Cayman AEOI: What Investment Managers Need to Know about FATCA and CRS Reporting

While these efforts play a vital role in stanching the funding of international crimes and illicit activities, compliance with AEOI may create an increased administrative burden.  The Maples Group has deep experience in providing up-to-the-minute legal advice and financial services solutions that support compliance with regulatory requirements under AEOI.

There are a number of key considerations for investment managers for AEOI regulatory reporting going into the next reporting season and beyond.

What are the FATCA and CRS deadlines which Financial Institutions domiciled in the Cayman Islands should be aware of?

The term “Financial Institution” encompasses entities that are depository institutions, custodial institutions, investment entities and specified insurance companies.  The definitions of “depository institution” and “custodial institution” are largely self-evident, and “specified insurance companies” are essentially issuers of long term insurance investment products.  However, “investment entity” is a term defined very broadly and encompasses not only most types of investment entity (whether or not a collective investment vehicle) but also investment managers and advisors.

For FATCA purposes, all Cayman Islands entities classified as FIs need to register for a Global Intermediary Identification Number (“GIIN”) with the IRS within 30 days of commencing business.  The deadline for registration with the Cayman Islands Tax Information Authority (“TIA”) for FATCA and / or CRS is the next 30 April after the investment entity commenced business.  Specified information on reportable account holders for FATCA and / or CRS is due annually by 31 July, and the CRS Compliance Form, which is a set of additional compliance questions, including some in relation to non-reportable account holders, is due every 15 September.

Are there any anticipated regulatory changes with regards to FATCA or CRS?

Although over 100 jurisdictions participate in the CRS globally, the main factors that may change year to year are the reportable jurisdictions.  On 24 March 2023, several new jurisdictions have been added for the 2022 reporting period due 31 July 2023 and beyond, including Jordan, Moldova, Montenegro, Thailand, Uganda and Ukraine.  It should be noted that Kenya, Morocco, New Caledonia and Saint Kitts and Nevis were removed from the list for the 2022 reporting period.  Once jurisdictions sign up to the CRS as a participating jurisdiction, they commit to passing legislation to implement CRS in their jurisdiction, as well as entering multi-lateral agreements with other jurisdictions in order to allow for the exchange of CRS information.

Once this is in place within the Cayman Islands, they are then added to the list of reportable jurisdictions with sharing of information to commence from the next reporting period.  There are in fact two lists of which to be aware: the CRS List of participating jurisdictions and the CRS List of reportable jurisdictions.  The difference between participating and reportable jurisdictions relates to whether or not there is an agreement in place between jurisdictions to provide CRS information on account holders, as participating jurisdictions may only exchange information with reportable jurisdictions.  Some participating jurisdictions, such as the British Virgin Islands (“BVI”) and the Cayman Islands, have agreed to exchange account holders’ information on a non-reciprocal basis, and therefore would not be considered a reportable jurisdiction by other participating jurisdictions. As such, will not receive account information from participating jurisdictions in respect of account holders resident in the BVI or the Cayman Islands.

What steps can FIs take to prepare for AEOI regulatory compliance?

It is very important that FIs have clear, written policies and procedures in place to ensure compliance with the AEOI regulations.  This is required even when delegating compliance to an external provider such as the Maples Group, as, even though reliance may be placed on the external providers’ own policies and procedures, the ultimate responsibility for compliance lies with the FI.  FIs should document evidence of oversight over any external providers, which may include resolutions, an annual review in the board meetings or periodic reporting throughout the year from the outsourcing agent to the FI or investment manager.

What AEOI services does the Maples Group provide?

The Maples Group provides a full-service solution throughout the reporting cycle.  Specific support may include:

• Applying for GIIN with the IRS, part of the FATCA registration process.  The Maples Group can serve as the “responsible officer” for such purposes.
• Registration with the TIA for FIs domiciled in the Cayman Islands.  The team can assist with the registration process and can act as the FI’s principal point of contact.
• Account holder onboarding and facilitating the collection and review of the account opening documentation, including self-certification forms, subscription documents and Know Your Client documentation,  to determine FATCA / CRS classification, as well as whether or not those accounts need to be reported and if so, to which jurisdictions.
• Preparation and submission of annual reporting of reportable account holders, as well as the CRS Compliance Form to the local authority on behalf of FIs.

For more information on how the Maples Group can assist with regulatory compliance concerning global AEOI reporting initiatives, please visit our Regulatory and Compliance – AEOI – FATCA and CRS page.