CF_Mag_2015_web-V2

Cayman. Moving finance forward. 2015-2016 I ISSUE 2 

Cayman. 

2015-2016 I ISSUE 2

Cayman. Moving finance forward. 1 

FOREWORD 

By Ian Wight 

The Cayman Islands has continued 

to cement its reputation as a 

leading international financial 

services centre, while addressing 

constant change on the global 

regulatory landscape. 

Striking the right balance in 

regulation remains one of our 

greatest advantages as a jurisdiction 

and several of the articles in this 

edition of the Cayman Finance 

magazine will demonstrate how 

we have managed to achieve this 

over the past 12 months. Alongside 

our focus on the various sectors 

within the industry, we also include 

an update from our CEO Mr. Jude 

Scott, as well as an overview of our 

position on the issue of a central 

registry for beneficial ownership. 

The Cayman Islands has 

maintained its client centric focus 

throughout this period of global 

regulatory change, which has 

presented significant challenges 

to firms operating in the financial 

services industry. Delivering first 

class service to our clients has 

underpinned our success as a 

destination for international capital 

over the past four decades and this 

effort is more vital than ever in a 

constantly shifting environment. 

Our partnership with the Cayman 

Islands government has been a 

valuable factor in this regard. 

Indeed many of Cayman Finance’s 

member firms have been directly 

involved in various committees 

to assist with a range of important 

initiatives, be it the National 

Risk Assessment, legislative 

subcommittees and several others. 

We thank them for their continued 

contributions in working hand-inhand 

with the various public sector 

bodies and officials in making this 

jurisdiction a success. 

Over the past year Cayman Finance 

membership has grown steadily and 

we have continued to work hard in 

the interest of our members, as well 

as the financial services industry 

generally. The organisation plays 

an important role participating 

in the debate and increasing global 

understanding of the many benefits 

that IFCs like Cayman bring to 

the global economy. We hope this 

publication will contribute towards 

that goal with updates for our 

local and international clients, as 

well as better informing global 

stakeholders on how the Cayman 

Islands operates as one of the 

world’s leading international 

financial services centres. 

Visit caymanfinance.ky to learn 

more about Cayman Finance 

initiatives and our upcoming events. 

About the Author 

Ian Wight is the Chairman of 

Cayman Finance.

2 Cayman. Moving finance forward. 

OPPRESSION 

REMEDY 

23 30 

Cayman. 

FINANCIAL SERVICES 

REGULATORY FRAMEWORK 

TABLE OF CONTENTS 

1 Foreword from Cayman Finance Chairman Ian Wight 

8 Preface from the Minister of Financial Services, 

Commerce and Environment, Hon. Wayne Panton 

10 Cayman Islands Financial Services Industry 

12 Industry Overview 

By Jude Scott 

16 Cayman Islands Economy: A Snapshot 

18 IFCs Outlook: Leading the Debate 

By Paul Byles 

20 Private Trust Companies in the Cayman Islands 

By Robert Lindley 

23 The Cayman “Oppression Remedy” 

By Fraser Hughes 

28 IFCs and Global Growth 

By Jude Scott 

30 The Cayman Islands Financial Services Regulatory Framework 

By Cindy Scotland 

NATIONAL RISK 

ASSESSMENT 

44 

34 Getting Up to Date on FATCA 

By Tim Dawson


UP TO DATE 

ON FATCA 

34 

MINISTRY 

UPDATE 

40 

37 Central Beneficial Ownership Registry 

By David Roberts and Mark Lewis 

40 Cayman Islands Ministry of Financial Services, Commerce and 

Enviromnent Update 

By Hon. Wayne Panton 

44 National Risk Assessment 

By Sandra Edun-Watler 

46 Superyachts and the Cayman Islands 

By David Cooney 

48 AT A GLANCE: Banking 

50 The Cayman Islands – Still a Top Choice for High Net Worth 

Individuals and Investors 

By Bruce John 

53 Responding to Global Regulatory Challenges 

By Andrew Schofield 

56 AT A GLANCE: Investment Funds 

58 Cayman Fund Sector Rises to Regulatory Challenges 

By David Roberts 

60 Big is Back – Private Equity in Cayman 

By Jason Allison and Bicrom Das 

64 How Institutional Investors are Changing the Fund Industry 

By Kevin Phillip 

66 Surge Predicted in Global Assets Under Management 

By Graeme Sunley 

PRIVATE EQUITY 

IN CAYMAN 

60


PORTFOLIO 

INSURANCE COMPANY 

74 

CAYMAN’S ACCOUNTING 

INDUSTRY 

86 

70 Export Cayman – Hedge Funds in Asia 

By David Bentley 

72 AT A GLANCE: Insurance 

74 The Portfolio Insurance Company 

By Paul Scrivener 

78 AT A GLANCE: Trusts 

80 Risk Retention and Emerging Structures 

By Mark Matthews, Nicola Bashforth and Stephen McLoughlin 

83 Trust Industry Evolves in Changing World 

By William Walmsley and Tamara Corbin 

86 CISPA: Promoting and Preserving Cayman’s Accounting Industry 

By The Cayman Islands Society of Professional Accountants 

88 Cyber Security in the Mobile World 

By Alexandra Simonova and Nick Kedney 

92 AIMA and Hedge Funds: A Long and Distinguished History 

By Jack Inglis 

96 Q & A with Jude Scott 

98 Cayman Finance Overview 

101 Cayman Finance Board Members 

105 Cayman Islands Financial Services Industry Associations 

CYBER 

SECURITY88 

107 Member Firms 

110 Other Useful Resources 

111 List of Advertisers


Produced by Tower on behalf of 

Cayman Finance and the Ministry 

of Financial Services, Commerce 

and Environment. 

