The Cayman Islands government has announced that a further five Bills are to be presented to the legislative assembly, to satisfy the Caribbean Financial Action Task Force’s (CFATF’s) recommendations for stricter anti-money laundering rules.
A deadline of 21 February has been agreed for the Cayman Islands to demonstrate that it has made ‘positive and tangible progress’ in implementing the CFATF’s 63 recommendations, which were set out in its Cayman Islands Mutual Evaluation 2019 report. Recording of beneficial ownership in a register and reporting of the information to the authorities form a major part of the report’s conclusions.
The draft Bills, to be introduced by financial services minister Tara Rivers later this month, deal with changes to the oversight of open-ended and closed-ended funds and address the issue of beneficial ownership.
The Mutual Funds (Amendment) Bill 2020 and Private Funds Bill 2020 the require previously exempted investment funds to be registered with the Cayman Islands Monetary Authority (CIMA) and audited. The mutual funds Bill affects funds with 15 or fewer investors capable of appointing or removing the operators – so-called s.4(4) funds, which have not previously been covered under the existing mutual funds law. The registration requirement will apply to all standalone funds, feeder funds and master funds that are structured as s.4(4) funds.
The private funds Bill will also require private funds to be audited annually by a local CIMA-approved auditor in accordance with international standards. They will have to have appropriate and consistent internal procedures for the proper valuation and identification of their assets, and have proper custodial and cash-monitoring processes. The Bill will apply to private funds set up as Cayman Islands partnerships, companies, unit trusts and limited liability companies, unless specifically exempted. It will also apply to non-Cayman Islands private funds that make an ‘invitation to the public in the Islands’.
The other three Bills – the Companies (Amendment) Bill 2020, the Limited Liability Companies (Amendment) Bill 2020, and the Limited Liability Partnership (Amendment) Bill 2020 – clarify the definition of beneficial owner and corporate service provider responsibilities.