The Ministry of Financial Services has advised the industry that it remains in close contact with the EU Commission and is making progress towards proposals which, the Ministry believes, will result in the removal of the Cayman Islands from the list of non-cooperative jurisdictions for tax purposes at the next available opportunity, which we understand is October 2020.
In an advisory to industry, the ministry noted that the full regulatory reforms include the Private Funds Law, 2020; the Mutual Funds (Amendment) Law, 2020; and the associated Cayman Islands Monetary Authority (CIMA) rules and policies. Immediately following approval of the laws, CIMA began the process to approve and issue the rules and policies.
Under section 4(1) of the Monetary Authority Law, CIMA is required to consult with the private sector associations for a period of 30 days when seeking to introduce new or revised measures. The consultation period for the rules under the Private Funds Law and Mutual Funds Law commenced on 5 February 2020 and ended on 5 March 2020.
This point is now considered closed as the rules and policies are currently undergoing final review and will be presented to CIMA’s Board of Directors at the next available opportunity, the Ministry said.
With regards to the transition period for private funds, EU Member States accepted a 6-month transition period for existing funds, but not for new funds. However, the Private Funds Law provides for a transition timeframe for new funds.
This point is now considered closed as the transition period for new funds also ends on 7 August 2020. Starting on 8 August, the requirements will apply to all funds, existing and new, without exception, the Ministry states.
It is also proposed that the Private Funds Law, 2020 be amended in sections 16(4)(1)(b)(ii) (Valuation), 17(4)(b)(ii) (Safekeeping of fund assets) and 18(1)(b)(ii) (Cash monitoring) by inserting after the word “identified”, where it appears in those sections, the words “managed, monitored”. The effect of this amendment would be that valuations, safekeeping of fund assets or cash monitoring of a private fund may be performed by the manager or operator of the private fund, or a person who has a control relationship with the manager of the private fund; provided that, in addition to being properly identified and disclosed to investors of the private fund, potential conflicts of interest would be properly managed and monitored.
It is also proposed that the Private Funds Law, 2020 be amended in section 31(1) (Regulations) by repealing paragraph (d). The effect of this amendment would be that the Cabinet would no longer have a general power to make Regulations exempting any person or class of persons or business or class of business from any provision of that law.
The Ministry stressed it is currently in discussion with the EU Commission on an alternative legislative provision.
Ministry of Financial Services, CIMA, EU Commission, non-cooperative jurisdictions, Tax, Private Funds Law, Cayman Islands