. Assisting us with our engagement efforts are two venerable law firms: Pillsbury Winthrop Shaw Pittman LLP, and Baker Botts LLP.

Based on all of the above, clearly the Government and the Ministry have demonstrated energy and vision in fulfilling our responsibilities for the financial services industry, and we recognise that our ability to fulfil this responsibility is supported by the energy and vision that also characterises our financial services industry. As Minister I thank the members of industry, as well as CIMA, for your valuable participation and input that helps to shape Government's actions. I noted that results also characterise the Ministry's body of work, and I am proud of financial services' longstanding contribution to the positive results of Cayman's overall economic performance. For example, according to Government's 2016 annual economic report the 'financing and insurance services' sector accounted for approximately 40.5 percent of the country's Gross Domestic Product.1

To provide other economic statistics, it's noteworthy that Cayman's central government debt fell from about $559.9 million three years ago, to $483.9 million as at the end of 2016. By December 31, 2020, under current plans, debt will be further reduced to $221 million. The unemployment rate, meanwhile, fell from 6.2% in 2012 to 4.1% in spring 2017. It is forecast that unemployment will remain below 4.0% over the next three years. Moreover, based upon projections, Cayman's economy will continue to expand; since 2014, Cayman's GDP has grown on average by 2% annually, and is expected to continue that trend over the next three years.

Capital projects are also planned, which is another indicator of our stability. Government's 2018 Strategic Policy Statement includes commitments to complete the Owen Roberts International Airport renovations, and to construct a modern cruise pier and cargo dock. In the past decade the pace of change has continuously increased and going forward, we must accept that this is the new normal. Recognising this fact, Government has indicated its support of our financial services industry through funding increases to key financial services pillars, namely the Ministry's policy department, CIMA as regulator, and Cayman Finance as the coordinating industry association. The increase allows Cayman Finance to improve its core efforts around business development and promotion of the jurisdiction; and also allows CIMA and the Ministry to strengthen their policy, legislative and regulatory functions. For the Cayman Islands, this again translates into results. As a jurisdiction, our position is that we will be both proactive and responsive, as the circumstances require, thereby ensuring that Cayman remains a top international financial centre

Footnote

1 The contribution of 40.5% of GDP by the financial and insurance services sector does not include contributions by legal and accounting services, as these are grouped together with other services outside of the financial industry. The actual percentage contributed by the financial services industry, including legal and accounting, is over 50%.

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
 
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
 
Related Articles
 
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