Cayman Finance 

PO Box 11048, George Town 

Grand Cayman, KY1-1007 

Cayman Islands 

1 (345) 623 6725 

caymanfinance.ky 

enquiries@caymanfinance.ky 

Ministry of Financial Services, 

Commerce and Environment 

Cayman Islands Government 

Government Administration 

Building 

Suite 126, 133 Elgin Avenue 



caymanfinance.gov.ky 

financepr@gov.ky 

Tower 

1 (345) 623 6700 

tower.com.ky 

info@tower.com.ky 

Contributing Writers 

Jason Allison 

Nicola Bashforth 

David Bentley 

Paul Byles 

David Cooney 

Tamara Corbin 

Bicrom Das 

Tim Dawson 

Sandra Edun-Watler 

Fraser Hughes 

Jack Inglis 

Bruce John 

Nick Kedney 

Mark Lewis 

Robert Lindley 

Acknowledgments 

Mark Matthews 

Stephen McLoughlin 

Hon. Wayne Panton 

Kevin Phillip 

David Roberts 

Andrew Schofield 

Cindy Scotland 

Jude Scott 

Paul Scrivener 

Alexandra Simonova 

Graeme Sunley 

William Walmsley 

Ian Wight 

Cayman Islands Society of 

Professional Accountants 

Cayman Finance would like to thank the following organisations for 

their contribution to this publication. 

Alternative Investment Management Association (AIMA) 

Cayman Islands Bankers’ Association (CIBA) 

Insurance Managers Association of Cayman (IMAC) 

Society of Trust and Estate Practitioners (STEP) 

All rights reserved. No part of this publication may be reproduced in any form of advertising 

without permission in writing from Cayman Finance. No responsibility for loss occasioned to any 

person acting or refraining from acting as a result of material in this publication can be accepted. 

The views and opinions of the writers of articles in this supplement are those of the authors and 

do not necessarily represent the views and opinions of any organisation that they are employed 

by, or otherwise associated with.

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PREFACE FROM THE MINISTER OF FINANCIAL 

SERVICES, COMMERCE AND ENVIRONMENT 

Based on our excellent 

and continually growing 

expertise in areas 

including accounting, 

law and banking, the 

Cayman Islands’ position 

as a key jurisdiction 

in global financial 

services is recognised 

by international 

governments, regulators, 

financial services 

media and current 

and potential clients, 

worldwide. 

Backed by strong legislation and 

regulation, Cayman maintains its 

place as an international financial 

centre by being the world leader in 

investment funds; the second largest 

domicile in the world for captives 

(and the number one domicile 

for healthcare captives); and by 

being one of the world’s leading 

jurisdictions for trust and company 

management services. 

None of these achievements would 

have been possible without a strong 

partnership between Government 

and the private sector, and without 

an appropriate relationship with the 

Cayman Islands Monetary Authority 

– the country’s financial services 

regulator. 

Each of us upholds the discipline that 

ensures prudent checks and balances 

upon the business of our jurisdiction; 

indeed, that discipline unites us, in 

our commitment to excellence. And 

for the record, we define excellence 

as adhering to, and in some cases, 

surpassing international regulatory 

standards; and as being innovative in 

identifying and addressing the needs 

of Cayman’s global client base. 

The end result is an attractive, wellregulated 

and respected business 

environment for global investors. 

The numbers tell the story only 

for today. In Cayman, our vision 

is for our jurisdiction to continue 

providing excellent client products 

and services in an industry that is 

constantly evolving, both in terms of 

complexity and standards, and for 

which global economic and political 

pressures are significant factors. 

Working together, Cayman Finance 

and the Ministry of Financial 

Services provide insight into 

Cayman’s current endeavours, 

as well as into the future services 

that will increase our commercial 

appeal and our reputation as a wellregulated 

International Financial 

Centre. I encourage you to read 

through this publication, and I hope 

that you will appreciate the various 

articles about our longstanding 

relationships and earned respect in 

global regulatory spheres, and the 

key feature contributions covering 

our stock exchange, insurance 

and other major industry sectors 

– because together they present a 

comprehensive picture of Cayman’s 

strength and initiative. 

I also encourage you to read the 

articles because I believe you will 

be impressed by their quality, 

which reflects the standards of the 

professionals who have contributed 

to the publication. The authors, 

who are experts in their particular 

areas, represent some of the foremost 

minds not just on Cayman’s shores, 

but internationally. 

In large part we owe Cayman’s 

strength as a leading IFC to the 

valuable contributions of the 

many professionals in our financial 

services industry. It is no small 

feat that Cayman has attracted 

one of the highest concentrations 

of professionals, per capita, in the 

world. I repeatedly am told by 

individuals working in our financial 

services industry that they are drawn 

by our world-class financial services 

infrastructure and innovation; for us, 

this is good news, because our ability 

to attract persons of such calibre 

speaks unequivocally to our future 

success as an IFC. 

I understand this attraction on a 

personal level. Long before I became 

the Minister of Financial Services, I 

began my decades-long law career as 

an articled clerk, and in time became 

the chairman of one of Cayman’s 

leading law firms. Because of my 

background, I am fully aware that 

there are many worthy options for 

the conducting of global business. 

I trust this publication provides a 

clear understanding of why investors 

around the world, once all of the 

benefits are weighed, confidently 

choose Cayman. 

Hon. Wayne Panton 

Minister of Financial Services, 

Commerce and Environment

AD


Cayman Islands Financial Services Industry 

Clients are at the centre of the 

Cayman Islands financial services 

industry. They are at the core 

of everything we do, and this 

approach has been central to our 

success as a leading international 

financial centre. 

Our industry is led by first 

rate service providers within 

our investment funds and 

asset management, banking, 

insurance, capital markets, and 

trusts sectors and world class 

fiduciary, legal, and accounting 

service providers across 

the industry. 

The combined efforts of Cayman 

Finance, the government and the 


ensure that the financial products 

and services are consistently 

delivered to meet or exceed our 

international clients' expectations 

through innovation, excellence 

and balance. 

Ministry of Financial Services 

Fiduciary Services, Legal Services, Public Accounting 


CIMA

When business works better, 

the world works better. 

© 2014 EYGM Limited. All Rights Reserved. 

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We start with the world that matters 

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The things that affect you 

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One step at a time. 

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Because when business works better, 

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How do we help to create better? 

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We’re making it our purpose to 

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Starting with yours. 

better begins here: 

ey.com/betterworkingworld 

#betterworkingworld


By Jude Scott 

INDUSTRY 

OVERVIEW 

In what can be described as a 

transformative year for the 

financial services industry in 

the Cayman Islands, continued 

development of legislation at 

the local level has significantly 

enhanced the jurisdiction’s offering 

in a number of key areas, while 

maintaining our strong record of 

cooperation with various global 

initiatives on transparency. 

