A Special Notice published by the Cayman Islands (‘Cayman’) Department of Commerce and Investment (‘DCI’) informs Real Estate Agents and Property Developers that under the Anti-Money Laundering (Designated Non-Financial Business and Professions) (Amendment) (No.2) Regulations (‘AML Regulations’) they must register with the DCI as soon as possible. The Special Notice gives a deadline of 29 May 2019 for applications.
The Cayman Islands (‘Cayman’) Grand Court (‘Court’) has given important guidance on when a Limited Partner (‘LP’) of a Cayman registered Exempted Limited Partnership (‘ELP’) can insist that a General Partner (‘GP’) provides them with “true and full information” on the financial state of the ELP under Section 22 of the Exempted Limited Partnership Law (2014 Revision) (‘Law’). It also considered when a GP might be able to refuse.
The Formal Validity of Wills (Persons Dying Abroad) Law 2018 (‘Law’) came into force in the Cayman Islands (‘Cayman’) on 1 February 2019.
What is the Law about?
The Law relates to Cayman’s recognition of formalities required to make a testamentary instrument or act (a ‘Will’) valid in law when it is executed by the person making the Will (‘Testator’). A Testator executes a Will by following formalities required when it is signed, such a signing it in front of witnesses. Importantly, the Law only deals with the valid execution of a Will which disposes of Cayman moveable assets, such as shares, investments or personal effects such as jewellery. It does not change the requirements for a Will disposing of Cayman immovable property (such as real estate) or any interest in land in Cayman.
On 12 March 2019, the European Commission (‘EC’) published its latest list of non-cooperative tax jurisdictions, adding ten jurisdictions to the five already on its list. The list, often called a ‘blacklist’, is composed of countries that either failed to deliver on their commitments to comply with the European Union’s (‘EU’) required good governance criteria, or did not commit to do so at all. The Cayman Islands was not one of the countries added and was recognised as having taken many positive steps to comply with the EU listing process requirements.
The new Cayman Islands ('Cayman') Trusts (Amendment) Law 2019 (‘Amendment’) is due to be heard in the Legislative Assembly's fourth sitting in March 2019, and assuming it passes without amendments from the Bill, it will bring welcome amendments to enhance the existing Cayman regime under the Trusts Law (2018 Revision) (‘Trusts Law’).
The Cayman Islands (‘Cayman’) Grand Court (‘Court’) recently blessed the Final Distribution Proposal (‘Proposal’) of a trustee (‘Trustee’) of a family trust (‘Trust’) which benefitted two sisters and their brother. The Court was in no doubt that the Trustee had the power to make the decision and that it should be approved by the Court unless the brother persuaded it that the Proposal was, in whole or in part, irrational.
In a Notice dated 25 January 2019, the Cayman Islands Monetary Authority (‘CIMA’) reminds entities registered under the Cayman Islands (‘Cayman’) Securities Investment Business Law (2015 Revision) (‘SIBL’) of their Anti-Money Laundering (‘AML’) Countering the Financing of Terrorism (‘CFT’) responsibilities. It also sets out issues which have arisen in 2018 audits which may help organisations identify areas which they may need to address in their own organisation to ensure that the expected standards are being met.
A decision from the Ontario Superior Court (‘OSC’) provides a useful summary of the common law ‘red flags’ which help creditors and insolvency practitioners identify when a bankrupt’s assets are held in a sham trust. Of interest was the expert evidence showing a font used in a trust document was not invented until seven years after the document was supposed to have been created.
The Cayman Islands (‘Cayman’) International Tax Co-operation (Economic Substance) Law, 2018 (‘Law’) and International Tax Co-operation (Economic Substance) (Prescribed Dates) Regulations, 2018 (‘Regulations’) came into force on 1 January 2019. Official Guidance Notes are expected in early 2019 to set out how the new regime will work. Here we consider what steps Cayman entities should be taking to find out if the Law and Regulations apply to them and, if so, whether they carry out the core income generating activities defined in the Law for their business.
As expected, the Cayman Islands (‘Cayman’) International Tax Co-operation (Economic Substance) Law, 2018 (‘Law’) came into force on 1 January 2019. The Law was published in the Cayman Gazette on 27 December 2018 at the same time as the International Tax Co-operation (Economic Substance) (Prescribed Dates) Regulations, 2018 (‘Regulations’) which set the dates from which a relevant entity must satisfy the economic substance requirement in relation to a relevant activity. Guidelines are expected to be published early in 2019.
The Stamp Duty (Amendment) Law, 2018 (‘Law’) came into effect on 19 December 2018 introducing Stamp Duty on ‘Linked Property Transactions’ from 31 December 2019. For more information on what constitutes a linked property transaction, please see our briefing entitled Welcome delay in change to Cayman Islands Stamp Duty law gives developers another year before Stamp Duty increase.
