CAYMAN ISLANDS: AEOI Update - March 2018

(Lexology) -- The Cayman Islands Department for International Tax Cooperation ("DITC") has issued an advisory dated 20 March 2018 (the "Advisory") making certain announcements with respect to FATCA and CRS compliance in the Cayman Islands for Cayman Islands Financial Institutions ("Cayman FIs").

AEOI Portal

The DITC has confirmed that the Cayman Islands AEOI Portal (the "AEOI Portal") for notification and reporting in relation to FATCA and CRS is now open and the relevant regulatory deadlines are (i) 30 April 2018 for notification (i.e. enrolment), and (ii) 31 May 2018 for reporting for the 2017 calendar year. Entities that became Cayman FIs after 30 April 2017, which was the statutory deadline for notification in 2017, should make their notifications to the DITC by this date.

Other key announcements include:

Updated Entity Self-Certification

With effect from 1 April 2018, Cayman FIs and their agents and advisers must use the newly updated version of the Entity Self-Certification Form (the "Form") rather than any prior version.

The updates to the Form include that the new threshold for a Controlling Person under CRS is 10% of the shares or the voting rights of an entity (being the threshold specified by the Anti-Money Laundering Regulations, 2017 which implement the FATF Recommendations in the Cayman Islands). The corresponding threshold for FATCA however remains "more than 25%" unless clients adopt the definition of Substantial U.S. Owner from the US Treasury Regulations which uses a 10% threshold.

The DITC has also implemented a deadline of 31 December 2018 (as confirmed in the updated CRS Guidance Notes), whereby Cayman FIs must remediate any affected accounts so they are in a position to report on Controlling Persons who are Reportable Persons under CRS in 2019 based on the 10% threshold.

Updated CRS Guidance Notes (Version 3.0)

The updated Guidance Notes have also clarified, amongst others, the following:

(a) Cayman FIs being liquidated or wound up should arrange for a third party to perform any obligations under CRS which will arise prior to final dissolution and which cannot be completed prior to such final dissolution, whether that is due to the AEOI Portal being offline or for any other reason.

(b) Cayman FIs migrating to another jurisdiction are required to file a final return and a "stub" period return until the date of migration.

(c) Those receiving an indirect distribution from a trust will be considered to be a beneficiary and may be reportable (e.g. the trust pays tuition fees).

(d) An account should be closed if a self-certification is not obtained within 90 days.

Updated AEOI Portal User Guide (Version 4.0)

Updates to the AEOI Portal User Guide include the following:

(a) Guidance on how to correct CRS returns as well as further detail on termination of status as a Cayman FI.

(b) The Authorising Person now has login credentials for his / her Cayman FIs on the AEOI Portal. This means that all Cayman FIs have an account on the AEOI Portal under both the Principal Point of Contact ("PPOC") and the Authorising Person. The AEOI Portal Guide provides that the PPOC and Authorising Person must not share their AEOI Portal log in details and password with any other individual.

(c) Please refer to the AEOI Portal User Guide and Appendix 1 (Summary of changes made to the AEOI Portal User Guide) of the Advisory for a full list of changes.






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