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The Cayman Islands anti-money laundering regime comprises various laws, regulations and guidance including the Proceeds of Crime Act (as revised) (the “POCA’’), the Anti-Money Laundering Regulations (as revised) (the “Regulations’’) and the Guidance Notes on the Prevention and Detection of Money Laundering, Terrorist Financing and Proliferation Financing in the Cayman Islands, as amended from time to time (the “Guidance Notes’’ and together with the POCA and the Regulations the “AML Regime’’). Pursuant to the AML Regime, there are detailed requirements pertaining to entities conducting “relevant financial business’’ in the Cayman Islands, including investment funds. Our team is well equipped to help you meet your regulatory obligations.
The POCA defines “relevant financial business’’ as the business of engaging in one or more activities including:
- acceptance of deposits and other repayable funds from the public
- money or value transfer services
- issuing and managing means of payment
participation in securities issues
- otherwise investing, administering or managing funds or money on behalf of other persons
Generally speaking, if you are engaged in financial services, it is prudent to assume that you will be conducting relevant financial business and will need to comply with various AML measures.
Even if your business activities do not technically fall within the definition of “relevant financial business’’, counterparties such as investors, service providers and banks will expect that you have adopted and are compliant with the AML Regime.
In order to comply with the stringent AML requirements under the AML Regime, you will need to do the following:
- appoint an Anti-Money Laundering Compliance Officer, Money Laundering Reporting Officer and a Deputy Money Laundering
- adopt a manual setting out various procedures including identification and verification procedures, risk management procedures, procedures of internal control and internal reporting mechanisms
- train employees on anti-money laundering and counter terrorist financing procedures
- have record keeping procedures in place
- comply with sanction measures
- ensure that appropriate due diligence documentation is collected from your investors and periodically reviewed
The Campbells Regulatory and Compliance Services team has extensive experience in supporting our clients to fulfil their AML/KYC obligations.
Our AML/KYC services include:
- providing named individuals to act as AML Officers and carry out the functions applicable to these roles
- preparation of compliance manuals and other supporting policies and procedures
- provision of compliance reports (as required)
- collecting due diligence documentation from prospective investors prospective investors to ensure all CIMA requirements are met
- carry out in-depth global sanctions and politically exposed person screening
- regulatory and AML consulting
Cayman Islands FATCA / CRS Regime
The US Foreign Account Tax Compliance Act (“FATCA”) is a US federal law that aims to reduce tax evasion by US persons. US FATCA requires non-US (Cayman Islands) financial institutions to report to the US Internal Revenue Service details of accounts held by US citizens or taxpayers. The Common Reporting Standard (“CRS”) is a global standard for reporting such information. The CRS allows tax authorities to gain a clearer understanding of financial assets held abroad by their residents. FATCA and the CRS are collectively known as Automatic Exchange of Information (“AEOI”).
Are you a Reporting Financial Institution?
In general a Reporting Financial Institution is a broad concept and covers custodial institutions, depository institutions, specified insurance companies and investment entities. Therefore most investment entities will need to consider whether or not they fall within the definition of a Reporting Financial Institution and be required to comply with the reporting obligations under FATCA and/or CRS. Investment funds are typically in scope for the purposes of FATCA and/or CRS.
If you are a Reporting Financial Institution it is necessary to take the following steps:
- identify the tax residency of your account holders
- in respect of FATCA, obtain a Global Intermediary Identification Number (“GIIN”)
- identify and report certain information of “reportable accounts” to the Cayman Islands Department for International Tax Cooperation (“DITC”) or, if you have no reportable accounts in respect of the previous calendar year, to file a nil return
Our AEOI services include:
- establishing and maintaining written policies and procedures to comply with AEOI
- appointing AEOI officers (namely a Responsible Officer, Principal Point of Contact and Authorising Person)
- assistance in respect of:
· obtaining a Global Intermediary Identification Number for the purposes of FATCA
· registering with the DITC
· undertaking identification of investors as to their tax residence
· collecting and validating self-certifications from investors
· preparing and submitting annual CRS XML reports, CRS filing declarations
- FATCA/CRS consulting