The Cayman Islands funds industry has responded to the Foreign Tax Compliance Act (FATCA) in “suspended disbelief”, according to a new report from DMS Offshore Investment Services.
The report says that as the rest of the world marches inexorably towards the implementation of FATCA on July 1 2014, seven widely circulated myths are “interfering with the timely preparation that Cayman Reporting Financial Institutions (CRFIs) should be making on their own behalf, for the benefit of their investors, to avoid the severe penalties for non-compliance that FATCA dictates.”
Although the report criticises propagation of the myths, it does state that many CRFIs are already well advanced in preparing and registering for FATCA.
The seven myths it identifies are: that no action required now; it is best to wait and see for Cayman Islands enabling legislation; IRS registration may breach confidentiality; Cayman Islands funds may be exempted; that Model 1 IGA displaces US Treasury Regulations; that a FATCA Responsible Officer (FRO) is not required by a Model 1 IGA; that FRO’s obligations under the Model 1 IGA are lax or light.
FATCA, DMS Offshore Investment Services, CRFIs