As with all international financial 

centres, much of the past 12 

months has been dominated by 

global regulatory initiatives, from 

the FATCA regimes in the US 

and the UK, to Europe’s AIFMD 

and ultimately leading to the 

Common Reporting Standard for 

tax information from the OECD. 

As an early adopter of the Model 

1 IGA, Cayman has taken a 

leadership role among international 

financial centres. With most of the 

hedge and private equity funds 

registered in Cayman captured as 

reporting financial institutions, 

for FATCA purposes, the scale of 

the task involved is quite clear. 

While there has certainly been 

some extra burden and additional 

costs for Cayman service providers 

to get to the stage they are at 

now, in terms of being ready to 

provide the required information, 

our infrastructure is in place and 

demonstrative of the high standards 

of Cayman’s compliance culture. 

In late 2014, following on from our 

initial commitment to the G5 pilot, 

the Cayman Islands government 

signed up to the Multilateral 

Competent Authority Agreement 

developed by the OECD as the 

worldwide standard for automatic 

exchange of information (AEOI). 

It has been a busy year for the 

Tax Information Authority – under 

the Department for International 

Tax Cooperation, which has 

launched an online AEOI portal, 

through which financial institutions 

can conduct their notification and 

reporting obligations, as well as 

issuing regulations for FATCA (US 

and UK) and Guidance Notes to 

cover the two IGAs. Our network 

of tax information exchange 

agreements continues to grow, 

with Belgium becoming the 

35 th nation to establish such a 

framework with Cayman. 

As we now move into the reporting 

phase, with deadlines upon us, 

FATCA will remain squarely in the 

spotlight for the financial sector. I 

agree with the view that FATCA 

reporting is an area where Cayman 

can excel, highlighting the quality of 

this jurisdiction and its professional 

advisers. The lawyers, auditors, 

fund administrators and corporate 

service providers have gone to great 

lengths to update and educate their 

clients on what their responsibilities 

are. It should also be noted that 

most of the information required 

for FATCA compliance is already 

in place. We know who the 

beneficial owners are because our 

regulated network of corporate 

service providers have already 

been collecting and maintaining 

this kind of information for years. 

This leaves Cayman and its financial 

services providers extremely well 

placed to comply with the FATCA 

regulations. Both government and 

the industry are to be congratulated 

for the diligent manner in which 

they have conducted this whole 

exercise. We maintain that 

Cayman's approach to collecting 

beneficial information – which 

is one of the methods approved 

by the FATF – is superior to the 

UK proposed public register, in 

terms of keeping correct records. 

The Cayman Islands government 

has stated that this jurisdiction 

would not participate in a register 

without the application of global 

standards, otherwise leaving our 

clients at a disadvantage. 

For anyone working in the financial 

services industry globally, there 

must have been an element of 

regulatory fatigue, with multiple 

international initiatives coming 

on stream, and we have also had 

important changes locally, including 

a new licensing and registration 

regime for directors of investment 

funds. The good news is that the


financial industry in Cayman 

continues to grow and we have 

seen advances in a number of 

key areas, as the world’s leading 

investment managers, financial 

institutions and major corporates 

continue to trust Cayman structures 

and remain comfortable with our 

regulatory framework. Recent 

reports suggest that offshore M&A 

activity hit a record in 2014, with 

US$277 billion over 2,687 deals. 

Notably, the Cayman Islands was 

the number one jurisdiction, with 

the highest deal volume in each 

quarter of 2014. 

We can see from the number 

of partnerships formed in the 

Cayman Islands that the private 

equity industry continues to prefer 

Cayman vehicles for their offshore 

fundraising and downstream 

M&A business. Registry figures 

show 2,861 exempted limited 

partnerships – the primary vehicle 

for private equity fundraising – were 

formed in 2014, compared with 

2,368 in 2013. With 791 ELPs 

established in the first quarter of 

2015 alone, the rate of growth so 

far this year is equally impressive. 

Our Exempted Limited Partnership 

legislation has been completely 

revamped following an intensive 

period of consultation between 

government and the private sector, 

coming into force in July 2014. As 

an industry, the special relationship 

we have with both the government 

and CIMA has been a hallmark 

of the jurisdiction’s success over 

the years – as it allows us to 

respond swiftly to changes in the 

marketplace. The new ELP Law is a 

good example, with changes driven 

by investors, local service providers 

and the market, including greater 

contractual flexibility for partners to 

determine their affairs. The changes 

further enhance the attractiveness 

of the Cayman Islands as a domicile 

for the formation of partnerships. 

Our investment funds sector 

remains strong. We are pleased to 

have been recognised as the ‘Best 

Hedge Fund Services Jurisdiction’ 

in the 2015 Hedgeweek Global 

Awards. This award not only 

demonstrates the popularity of the 

Cayman model, but validates the 

suitability of our legislative and 

regulatory framework among our 

clients, with the votes taken from 

industry professionals. This thread 

of excellence runs through the 

financial services industry, across the 

sectors and clients can rest assured 

that we will continue to innovate 

and develop solutions to the 

complex problems they encounter. 

There have been significant 

regulatory enhancements to 

the investment funds sector, with 

particular regard to corporate 

governance. A new registration 

and licensing regime has been 

introduced for directors of 

funds, which followed on from 

the Statement of Guidance on 

Corporate Governance for Mutual 

Funds from CIMA, which sets out 

best practice for directors which 

in many cases highlighted the 

procedures and policies already 

ingrained into the behaviour of 

the fiduciary industry here. 

Cayman is well known as the 

second largest domicile worldwide, 

after captive insurance, and a leader 

in the healthcare sector, with a 

34% share of the global market. 

Our insurance sector remains 

resilient to challenging international 

conditions and added 22 new 

licenses during the course of 2014, 

with the total number standing at 

760. These companies have issued 

total premiums worth US$12.4 

billion with total assets of US$54 

billion as of March 2015. 

New legislation has introduced 

Portfolio Insurance Companies 

(PIC) to the Cayman Islands. 

