1. Cayman removed from the EU list of non-cooperative jurisdictions for tax purposes
On 6 October 2020, the Cayman Islands was removed from its brief inclusion on the EU's list of non-cooperative jurisdictions for tax purposes. This reflects the comprehensive legislative changes made by the Cayman Islands in early 2020 to bolster its AML and funds regulatory frameworks. See our update for further details.
2. DITC portal online
The Department for International Tax Cooperation (DITC) launched its new DITC Portal in early November 2020. The DITC Portal User Guide was issued at the same time. The DITC Portal is currently only open for CRS/FATCA purposes and registrations of outsource service providers (OSPs) for economic substance (ES) purposes.
The OSP registration form must be filed by the OSP before any ES return which claims outsourcing of core income generating activities (CIGA). Otherwise, the outsourcing claim cannot be considered when assessing whether that entity has satisfied the applicable ES test. OSPs who only provide services to pure equity holding companies are not required to register.
Functionality for the ES return and the form for an entity tax resident in another jurisdiction is expected to be added to the DITC Portal in late January 2021. Bulk upload reporting for ES filings will not be available for this reporting cycle. A bulk upload option for entities carrying on holding company business is expected to be added later this year.
Please see our Guide for an overview of the Cayman Islands economic substance regime.
3. CRS updates
Updated CRS Guidelines were published on 6 November 2020.
The CRS XML Schema Version 1.0 and CRS User Guide Version 2.0, which were applicable for all submissions up to the reporting deadline of 16 December 2020, will now transition to the new version of the OECD's CRS XML Schema Version 2.0 and CRS User Guide Version 3.0. The DITC has confirmed that the changes are relatively minor and will provide a summary in January 2021.
Financial Institutions (FIs) who were unable to submit CRS reporting by the 16 December 2020 deadline will not automatically be issued an administrative penalty but will be required to submit their reporting using Version 2.0 of the Schema.
In order to allow for the Schema update, CRS reporting functionality on the DITC Portal has been disabled and is expected to reopen in March 2021. Users are still able to register new FIs, complete AP/PPoC/secondary user updates, and submit CRS compliance forms and FATCA reporting.
See our CRS and FATCA update for more information.
4. CRS compliance forms – reporting deadline
The reporting deadline for filing CRS compliance forms in respect of the 2019 reporting period has been extended to 15 September 2021.
A CRS compliance form must be completed annually by Reporting FIs and by Trustee Documented Trusts in respect of the same reporting period as their CRS annual returns. For periods following the 2019 reporting period, the annual reporting deadline for FIs to submit the CRS compliance form is 15 September. The deadlines for the 2019 CRS Compliance Form and the 2020 CRS Compliance Form are therefore now the same.
5. AML Regulations amended
The Anti-Money Laundering Regulations (2020 Revision) (as amended, the AMLRs) were further amended in November 2020 by the Anti-Money Laundering (Amendment) (No. 3) Regulations, 2020.
Regulation 36(2) of the AMLRs was amended to require that transfers of funds must be accompanied by the following information on the payer:
- the payer's name;
- the payer's account number or, where that is not available, a unique identifier which allows the transaction to be traced back to the payer; and
- one of the following:
- the payer's address;
- the number of a Government-issued identification document for the payer;
- the payer's customer identification number; or
- the payer's date and place of birth.
6. Introduction of quarterly reporting requirements for money services businesses
The Anti-Money Laundering (Money Services Business Threshold Reporting) Regulations, 2020 were gazetted on 12 November 2020, introducing a new reporting requirement for money services businesses.
These Regulations require a money services business to provide the Financial Reporting Authority with a quarterly report of transactions, including threshold transactions, carried out by that business in each calendar month. A threshold transaction is one involving a transfer of funds, into or out of the Cayman Islands, where the total transferred exceeds US$3,500, whether in a single transaction or multiple transactions by the same sender or receiver within the same month.
The Regulations set out the information to be contained within the report, which includes:
- the aggregate number and value of transactions for each month in the reporting quarter;
- the largest single transaction for each month in the reporting quarter;
- the total values transferred to and from another country for each month in the reporting quarter; and
- additional details for threshold transactions.
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