UPCOMING AEOI FILING DEADLINES
CRS Compliance form: 16 September 2024
Upcoming Economic Substance Filing deadlines
Economic Substance Returns: 31 December 2024 (for entities carrying on a relevant activity with a 31 December FYE)
Economic Substance Notification: 31 January 2025 (for all entities)
KEY legislative DEVELOPMENTS
Beneficial Ownership Transparency Act 2023
The Beneficial Ownership Transparency Act 2023 (BOT Act) and the Beneficial Ownership Transparency Regulations (BOT Regulations) came into effect on 31 July 2024. The key changes to be brought about by the BOT Act were summarised in our Spring Edition Regulatory Round-up (available here).
Ministry for Financial Services (MFS) Updates
On 15 March 2024 the MFS published technical guidance and a sample new form of CSV file for registered offices of in-scope entities to facilitate changes to the reporting of beneficial ownership information to the relevant Registrar. The revised CSV Technical Guidance Notes dated 18 July 2024 were made available on the General Registry Website. It is expected that the final form guidance materials will be made available shortly.
On 30 April 2024 the MFS issued a public consultation seeking feedback on draft Beneficial Ownership Transparency Regulations and associated guidance materials. The consultation closed on 14 May 2024. The Beneficial Ownership Transparency Regulations and associated guidance were also published by the MFS on 31 July 2024.
Current Status
Corporate Services Providers have been advised to suspend filing beneficial ownership information under the previous framework until the MFS notifies industry to recommence filing under the new framework (i.e., filing under the BOT Act). In addition, the MFS have advised that enforcement relating to the new requirements in the beneficial ownership reporting framework will be suspended until early next year.
Cayman entities listed on the Cayman Islands Stock Exchange or an approved stock exchange (or 75% or more subsidiaries of the same); Cayman mutual funds and private funds registered with CIMA and CIMA licensed entities can benefit from an “alternative route to compliance” and will need to provide prescribed information to their Corporate Services Providers to avail of this benefit. All other Cayman entities (other than unit trusts and registered foreign companies which are out of scope) that either already report information relating to their beneficial owners or are newly within scope under the new BOT Act will need to identify their registrable beneficial owners and provide the prescribed information to their Corporate Services Providers for review, entry in beneficial ownership registers and filing with the relevant competent authority in due course.
Proceeds of Crime (Amendment) Act, 2023 (POCA Amendment Act)
As referred to in our Spring Edition Regulatory Round-up, parts of the POCA Amendment Act came into effect on 31 January 2024 whereas sections 11, 12 and 13 concerning the offences of “concealing, etc”, “arrangements” and “acquisition, use and possession” were scheduled to come into force on 30 April 2024. Pursuant to the Proceeds of Crime (Amendment) Act, 2023 (Commencement) (Amendment) Order, 2024 gazetted on 1 May 2024, these provisions will now come into force on 2 January 2025.
Anti-Money Laundering (Amendment) Regulations, 2024 (“amended AMLRs”)
On 19 April 2024, the amended AMLRs came into force. The main amendments were to include references to proliferation and counter-terrorist financing to ensure that the compliance requirements apply equally to these areas of risk. Other amendments included:
- reduction to the minimum one-off transaction value (from CI$15,000 to CI$10,000);
- designated non-financial businesses and professions must provide additional information on registration with their relevant supervisory authority including in respect of their AML officers and ownership and control structure;
- administrative fines for non-compliance may be imposed on directors, managers, secretaries, partners or other similar officers of designated non-financial businesses or professions;
- expanded enhanced due diligence requirements to include sanctions screening where higher proliferation financing risks are identified; and
- persons undertaking relevant financial business must assess and understand money laundering, terrorist financing and proliferation financing risks and keep such risk assessments up to date. Policies, controls and procedures must be implemented and should be consistent with national requirements and guidance from competent authorities and self-regulatory bodies.
The Perpetuities (Amendment) Bill, 2024
The Perpetuities (Amendment) Bill has been passed by Parliament and will come into force following royal assent on a date to be appointed by Order of Cabinet. The amendments remove the mandatory perpetuity period of 150 years for many existing and future trusts. This is a welcome change, bringing the Cayman Islands in line with a number of other financial services jurisdictions.