Considered within the market as 

superior to the Incorporated Cell 

Company structures offered by 

other jurisdictions, the PIC vehicle 

increases the flexibility for insurers 

established as Segregated Portfolio 

Companies by providing a greater 

number of risk management


opportunities. The outlook for 

future growth in what is one of the 

more mature areas of our financial 

services sector remains bright 

and is evidenced by the record 

attendance at the 2014 Cayman 

Captive Forum. This showcase 

event, organised by the Insurance 

Managers Association of the 

Cayman Islands, attracted almost 

1500 registrants to the island, 

confirming its place as the world’s 

largest captive insurance conference. 

creates a standardised international 

framework for registration of 

international interests in aircraft, 

the Cayman Islands becomes 

increasingly attractive to financiers 

and at the forefront 

of developments in asset finance. 

Cayman Finance is the representative 

organisation of the entire Cayman 

Islands financial services industry. 

Cayman Finance has grown to 

include members from every 

sector of Cayman's financial 

services industry, and our members 

collectively are as well placed as 

ever to assist our global clients, 

amidst the more favourable 

economic conditions, with market 

leading solutions in an ever 

more complex environment for 

international business and finance. 

Cayman has for many years 

also been renowned as a leading 

jurisdiction for aircraft registration 

and financing, mainly due to the 

significant comfort lenders obtain 

from our insolvency legislation. 

New legislation – the International 

Interests in Mobile Equipment 

(Cape Town Convention) Bill 

2015 – will extend the Cape Town 

Convention to the Cayman Islands, 

now that it has been ratified by 

the UK. By participating in what 


Jude Scott, CEO of Cayman Finance, is a 

former Audit Partner of Ernst & Young 

and former Global Chief Executive Officer 

of Maples and Calder. 

Jude has served on various Cayman 

Islands government and private sector 

committees, including the Cayman Islands 

Society of Professional Accountants, the 

Cayman Islands Financial Services Council, 

the Education Council, the Insolvency 

Rules Committee and the Stock Exchange. 

Building better business 

TOGETHER 

www.caymanmanagement.com 

(345) 949-4018 

Grand Cayman, Cayman Islands 

With a vast wealth of industry focused expertise, our team of 

professionals will look after all your fiduciary needs, including: 

• Independent Director Services 

• Specialist corporate services for Funds and Investment 

Managers, including registration and management 

• Full corporate registration and representation services for all 

business undertakings 

Working closely with clients and industry professionals in the 

Cayman Islands and internationally we provide you with the utmost 

professional service, delivered with that extra personal touch.

Cayman Islands Financial Services 

Nimbleness. Purpose. Strength. 

The reason why the Cayman Islands is the premier jurisdiction for funds is simple: 

Third-party global bodies have noted our adherence to international standards, and 

our Government is dedicated to maintaining and further enhancing our legal and 

regulatory funds framework. 

AD 

For more information on funds, visit www.cimoney.com.ky.



Economy: 

a snapshot 

The Cayman Islands economy has 

continued to grow at a steady pace 

since economic recovery began in 

2011. Real GDP is expected to grow 

by 2.1% in 2015, which is similar 

to the growth experienced in 2014. 

The government expects growth in 

the medium term to be driven by the 

construction sector. 

0.9% 

1.6% 

1.5% 

2.1% 

‘10 ‘11 ‘12 ‘13 ‘14 

Financial Services 

50-60% 

of GDP 

Tourism Sector 

25-30% 

of GDP 

KEY 

INDUSTRIES 

The main economic sectors are 

financial services and tourism. 

Various economic impact studies 

puts the financial services sector 

at approximately 50 to 60% of 

GDP, while the tourism sector is 

to contribute between 25 to 30% 

of GDP. Other sectors include 

construction, real estate and 

other business activities. 

Like many of the smaller islands 

in the Caribbean, the Cayman 

Islands economy is a service 

based economy. The natural 

resources of the Cayman 

Islands have not enabled it to 

pursue traditional industrial 

development. Historically the 

economy was relatively small 

until four decades ago when the 

country began to pursue tourism 

and financial services as a path 

to economic development. 

-2.9% 

Recovering Well: Real GDP Growth in the 

Cayman Islands* (2010-2014) 

*Source: Cayman Islands ESO annual reports. 

2014 estimates provided in ESO’s semi-annual report for 2014.


Inflation 

Imported Labour 

Unemployment Rate 

6.2 

6.3 

6.2 

1.5% 

50% 

4.7% 

6.1 

4.7 

Goods and Prices 

The vast majority of the country’s 

locally consumed goods are imported, 

and most of this comes from the US 

as the primary trading partner. As a 

result of this and the monetary system 

described below, inflation rates in the 

Cayman Islands tend to track closely 

with that of the US and inflation has 

been fairly low over the past three 

years averaging 1.6% per year. 

2.1% 

1.5% 

Labour and Employment 

The Cayman Islands economy is labour intensive. Due to its 

relatively small population and the impressive economic growth 

over the past four decades, the Cayman Islands relies heavily on 

imported labour to meet the skilled and unskilled human capital 

requirements for sustaining the economy. Imported labour 

comprises just over 50% of the entire labour force. This is likely 

to remain a key feature of the economy for the foreseeable 

future given the relatively small population. 

The unemployment rate in the country has declined significantly 

from 6.1% in 2013 to 4.7% in 2014, reflecting the increase in 

economic growth over the past year. 

‘10 ‘11 ‘12 ‘13 ‘14 

Steady: 

Unemployment in 

the Cayman Islands* 

(2010-2014) 

1.3% 

1.2% 

Taxes and Fiscal Stability 

There are no direct personal income, corporate or property taxes in the Cayman 

Islands. The government relies on a system of indirect taxation focused primarily in 

the following areas: 

0.3% 

‘10 ‘11 ‘12 ‘13 ‘14 

Inflation in the Cayman Islands* (2010-2014) 

• Banks, trust, insurance, company and 

mutual funds fees 

• Land or property transfers fees 

• Work permits 

• Travel and cruise ship taxes 

• Tourist accommodations taxes 

• Business licences 

• Customs and import duties 

Population 

58,000 

The country’s population is estimated 

at around 58,000 according to the last 

census. The country is very cosmopolitan 

and it is estimated that there are over 

100 different nationalities represented 

in the Cayman Islands. 

57% 

43% 

Non Caymanian Caymanian 

Diversity: Estimated Cayman Islands 

Population as at 2014* 

Money Matters 

The Cayman Islands uses the Cayman 

lslands dollar and the local currency 

is backed by US dollar denominated 

securities. This system is managed via 

a full currency board system and there 

is no equivalent of a central bank in 

the country.


