Covid-19: Cayman Islands extends some deadlines on BOI and ES23 Mar 2020
The Cayman Islands (“Cayman”) Ministry of Financial Services (“Ministry”) has issued an Industry Advisory (“IA”) to address matters as part of its business continuity plans in the face of the coronavirus (“Covid-19”) pandemic. The IA covers the new Mutual Funds (Annual Returns) (Amendment) Regulations, 2020.
(“MF Regulations”) which were gazetted on 17 March 2020 and are now in effect. Two financial services industry consultations have been extended, but while there are new extensions of 30 days for some entity changes of information the IA reminds the industry that other Economic Substance (“ES”) obligations remain.
What are the new mutual fund regulations?
As part of Cayman’s ongoing commitment to modernisation of its funds regime it introduced new regulations to improve the data the Cayman Islands Monetary Authority (“CIMA”) collects from each regulated mutual fund. The changes respond to the Caribbean Financial Action Task Force (“CFATF”) review of Cayman’s anti-money laundering, countering the financing of terrorism, and countering proliferation financing regime (“AML Regime”). CFATF is the regional body which monitors Cayman’s compliance with international regulatory standards set by the Financial Action Task Force (“FATF”). As of 17 March 2020 the new MF Regulations are now in effect and may be found at the link above.
What are the Beneficial Ownership extensions of time?
The Cayman General Registry recognises that Covid-19 affects the ability of corporate service providers (“CSPs”) to retrieve information from their overseas clients and so it is giving a one-month extension for beneficial ownership information (“BOI”) submissions. These are temporary measures which go into effect as of Monday, 23 March 2020 and will cease on 20 April 2020. The General Registry expects that Cayman’s new BOI digital platform will soon be online and that CSPs will make the transition to filing electronically.
What’s new for Economic Substance regulations?
The IA points out that the Cayman Department for International Tax Cooperation (“DITC”) reiterates the importance of entities’ ES obligations. Where the travel restrictions due to the Covid-19 pandemic forces an entity has to conduct virtual board of director meetings, the IA advises that the DITC will take those restrictions into consideration on a case-by-case basis when determining whether an entity has passed or failed the ES test in its reporting (due in 2021). None of the changes will affect the reporting requirements due in 2020 for the 2019 year-end.
Extension: The Cayman Registrar of Companies is instituting temporary measures to assist with notification of entity changes under ES regulations. This includes changes to information on directors and officers, registered office changes and amended memorandum and articles of association (including increases in share capital). The IA advises that extensions to file for 30 days will come into effect for changes which occurred on or after 1 March 2020 and that filings will not incur penalties before 30 April 2020.
CIGA Obligations: The IA reminds relevant entities that whilst Covid-19 travel restrictions may affect the “directed and management” obligations (such as for board meetings), entities are still required to conduct core income generating activities (“CIGA”) in relation to their relevant activity.
What are the new deadlines for the Virtual Assets and Administrative Fines Consultations?
The Cayman consultation the development of a regulatory framework for Virtual Assets Service Providers will now conclude on Wednesday, 8 April 2020. The consultation on administrative fines, focussed on the proposed Monetary Authority (Administrative Fines) (Amendment) Regulations and looking at a range of effective, proportionate and dissuasive sanctions which aligns with FATF recommendations will now conclude on 6 April 2020.
Does this affect FATCA/CRS and ES reporting?
The DITC does not currently propose to make any changes to previously announced deadlines for Foreign Account Tax Compliance Act (“FATCA”) and Common Reporting Standard (“CRS”) reporting and ES reporting. If applicable international deadlines are modified then the DITC will advise of any changes at that time.