In a significant alteration to draft legislation, the Cayman Islands Stamp Duty (Amendment) Law 2018 (‘Law') allows developers with planning permission in place by 30 June 2019 to have a year to take advantage of the pre-existing regime for stamp duty on ‘linked property transactions’, provided they enter into their contracts before 31 December 2019.
UPDATE: For the current position on stamp duty and linked property transactions see our piece: What is the new stamp duty position on linked transactions?
The Cayman Islands (‘Cayman’) Legislative Assembly is scheduled to debate The International Tax Co-operation (Economic Substance) Bill (‘Bill’), 2018 in December 2018. The Bill proposes “a law to provide for an economic substance test to be satisfied by certain entities; and for incidental and connected purposes” and is expected to be passed into Law and ready to take effect by 1 January 2019. Guidelines are expected to be published early in 2019.
What is economic substance?
To meet the ‘Economic substance’ requirement, a Cayman company or other entity must be carrying out substantial business activity which is related to the line of business that the entity conducts in Cayman.
The Cayman Islands Monetary Authority (‘CIMA’) has published amendments (‘Amendments’) to its December 2017 Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands. The following is a brief overview of the principal changes.
Legal 500 has released its 2019 Caribbean Guide, and partners Laura Hatfield and Ian Jamieson have been named as leading individuals. Attorney, Rob Humphries, has been named as a next generation lawyer.
Solomon Harris merged with Bedell Cristin earlier in the year, and the firm has achieved rankings in five of the Cayman categories: Real Estate, Insurance/Reinsurance, Dispute Resolution, Corporate and Commercial and Investment Funds.
In time to help fund Anti-Money Laundering (‘AML’) Officers meet the 31 December 2018 deadline for regulated funds to notify the Cayman Islands Monetary Authority (‘CIMA’) of their appointment of AML Officers, CIMA has published answers to Frequently Asked Questions (‘FAQs’) on matters relating to forms (‘MLO-154-99’) which need to be completed on CIMA’s Regulatory Enhanced Electronic Forms Submission (‘REEFS’) Portal. The forms relate to all AML Officers which are: Money Laundering Reporting Officer (‘MLRO’), Deputy Money Laundering Reporting Officer (‘DMLRO’) and the Anti-Money Laundering Compliance Officer (‘AMLCO’).
The Cayman Islands Monetary Authority (‘CIMA’) has published its 2018 Edition of its Regulatory Handbook and its Appendices, as well as the latest editions of and amendments to guidance notes and Rules.
New Regulatory Handbook
Published in the Cayman Islands Gazette on 3 December 2018 is the new November 2018 edition of the Regulatory Handbook Volume 1 which replaces the August 2017 version. The Regulatory Handbook – Appendices 1 replaces the February 2017 version. CIMA’s Regulatory Handbook sets out the policies and procedures CIMA, its committees and officers must follow in performing CIMA’s regulatory and co-operative function and gives specific information on matters such as CIMA’s approach to supervision, supervisory returns and AML procedures.
At a business briefing on 14 November 2018, representatives of the Cayman Islands Government (‘CIG’) stated that the Cayman Islands (‘Cayman’) Data Protection Law 2018 would not come in to force in January 2019, as previously advised, but would be delayed until September 2019. This is confirmed on the Cayman Ombudsman website.
The Cayman Islands (‘Cayman’) Government (‘CIG’) has issued an Industry Advisory that the Organisation for Economic Co-operation and Development (‘OECD’) has confirmed that it had extended the ‘substantial activities’ requirement to ‘no or only nominal tax’ jurisdictions in its Base Erosion and Profit Shifting (‘BEPS’) Inclusive Framework (‘Framework’). The move is to prevent business activity avoiding the Substantial Activities Requirements which apply to all preferential regimes for geographically mobile income by relocating to a zero-tax jurisdiction. (Consult the new global standard on substantial activities in no or only nominal tax jurisdictions at www.oecd.org/tax/beps/resumption-of-application-of-substantial-activities-factors.pdf .)
The Cayman Islands Government has good news for those Caymanians looking to buy their first homes in the Cayman Islands. The changes to stamp duty in The Stamp Duty (Amendment) Bill 2018 (‘Bill’) propose significant increases in the thresholds for stamp duty concessions to help ease the financial burden on first-time Caymanian property buyers.
If the Bill is passed without amendment, Caymanians will be able to take advantage of these new concessions from 1 January 2019.
UPDATE: When the Bill became The Stamp Duty (Amendment) Law, 2018, there was a significant alteration in wording which allows developers with planning permission in place by 30 June 2019 to have a year to take advantage of the pre-existing regime for stamp duty on ‘linked property transactions’, provided they enter into their contracts before 31 December 2019. For more information, please see our piece Welcome delay in change to Cayman Islands Stamp Duty law gives developers another year before Stamp Duty increase. For the current position on stamp duty and linked property transactions see our piece: What is the new stamp duty position on linked transactions?
Real Estate Agents and Property Developers have until 29 May 2019 for AML Registration...
A Special Notice published by the Cayman Islands (‘Cayman’) Department of Commerce and...