IFCs continue to face the growing 

challenges of dealing with ever 

changing global standards focused 

on regulation and other crossborder 

risk issues. Invariably when 

the question of the future of IFCs 

arises, we tend to examine how 

well they might deal with these 

various initiatives. 

For certain, the ability of IFCs to 

better handle these international 

initiatives and strike that ‘perfect 

balance’ between addressing 

jurisdictional risk management 

concerns and commercial success 

remains a key factor in any attempt 

to size up their future sustainability. 

It is also equally and increasingly 

important to reflect on the future 

of IFCs in other ways. 

One such approach is to take a 

serious look at whether IFCs have 

unwittingly found themselves in 

the position of primarily reacting 

to such initiatives in an effort to 

survive instead of working smarter 

to deal with the underlying issues 

behind them. 

Initiatives: The Most 

Recent Goalpost 

Positions 

Some of the challenges faced by the 

IFCs over the years have not only 

maintained their original format 

but intensified, while new initiatives 

have been introduced. 

CFATF Evaluations 

The Caribbean Action Task Force 

(CFATF) is one of the regional arms 

of the FATF, the global standard 

setting body in the area of fighting 

money laundering and the financing 

of terrorism. The original FATF 

Recommendations have been 

revised and several Caribbean IFCs 

are undergoing or about to undergo 

the next round of CFATF Mutual 

Evaluations of their anti money 

laundering and CFT regimes. The 

Cayman Islands, as an example, 

is set to undergo its fourth round 

mutual evaluation in 2017. 

IFCs OUTLOOK: 

LEADING 

THE DEBATE 

These newer rounds of evaluation 

will test whether a country’s legal 

and institutional framework is 

producing the desired results. 

The main factor for most IFCs 

to consider in this respect is 

whether they have the resources 

and infrastructure in place to fully 

comply with the various laws and 

regulations. 

For the most part, IFCs that are 

able to invest resources into full 

implementation of their own 

previously established legal and 

institutional frameworks will likely 

survive these latest round of reviews 

and come through them very well. 

It is unlikely that any of the larger 

IFCs in the Caribbean region such 

as the Bahamas, BVI, Bermuda 

By Paul Byles 

and Cayman Islands will have any 

challenges effectively dealing with 

the required changes resulting from 

any of these reviews. From a purely 

resource perspective some of the 

smaller jurisdictions, be it in the 

Caribbean or elsewhere, may face 

difficulties in terms of making the 

recommended changes in a timely 

manner. 

The main risks facing IFCs generally 

with these evaluations is the 

potential PR damage, as a result 

of being projected in the final 

reports as ‘largely non compliant’ 

in terms of the effectiveness of 

their regimes. This can in turn have 

a negative effect on existing and 

potential clients’ perception of 

the jurisdiction.


Cross-border Tax Information 

Exchange 

Many IFCs have previously 

implemented numerous tax 

information exchange agreements 

in line with the ‘information on 

request’ regime introduced by the 

OECD several years ago. Issues 

related to cross-border information 

have moved on significantly over 

the past six years with automatic 

exchange of information between 

tax authorities fast becoming the 

new standard. 

As an example, the Foreign Account 

Tax Compliance Act (FATCA), 

will require automatic reporting 

of certain information on US or 

UK persons, as defined by those 

respective countries’ FATCA 

regulations. 

Some jurisdictions chose Model 

2 version of FATCA with most 

IFCs, including the Cayman 

Islands, choosing Model 1, the 

latter being where local financial 

institutions report via their local 

tax authority rather than directly 

to the authorities in the US/UK. 

At this stage, many IFCs have put 

the required infrastructure in place 

and local institutions are getting 

closer to being equipped for the first 

reporting date in the latter part of 

2015. 

In addition to FATCA being 

imposed by the US and UK, the 

OECD’s Common Reporting 

Standard has evolved significantly 

over the past two years in particular 

with over 51 jurisdictions already 

committed to start sharing 

information automatically in the 

latter part of 2017 and 2018. This 

standard is an automatic exchange 

of information protocol based 

on FATCA. Some of the key IFCs 

which have already signed on to this 

new initiative to date are: Bermuda, 

the British Virgin Islands, the 

Cayman Islands, Isle of Man, Jersey 

and Switzerland. 

IFCs Should Lead 

the Debate and 

Work Together 

The vast majority of the research 

and technical analysis that supports 

the existing approach by the major 

bodies such as the FATF, OECD, 

IMF etc is being carried out onshore 

in research centers in the USA or 

Europe for example. To date only 

a small amount of such activity 

has been undertaken in the IFCs’ 

jurisdictions themselves. 

The immediate outlook for IFCs 

therefore continues to be determined 

disproportionately by external 

forces on key policy matters. It is 

crucial now that IFC governments 

should position themselves to 

better influence these types of 

policy developments. 

Individual IFCs have made great 

efforts to better communicate the 

positive contributions, as well as 

the quality and depth of regulatory 

standards in their jurisdictions. 

Gains in this area will likely continue 

to be somewhat limited unless there 

is an improvement in the area of 

policy debate. 

It appears that the very well intended 

efforts to rebrand ‘offshore centres’ 

as ‘IFCs’ or to push back whenever 

someone describes an IFC as a ‘tax 

haven’ have not in fact materially 

helped the general perception issues 

that these financial services centres 

face. At the heart of the issue is not 

the labeling and its connotation 

but the more important policy and 

political battle that lies beneath. 

IFC governments should work more 

closely together via an organisation 

that has: an agreed vision and set 

of objectives, the budget and central 

administration infrastructure to 

better research the issues and to 

be able to communicate the 

findings in more technical terms 

to key stakeholders in the major 

international standard setting bodies. 

The over-riding objective must be to 

establish IFCs as having a rightful 

and meaningful place in the global 

financial system, facilitating the 

movement of international capital. 

With a recovering global economy 

and increasing demand from 

international clients for services 

in IFCs, the general economic 

outlook for IFCs remains strong 

in the short to medium term. 

