22 December 2016, the Cayman Islands government issued the Tax Information Authority (Amendment) Law 2016 (Commencement) Order and the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations.
This represents the second tranche of regulations “to ensure effective implementation” of the OECD Common Reporting Standard (CRS), which is the global standard for automatic exchange of information (AEOI) between tax authorities. The Cayman Islands is one of 54 jurisdictions that committed to the adoption of CRS with the first exchange in 2017 with respect to information reported in 2016.
All Cayman Financial Institutions (CFIs) are required to complete a notification by 30 April 2017 using the Cayman AEOI Portal. CFIs that previously completed notifications for the US Foreign Account Tax Compliance Act (FATCA) or the equivalent UK Crown Dependencies and Overseas Territories (UK CDOT) regime, must update their notifications to confirm their CRS status and to provide additional required information.
All Cayman Reporting FIs (CRFIs) are required to have written policies and procedures to address their obligations in respect of due diligence, record keeping, filing information or change notices and annual returns via the Cayman AEOI Portal, and the appointment of third-parties to fulfil CRS obligations.
All CRFIs are required to submit, via the Cayman AEOI Portal, a separate return with respect to each reportable jurisdiction for which it has reportable accounts under CRS. The regulations also require a CRFI to file a nil return with respect to those reportable jurisdictions for which it has no reportable accounts.
The regulations implement penalties and enforcement powers in respect of both individuals and institutions for breaches and non-compliance with the CRS. It is now an offence for any person to provide a false self-certification to a CFI. Such an event would require the CFI to file a suspicious activity report. Directors, limited liability company members, general partners, and certain other individuals are liable where a CFI commits an offence, unless they can demonstrate that reasonable due diligence was exercised. The maximum penalties for firms or individuals who form, or form part of, an unincorporated CFI are raised to KYD50,000 (USD60,975)