Insolvency Practitioners (Amendment) Regulations, 2024
With effect from 1 June 2024, the amendment regulations prescribe new minimum and maximum rates of remuneration for official liquidators.
| Grade of staff | Minimum | Maximum |
| Official Liquidator and any Partner | US$630 | US$1,180 |
| Consultant | US$360 | US$1,180 |
| Director or Principal | US$560 | US$900 |
| Senior Manager | US$460 | US$750 |
| Manager or Assistant Manager | US$360 | US$630 |
| Senior or Senior Accountant | US$265 | US$455 |
| Administrator | US$65 | US$265 |
Local Companies (Control) (Amendment) Act, 2024 and the Local Companies (Control) (Fees) Regulations, 2024
With effect from 1 May 2024, various fees applicable to local companies were amended as follows:
| Description | CI$ | US$ |
| Processing fee for an application for a licence for all categories | 500 | 610 |
| Licence fee for all categories of applicants except accountants and bulk fuel installation businesses | 12,500 | 15,244 |
| Licence fee for accountants | 5,000 | 6,098 |
| Licence fee for bulk fuel installation businesses | 25,000 | 30,488 |
| Annual licence fee for all categories of applicants except accountants and bulk fuel installation businesses | 12,500 | 15,244 |
| Annual licence fee for accountants | 5,000 | 6,098 |
| Annual licence fee for bulk fuel installation businesses | 25,000 | 30,488 |
Consultations
Virtual Asset (Service Providers) (Amendment) Bill, 2024
In February 2024, the MFS issued a consultation paper on a Bill to amend the Virtual Asset (Service Providers) Act. The proposed revisions are considered necessary for the implementation of the licensing regime for virtual asset trading platform operators and virtual asset custodians. Of note, the definition of “Operator” is to be revised to provide greater clarity, particularly in the case of innovative trading platforms which may not have a clearly identifiable manager, such as in the case of a decentralized autonomous organization. The Bill also proposes to require a minimum of two directors for a virtual asset service provider to align with other Cayman Islands regulatory laws. Associated draft regulations provide the form of application for licenses and application and licensing fees.
Regulatory Policy on Recognition and Approval of an Actuary
In May 2024, CIMA issued a consultation draft of a Regulatory Policy on the Recognition and Approval of an Actuary to members of the insurance sector. The Regulatory Policy will replace the 2007 version which requires updating to reflect developments in legislation and international best practices applicable to the recognition and approval of actuaries. The consultation closed on 5 June 2024.
CIMA publications
March 2024 – CIMA issued a Regulatory Update: June 2023 to December 2023 (available here) covering legislative changes, regulatory updates, external assessments and consumer education and industry outreach for the period.
May 2024 – CIMA issued a notice (available here) regarding the process for submitting audit waiver applications for regulated funds. From 27 May 2024, all new audit waiver applications must be filed via the REEFS portal using the form FWV-161-22.
May 2024 – CIMA circulated its annual AML surveys to regulated entities required to complete the same in accordance with CIMA’s reporting timeline (available here). CIMA regulated funds are exempt from completing and filing the annual AML surveys. CIMA also published sector-specific guidance for completing the AML surveys (available here).
May 2024 – CIMA Regulatory Policy – Registration or Licensing of Virtual Asset Service Providers: In May 2024, CIMA published a regulatory policy (available here) setting out the requirements for approving the registration or licensing of virtual asset service providers in accordance with the Virtual Asset (Service Providers) Act (as revised). It should be noted that the licensing regime for VASPs operating a trading platform or providing custodial services is not yet effective. Accordingly, this element of the regulatory policy will come into effect upon the commencement of the licensing regime.
May 2024 – CIMA Rule and Statement of Guidance – Market Conduct for Trust and Corporate Service Providers and Company Managers: In May 2024, CIMA published a revised Rule and Statement of Guidance (available here) applicable to different types of trust licenses issued under the Banks and Trust Companies Act and holders of a companies management license and corporate services license issued under the Companies Management Act. The Rule and Statement of Guidance serves to update the previous Rule and Statement of Guidance issued by CIMA in March 2019 and will become effective on 22 November 2024. The Rule and Statement of Guidance establish the minimum requirements for trust and corporate services providers and company managers to ensure fair treatment of clients and general protection of clients’ assets.
May 2024 – CIMA published a new edition of its newsletter The Anchor (available here) which covered Cayman’s removal from the FATF and EU “Grey Lists”, financial sanctions updates, “travel rule” guidance for virtual asset service providers and money laundering/ terrorist financing risks posed by informal funds transfer networks (such as Hawala, Hundi, Fei ch’ien, and Chitti).
June 2024 – CIMA published a notice (available here) in respect of their user experience survey of their REEFS portal. The survey covers amongst other things, the purpose and frequency of use, functionality, satisfaction with the user experience, challenges faced and suggestions for improvement. The submission deadline was 21 June 2024.
June 2024 – As mentioned in our Spring Edition Regulatory Round-up, CIMA published a climate change and environmental related risk survey for completion by all regulated entities. The objective was to obtain information identifying challenges to climate change and environmental risk management in the financial services sector for use in developing regulatory frameworks to address such challenges. On 3 June 2024, CIMA published an industry notice (available here) reissuing the Climate Survey to facilitate broader participation and a higher response rate. The revised deadline for participation was 12 July 2024.
August 2024 – CIMA published a notice relating to fraudulent correspondence purporting to be from CIMA being published using a similar email domain name. It advised members of the public not to click on any links or attachments within the email. A copy of the notice is available here.
