Summary of recent legal and regulatory developments
FATCA and CRS reporting deadlines
CIMA issues statement on ESG considerations
No additional AML and CFT measures for Cayman
Cayman court revisits winding up petitions against general partners

This article provides a round-up of various Cayman Islands legal and regulatory developments that have occurred over the second quarter of 2022, as well as certain applicable deadlines.

Summary of recent legal and regulatory developments

FATCA and CRS deadlines
Cayman financial institutions recently worked through the annual Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) reporting deadline of 31 July 2022, and continue to work towards the upcoming CRS compliance form filing deadline of 15 September 2022. The Cayman Islands Department of Tax Co-operation (DITC) recently issued several CRS breach notices that may result in the imposition of administrative penalties for certain past reporting failures.

CIMA issues statement on ESG considerations
In a supervisory circular to all Cayman regulated funds, dated 13 April 2022, the Cayman Islands Monetary Authority (CIMA) acknowledged the importance of environmental, social and governance (ESG) investment strategies in the fund industry and provided broad guidance to funds implementing such strategies.

No additional AML and CFT measures for Cayman
The Ministry of Finance has received confirmation that the European Union does not require further measures, beyond those included in the Financial Action Task Force (FATF) action plan, for removing the Cayman Islands from the European Union's anti-money laundering (AML) and counter-terrorist financing (CFT) list.

Cayman court revisits winding up petitions against general partners
The recent Cayman decision in Re Formation (Cayman) Fund I, LP (1) confirms the legal position as it had been previously understood in the Cayman Islands that Cayman exempted limited partnerships can be wound-up by the Cayman court on the just and equitable basis in the same manner as a company, such that limited partners may apply to wind up the partnership directly.

These updates and deadlines are discussed in detailed below.

FATCA and CRS reporting deadlines

The annual deadline for CRS and FATCA reporting with DITC has recently passed (31 July 2022) and the next annual CRS compliance form deadline will fall on 15 September 2022.

In March, the Cayman Islands Tax Information Authority (TIA) issued new guidelines (CRS Enforcement Guidelines and ES Enforcement Guidelines) setting out and clarifying the TIA's principles and processes for taking enforcement action in relation to infringements under the Cayman Islands' CRS and economic substance (ES) frameworks. Since then, the DITC has issued several CRS breach notices, which may result in the imposition of administrative penalties for certain reporting failures and has indicated that it expects to issue notices relating to missed reporting for the ES notification year 2020 shortly. The DITC has confirmed that the key areas of focus for CRS enforcement will be:

  • missing the relevant reporting deadline (ie, for returns, declarations and compliance forms);
  • misclassification; and
  • incorrect reporting (eg, missing taxpayer identification numbers or dates of birth on the CRS return).

The DITC has also noted that common errors in relation to ES reporting are:

  • incorrect ES notification year listed on the ES notification (the year should be the calendar year in which the financial year commences);
  • uploading consolidated financial statements or incomplete books of account; and
  • classification errors (particularly regarding holding companies).

All Cayman financial institutions are advised to ensure that their CRS and ES filings are in order, given the DITC's increased enforcement of automatic exchange of information (FATCA and CRS) obligations.

CIMA issues statement on ESG considerations

In a supervisory circular to all Cayman regulated funds dated 13 April 2022, the CIMA acknowledged that ESG considerations, or sustainable investing, is the fastest growing investment strategy within the financial services sector. The CIMA also acknowledged the need for funds pursuing such strategies, and their investors, to better understand the impact of the ESG-related risks arising as a result.

At a minimum, those charged with governance of regulated funds should have clear roles and responsibilities in managing and mitigating the risks from climate change and other ESG-related risks in line with the fund's set investment objectives and such funds should:

  • start establishing reliable approaches for identifying, measuring, monitoring and managing material ESG-related risks; and
  • ensure clear and ongoing disclosures in the context of their reporting requirements.

The CIMA states in the circular that it will continue to undertake reviews of best practices undertaken in other key financial jurisdictions, with the aim of developing a suitable regulatory and supervisory approach for climate related risks and other ESG-related risks. In addition, the government previously announced that it is working on a legislative framework for the implementation of ESG criteria for Cayman's financial services industry (for further details please see "ESG framework for Cayman funds").

No additional AML and CFT measures for Cayman

In a letter dated 17 May 2022, the European Union confirmed that it does not require further measures, beyond those included in the FATF action plan, for removing Cayman from the EU AML and CFT list.(2) The DG FISMA has invited Cayman to focus on implementing the FATF's action plan and noted that it would monitor Cayman's progress via the FATF's international cooperation review group, of which the European Union is a member.

Of the three points that the FATF action plan comprised, Cayman has satisfied one point regarding CIMA's sanctions regime, and Cayman will provide an update on its progress on the second and third points, in relation to beneficial ownership filings and AML prosecutions, during the FATF's October 2022 plenary.

As part of Cayman's strengthening of its beneficial ownership requirements in response to the FATF's recommendations, the beneficial ownership regulations have been amended in relation to individuals to stipulate that the required particulars to identify an individual are taken from the individual's unexpired and valid passport. This may result in requests from Cayman service providers for updated identification documents to be supplied, and this information will have to be updated on an ongoing basis.

On 26 July 2022, the Ministry of Finance issued an industry advisory stating that the competent authority for beneficial ownership has published guidance notes on complying with beneficial ownership obligations in the Cayman Islands. Topics covered in the guidance include:

  • who is a beneficial owner;
  • relevant change(s); and
  • filing obligations of entities in liquidation and upon the death of a beneficial owner.

In the notice, the ministry reminded industry of the recent amendments referred to above and that failure to provide adequate, accurate and up-to-date beneficial ownership information may result in an administrative fine being assessed against an entity. In relation to the FATF's third recommendation, there have been a number of administrative fines issued in relation to breaches of the AML regulations.

Once the FATF removes Cayman from its list of jurisdictions under increased monitoring, the European Union will initiate its steps to delist Cayman from its AML and CFT list (for further details please see "Cayman Islands update on EU AML list and European Securitisation Regulation").

Cayman court revisits winding up petitions against general partners

In the recent Re Formation (Cayman) Fund I, LP decision, Justice Kawaley held (notwithstanding the earlier decision of Justice Parker in Re Padma Fund LP (3) in respect of a creditor's petition) that a limited partner may petition to wind up an exempted limited partnership (ELP) on the just and equitable ground by presenting a petition against the ELP directly (rather than against the general partner), and that an ELP may be wound up in the same manner as a company pursuant to Part V of the Companies Act.

This decision will be welcomed by the funds industry as it restores the previously understood legal position and thereby preserves the historic dynamic among the general partner, the limited partners and the ELP. It also relieves some anxiety for sponsors using a single general partner for multiple ELPs (for further details please see "Cayman court revisits winding up petitions against general partners").

For further information on this topic please contact Joanne Huckle, Martin Byers or Megan Mcluskie at Ogier by telephone (+1 345 949 9876) or email ([email protected], [email protected] or [email protected]). The Ogier website can be accessed at


(1) Unreported, 21 April 2022.

(2) Letter to the Cayman Minister of Financial Services and Commerce, André Ebanks, from the European Commission's Directorate-General for Financial Services and Capital Markets Union (DG FISMA).

(3) Unreported, 8 October 2021.