Caribbean IFCs and indeed IFCs 

generally, now need to consolidate 

their experiences over the past 

two decades, by moving away 

from the current reactive approach 

to various initiatives, towards 

achieving greater involvement in the 

international debate regarding the 

role of IFCs in contributing to and 

controlling cross border risks, as 

well as whether perceived, or real, 

risks are being adequately addressed 

by the seemingly never ending wave 

of regulatory initiatives. 


Paul Byles is CEO and Director 

of First Regents Bank & 

Trust in the Cayman Islands, 

which provides private banking 

and investment advisory 

services. He is an experienced 

economist and financial 

services professional having 

worked in the financial services 

industry for 20 years. He is 

a former director of a big 

four consulting firm and 

a former financial services 

regulator. He is author of the 

book ‘Inside Offshore’ which 

deals with the perception of 

offshore centres and Offshore 

Financial Services: a BVI text, 

an introductory textbook on 

offshore financial services.


of its role as trustee may be 

bespoke. This may not be the 

case if an institutional trustee is 

appointed which may not have 

a detailed knowledge of the 

family’s affairs or the ability to 

coordinate effectively the trust’s 

administration with the family 

and its family office or advisers. 

There are two categories of PTCs 

in the Cayman Islands: (1) Licensed 

PTCs and (2) Registered PTCs 

established under the Private Trust 

Company Regulations (2008). 

Registered PTCs are more lightly 

regulated and are not required to 

obtain a Restricted Trust Licence 

from CIMA. This is the most 

common form of PTC in the 

Cayman Islands, suitable for most 

clients’ purposes. Occasionally, 

a client will wish to establish a 

PTC with the benefit of a full 

Restricted Licence; this type of 

PTC is subject to direct regulatory 

oversight by CIMA. 

PRIVATE TRUST 

COMPANIES 

IN THE CAYMAN ISLANDS 

By Robert Lindley 

More and more, ultra high net 

worth families are looking at the 

flexibility and economic benefits of 

establishing their own private trust 

companies (PTCs) to serve as trustee 

of one or more of their family 

trusts. To be established in the 

Cayman Islands, a PTC is required 

to be regulated or registered by 

the Cayman Islands Monetary 

Authority (CIMA). 

PTCs are a good option for very 

wealthy families who wish to retain 

a high degree of confidentiality 

or who may want to retain 

some control over the trust’s 

administration. Also, some settlors, 

particularly those who may be 

resident in civil law jurisdictions 

and not familiar with trusts and 

the role of trustees, may prefer to 

use a PTC in the trust structure, 

appointing family members on to 

the board of directors of the PTC. 

A PTC may be tailored to reflect the 

settlor’s wishes and the scope 

A Registered PTC must maintain 

its registered office at a company 

which holds a trust licence under 

the Banks and Trust Companies 

Law, that is at a licensed Cayman 

Islands trust company. 

A Registered PTC may be 

incorporated as either an Ordinary 

or an Exempted Company depending 

on the client’s requirements. An 

Exempted Company is most 

commonly used for private trust 

companies. The advantages of an 

Exempted Company are as follows: 

• the Company may receive a 

renewable guarantee from the 

Government that it will not 

be taxed for 20 years after 

incorporation should the laws 

of the Cayman Islands be 

changed to impose tax (and 

there are no indications that 

this is likely); 

• it is permitted shares of no par 

value; 

• the name of the PTC need not 

include the word “Limited” 

or “Ltd.”.


The requirements for registration 

of a Registered PTC include the 

provision of the following to CIMA: 

• an annual declaration, 

confirming: 

- the name of the PTC; 

- the names of the directors 

of the PTC; 

- the name of the holder of 

the trust licence providing the 

registered office of the PTC or 

the address of the PTC’s place 

of business; 

- the company is a PTC; 

- the PTC complies with 

the requirements of the 

Regulations. 

• the directors and senior 

officers of a Registered PTC 

are not required to be approved 

by CIMA. However, clients 

may be asked to provide 

the names and professional 

biographies of proposed 

directors. It is advisable that 

at least one of the directors 

have knowledge and experience 

in trust business. If not, 

clients may consider appointing 

an adviser to the board 

of directors who has trust 

administration experience. 

• the name of the PTC must 

include the words “Private 

Trust Company” or the 

letters “PTC”. 

• there is no minimum net 

worth requirement. 

• a Registered PTC is not 

required by CIMA to have 

audited accounts, although 

clients should maintain 

unaudited accounts of both the 

PTC and any underlying trusts 

for good corporate governance 

and in order to comply with the 

Trusts Law. 

in duration and so the ownership 

structure of the PTC need not 

change, which may be appealing 

to the settlor and his family for 

reasons of continuity. 

A Registered PTC may only carry 

out trust business on behalf of 

“connected persons”. A Registered 

PTC cannot administer trusts 

on behalf of third parties or the 

general public. The PTC may only 

administer trusts that fall within 

the scope of the definition of 

“connected persons” under the 

Regulations. CIMA should 

be notified of any significant 

change in the scope of business 

after registration. 

There is an initial registration fee 

of CI$7,000 payable to CIMA and 

thereafter an annual fee of CI$7,000. 

It normally takes approximately 3-4 

business days to complete all aspects 

of establishing a Registered PTC. 

In some cases, certain aspects of the 

process may be expedited. 


Robert Lindley is a senior 

associate with the Private Client 

& Trusts and Dispute Resolution 

practice groups at Appleby. 

He specialises in contentious 

and non-contentious trust and 

private client matters, advising 

on a wide range of Cayman 

Islands and BVI structures and 

issues of dispute. 

PRIVATE TRUST COMPANY (PTC) 

Enforcer – 

professional 

or family 

member 

STAR Trust 

Owns shares in PTC 

Private Trust Company 

• Family members 

• Trusted advisers 

• Licensed administrators 

Trustee – 

external 

trustee 

The shares of a PTC are commonly 

held by one or more individuals 

who may be the settlor or members 

of his family, or by a company 

limited by guarantee or in a trust. It 

is not unusual for a purpose trust, 

such as a Cayman Islands STAR 

Trust, to be used to hold the shares 

of a PTC. STAR trusts are indefinite 

Family Trust 

Holding 

Companies 

Family Trust 

Holding 

Companies 

Family Trust 

Holding 

Companies

Why is the Cayman Islands one of the 

world’s leading international finance centres? 

AD 

Innovative legislation. Practical regulation. 

Robust legal system. Tax neutral. 