Financial sanctions
General License 2022/0001 (Non-Designated Person): This license permits a fund or an investment manager to redeem, withdraw or otherwise deal with an investment interest and make payments for basic needs, routine holding and maintenance and legal fees from frozen accounts. The Governor of the Cayman Islands further amended the timeline of this license originally which originally took effect on 4 October 2022 and was extended to 6 October 2024. Apart from extending the timeline, there was no other change to the license terms. A copy of the license is available here.
General License 2023/0001 (Trust Services): Subject to satisfying certain conditions and providing certain information to the Governor, this license permits the continued provision of trust services being provided to a “Designated Person”. This license has been effective since 21 March 2023 and may be varied, revoked or suspended by the Governor at any time. A copy of the license is available here.
General License 2024/0001 (Legal Services): The license permits, subject to certain conditions, the payment of reasonable professional legal fees (subject to a cap) and expenses (subject to a cap). This license took effect on 24 May 2024 and expires on 24 November 2024. A copy of the license is available here. The previous license in respect of legal fees GL/2023/0003 expired. The provisions of GL2024/0001 differ from the previous license; in particular the attorney’s fees and expenses caps have been reset and now apply to each law firm instructed by the designated person to cover all matters on which that law firm is instructed by that designated person.
New Reporting Requirements of the Financial Reporting Authority (“FRA”) under the Russia Sanctions Regime: On 15 April 2024, the FRA published a Public Notice (available here) under the Russia Sanctions Regime regarding new asset reporting measures for designated persons effective from 14 March 2024:
- Immobilised assets reporting measure: a relevant firm is required to report to the Governor as soon as practicable if it knows or has reasonable cause to suspect, that it holds funds or economic resources for a “prohibited person” meaning the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, the Ministry of Finance of the Russian Federation, a person owned or controlled directly or indirectly by these entities or a person acting on behalf of or at the direction of these entities.
- Designated Persons asset reporting measure: Designated persons who are Territory persons are required to report the nature, value and location of any funds or economic resources they own, hold or control in any jurisdiction (worldwide assets) in excess of US$13,000 to the Governor. “Territory person” is defined in regulation 2 of the Russia (Sanctions) (EU Exit) Regulations 2019, as modified. Designated persons who are not Territory persons are required to report the nature, value and location of any funds or economic recourses they own. Hold or control in the Cayman Islands (Territory assets) in excess of US$13,000 to the Governor. The initial report must be provided within 10 weeks of the relevant date being either 14 March 2024 or in the case of a person designated on or after 14 March 2024, the date of that person’s designation. The relevant template forms for reporting can be found on the FRA website.
DITC publications
April 2024 – Update Bulletin: in April 2024 (and further updated in June 2024) the DITC published an update bulletin (available here) which included the following:
Reminders for CRS Reporting and upcoming deadlines – for the 2023 reporting period, CRS reporting, nil returns and FATCA reporting were due on 31 July 2024. The CRS compliance form is due on 16 September 2024 (ordinarily 15 September but this year this would fall on a Sunday). We will shortly publish an alert covering the upcoming CRS compliance form filing deadline.
Updated CRS Reportable Jurisdiction list – for the 2023 reporting period, the CRS reportable jurisdiction list was updated to include Georgia, Kenya, Moldova and Ukraine and to remove Uganda for reports due in 2024.
Action required by financial institutions – Further to their press release of 22 March 2024, the DITC reminded financial institutions that the date of birth is required to be reported for all individuals who are reportable persons, i.e. both for account holders and controlling persons. The DITC warned that failure to include the date of birth in a CRS return may result in compliance and enforcement action being taken against the financial institution.
2024 PUBLISHED briefings and e-alerts
During 2024, Appleby published the following Briefings and E-alerts on our website.
These were also sent directly to client subscribers:
January: Cayman Islands Removed from The EU AML List (here)
February: Results of CIMA’s “Records Management” 2023 Thematic Review Published (here).
April: The Global – 2024 Q1 Review (here).
May: Funds – How to Comply with Cayman’s New Corporate Governance Rules (here).
July: The 150 Year Rule Falls – Cayman Perpetuities Act Changes (here).
July: The Global – 2024 Q2 Review (here).August: Cayman Islands: Expanded Beneficial Ownership Reporting Regime Now in Force – Your Top Questions Answered (here).
August: What Steps should a Cayman Fund take to comply with the new beneficial ownership regime (here).
How we can help
Keeping up to date with new and proposed legislation and regulations is an ongoing challenge for businesses. Our regulatory team monitors and analyses proposed and upcoming legislative and regulatory developments, to determine the practical implications for our clients.
Our regulatory team has seen increased demand from clients for advice on and assistance in complying with CIMA’s requirements and DITC requirements. During the course of 2024, we will continue to:
- monitor Cayman Islands legal and regulatory developments;
- produce client focused briefings and e-alerts tracking new developments;
- contribute to various industry consultations covering legal and regulatory developments affecting our client’s businesses; and
- provide training to clients to support their existing compliance framework.
Please get in touch if we can be of assistance.
