Cayman’s regulatory framework is continuously evolving to ensure it meets the needs of market participants and their clients and investors.
The Cayman Islands’ regulatory framework is continuously evolving to ensure it meets the needs of market participants and their clients and investors. The Cayman Islands has continuously amended its anti-money laundering, terrorist financing, proliferation financing and financial sanctions requirements to ensure it remains in line with developing global standards, in particular those of the Financial Action Task Force (FATF).
The Tax Information Authority Act has been in place since 2005 and has implemented the law and regulation necessary to implement the automatic exchange of information regimes. In 2016, the Limited Liability Company was introduced at the request of US clients. In 2017, the Foundation Companies Act was introduced, which provides clients with a flexible vehicle for offshore structuring. In particular, the Foundation Companies Act has recently proved to be useful for emerging virtual asset businesses looking for corporate vehicles without traditional shareholders. In 2017, the Cayman Islands also introduced a beneficial ownership regime, upholding a commitment spanning numerous British Overseas Territories.
Following consultation with the Organisation for Economic Co-operation and Development (OECD), the EU and Cayman Islands stakeholders, the Cayman Islands and other international financial centres adopted economic substance requirements in 2019. Cayman was assessed by the OECD as fully compliant and continues to ensure compliance by updating its guidance accordingly (with the latest version being introduced in July 2022).
In 2020, the Cayman Islands amended the existing Mutual Funds Act and enacted a new Private Funds Act to provide a regulatory regime for smaller closed-ended investment funds. The Cayman Islands had already introduced legislative changes to allow the funds sector to participate in the EU’s Alternative Investment Fund Managers Directive.
Also in 2020, the Cayman Islands introduced the Virtual Assets (Service Providers) Act, which sets out the legal and regulatory framework for virtual assets service providers seeking to do business in and from the Cayman Islands. Between 2021 and 2023, the Cayman Islands Ministry of Financial Services & Commerce has continued to consult with industry to develop the beneficial ownership regime in line with international comparator jurisdictions