Strong Government involvement. 

Quality and experienced professionals in 

the area of fiduciary services, legal services, 

public accounting, investment funds & 

asset management, trusts, capital markets, 

banking and insurance. 

Innovation. Excellence. Balance. 

www.caymanfinance.ky


THE CAYMAN 

“OPPRESSION REMEDY” 

CONSIDERED IN RE-ACORN INTERNATIONAL, INC. 

By Fraser Hughes 

Back in April 2009, I wrote 

about the changes made 

to the Cayman Islands’ 

Companies Law that created a 

form of “oppression remedy”. 

Such a remedy is a feature of 

most common law jurisdictions. 

It allows company shareholders 

to apply to court to obtain relief in 

circumstances where their interests 

are being unfairly disregarded. 

That relief often involves orders 

that regulate the affairs of the 

company going forward to remedy 

the conduct or a manner by which 

minority shareholders’ shares 

may be purchased – a kind of 

corporate divorce. 

In the Cayman Islands, the 

“oppression remedy” can only 

be obtained as alternative relief in 

a petition to wind up a Cayman 

Islands company on the just and 

equitable ground. The 2007 

amendments to the Companies Law 

contain those alternative powers, 

set out in subsection 95(3) of the 

Companies Law (2013 Revision). 

They include powers in the nature 

of injunctive relief and a general 

power to regulate the conduct of the 

company’s affairs in the future. 

An unusual feature of the Cayman 

Islands “oppression” provisions is 

that a party seeking relief from the 

court must first meet the test for 

winding up the company (i.e. ending 

it as a going concern) in order to 

have recourse to the alternative 

relief (Camulos v. Kathrein [2010] 

1 CILR 303). Put another way, 

a party seeking the “oppression 

remedy” relief in Cayman does not 

have a free standing remedy. 

This creates a strange anomaly. In 

order to justify relief less invasive 

than ending the company as a going 

concern, a party must show that the 

facts justify ending the company as 

a going concern. This needs to be 

done on the basis of over 100 years 

of precedents that looked only to 

the question of whether winding up, 

and only winding up, was justified. 

My 2009 paper on this issue 

speculated as to whether using the 

winding up principles as a type of 

jurisdictional trigger for granting 

less invasive relief could lead to 

either, 

i) the granting of alternative relief 

becoming rare in the Cayman 

Islands; or, 

ii) the various tests established 

to (previously) justify winding 

up the company would relax


The oppression remedy was born 

to (among other reasons) provide 

a judicial mechanism to resolve 

shareholder battles without 

liquidating a company’s assets and 

ending it as a going concern. 

in terms of the nature and 

severity of facts required to 

meet the test. 

A recent decision of the Honourable 

Mr. Justice Jones, Q.C. of 6 March 

2015, in the matter of Acorn 

International, Inc 1 (“Acorn”) 

considered and applied s.95(3). 

Acorn was a Cayman Islands 

company listed on the NYSE 

that served as a holding company 

for a group of businesses 

conducting TV direct sales 

business in PRC. A petition 

was brought by a company 

representing the majority 

shareholders (the “Majority 

Shareholders”) and a crosspetition 

was brought by 

companies representing the 

minority shareholders (the 

“Minority Shareholders”). 

A peculiar aspect of the Cayman 

oppression remedy was brought to 

light immediately in the decision as, 

“[b]oth petition and crosspetition 

necessarily plead that it 

would be just and equitable for 

the Court to make a winding up 

order, but both petitions ask the 

Court to exercise its jurisdiction 

under section 95(3) of the 

Companies Law to make orders 

for alternative relief.” 

The oppression remedy was born 

to (among other reasons) provide 

a judicial mechanism to resolve 

shareholder battles without 

liquidating a company’s assets and 

ending it as a going concern. Where 

a company has going concern value, 

the last thing that a disgruntled 

shareholder might want is to realise 

his shares by the destruction of that 

going concern value – cutting the 

corporate baby in half. 

Yet case law interpreting s.95(3) 

suggests that a petitioner must seek 

the very thing he might not want (to 

wind up the company) in order to 

seek the thing that he actually wants 

(an alternative to winding up the 

company). This forces the petitioner 

to argue against (some of) the very 

relief that he seeks in the petition. 

In Acorn, the court concluded 

that the Minority Shareholders 

effectively used their control of 

the Board of Directors to, 

i) remove a representative of the 

Majority Shareholders from 

office; and 

ii) to refuse to hold an EGM 

in the face of a threat by the 

Majority Shareholders to use 

such a meeting to change the 

Board of Directors and take it 

away from the effective control 

of the Minority Shareholders. 

The court concluded that, 

“[w]hether or not a winding up 

order is an appropriate remedy 

must depend on the basis upon 

which the Court comes to the 

conclusion that the jurisdiction 

is engaged. In this case the 

jurisdiction is engaged because 

the Petitioner has justifiably lost 

all confidence and trust in the 

Company’s directors who have 

acted in bad faith and exercised 

their powers for the improper 

purpose of disenfranchising 

the Majority Shareholders so 

as to perpetuate the Minority 

Shareholders’ control of the 

board. It is not necessary to 

make a winding up order 

to remedy this wrong. This 

complaint is capable of being 

remedied by an order that a 

meeting of the shareholders be 

convened for the purpose of 

considering and, if thought fit, 

passing the resolutions which 

Mr Roche has been attempting 

to put forward on behalf of the 

Majority Shareholders and I do


not consider that the pursuit 

of this particular remedy is 

unreasonable in any way. 

I have also concluded that 

it would be unjust in the 

circumstances of this case to 

exercise the Court’s discretion 

by imposing upon the Petitioner 

(and the Majority Shareholders) 

a remedy which they are not 

seeking.” (at paragraphs 71 

and 72) 

The Majority Shareholders might 

not have been seeking to wind up 

the company (in oral argument) but 

as this decision states, they were 

necessarily seeking to do that in 

their petition, because it has to be 

brought by a winding up petition. 

As stated above, recourse to s.95(3) 

can only be had if one can establish 

that it would otherwise be just and 

equitable to wind up the company. 

Put another way, but for s.95(3), 

would the court have wound up 

the company following established 

principles and case law? Arguably, 

the answer in Acorn should have 

been no. It is well established that 

a winding up might be justified 

on the basis of a justifiable loss of 

trust and confidence in a company’s 

directors and that loss is justifiable 

where there is a proven lack of 

probity in the conduct of the 

company’s affairs. However, it is 

also established that a winding 

up petition should be dismissed 

if the petitioner has an adequate 

alternative remedy (Camulos v. 

Kathrein [2010] 1 CILR 303). 

The court in Acorn concluded that 

the directors acted in breach of 

their fiduciary duties. This would 

normally ground a cause of action 

by the company, or a derivative 

action by its shareholder, against 

its directors and (on the facts in 

Acorn) likely justify an injunction 

to prevent the ongoing breaches. 

In addition, to the extent that the 

actions of the directors amounted 

to a breach of Acorn’s articles the 

Majority Shareholders might well 

have been in a position to enjoin 

the breach. As succinctly stated 

by Justice Henderson in Russell 

Alternative Investments Funds Plc 

et al v Laurus Offshore Fund, Ltd. 

et al 2 , 

“First, the articles of association 

constitute a contract to which all 

of the members of the company 

and the company itself must 

adhere. Second, the Court may 

restrain a company and its 

directors from acting in a way 

which violates the articles.” 

Since these alternatives appear to 

have been available, the petition 

might well have failed on the basis 

that adequate alternative remedies 

were available. 

Ultimately, the relief granted in 

Acorn appears unassailably just by 

putting the control of the company 

back into the hands of the Majority 

Shareholders and (consistent with 

oppression remedy case law) the 

court went only so far as was 

necessary to remedy the oppression. 

The law of the Cayman Islands in 

respect of the “oppression remedy” 

continues to evolve. As it stands 

now, it is said to be the case that 

the jurisdiction of the court to 

make orders pursuant to s.95(3) 

is only engaged if it can be shown 

that the court could otherwise 

make a winding up order. The 

difficulty with that state of affairs 

is that the body of law established 

to determine when a winding up 

order can be justified (as taken 

from English and other common 

law jurisdictions) has evolved in 

jurisdictions where stand-alone 

oppression remedies are available. 

Naturally, the barrier to entry is 

high since the result is ending the 

company as a going concern, and 

disproportionately high if the same 

test is being used to determine when 

a court can grant relief that is far 

short of ending a company as a 

going concern. 

It might not be intellectually 

sustainable to use a test meant 

to determine that winding up 

only (and no alternative relief) is 

justified – and to use it to determine 

if alternative relief is justified. The 

temptation to incrementally relax 

the jurisdictional trigger might 

prove irresistible. 

1 

Acorn International, Inc. FSD 109 of 

2014. Coram: Jones J 

2 

Ruling - Russell Alternative Investments 

Funds Plc et al v Laurus Offshore Fund, 

Ltd. et al Cause No.430 of 2008 18.09.08. 


Fraser Hughes (B.A., LL.B, J.D.) 

is a Litigation Partner with 

Conyers Dill & Pearman. He has 

particular expertise in fraud, 

accounting, insolvency and 

mutual fund-related litigation. 

Fraser has been involved in 

most of the significant hedge 

fund insolvency disputes in the 

Cayman Islands over the last 

seven years. Prior to joining 

Conyers in 2007, he was a 

distinguished member of the 

Ontario bar and has extensive 

trial experience, appearing 

as counsel in numerous 

high-profile insolvency 

and restructuring matters, 

including representing a key 

defendant in a civil conspiracy 

matter that turned into one 

of the longest civil trials in 

Canadian history.

Cosmopolitan 

Cosmopolitan 

Caribbean 

Cosmopolitan 

Caribbean 

Certain images come to mind whenever we think of the Caribbean. 

Images Certain of crystal images blue come water to mind and white whenever sand we beaches. think of of the Images the Caribbean. 

of 

adventure, Images music, of crystal mood blue and water culture. and white Images sand of beaches. being pleasantly, Images of of 

perhaps 

adventure, even mercifully, 

music, mood removed 

and culture. from the 

Images rest 

of 

of of being 

the world. 

pleasantly, 

perhaps even mercifully, removed from the rest of of the the world. 

These images come with certain 

Overseas Territory where English is 

These 

perceptions. images 

That come 

the with 

Caribbean certain 

Overseas 

is a spoken, Territory 

over 100 where 

different where English 

nationalities English is 

perceptions. 

place solely That 

for retreats, the the Caribbean 

not is 

advances. is a a spoken, 

make over 

up the over 100 

more 100 different 

than different nationalities 

55,000 people 

place 

A paradise solely 

you for 

discover 

for retreats, not 

once you’ve 

not advances. 

make 

who 

make up 

call the 

up the 

Islands 

the more more than 

home. 

than 58,000 55,000 people people 

A paradise you you discover once once you’ve you’ve who who call call the the Islands Islands home. home. 

enjoyed 

enjoyed 

success - not a breeding ground 

success -- not not a breeding ground ground 

for that for success. 

Widely regarded to be the safest 

for that that success. success. 

Widely Widely regarded regarded to to be be the the safest safest 

destination destination the destination 

in 

in 

the 

the 

Caribbean, 

Caribbean, 

Cayman 

Cayman 

But one But country in the Caribbean defies also boasts the But one one country in in the the Caribbean defies defies 

also 

also 

boasts 

boasts 

perhaps 

perhaps 

the 

the 

region’s 

region’s 

most 

most 

those perceptions, those offering their 

diverse, and those 

perceptions, 

perceptions, 

offering 

offering 

in 

in 

their 

their 

diverse, 

diverse, 

cosmopolitan 

cosmopolitan 

and 

and 

prosperous 

prosperous 

place a place 

place 

simple a simple 

simple 

truth. truth. For 

truth. For 

For 

entrepreneurs, 

entrepreneurs, 

society. society. 

society. 

What What 

What makes 

makes Cayman 

Cayman such 

such 

a a 

a 

corporate corporate 

corporate leaders leaders 

leaders and investment and investment 

and investment 

desirable place place to to invest, live live and work 

desirable place to invest, live and work 

managers managers 

managers the world the world 

the over, over, 

world to over, live to 

to better live better 

live better is the is the Islands’ Islands’ legislative framework, 

is the Islands’ legislative framework, 

is to work is to 

is to better. work better. 

work better. Here in Here 

Here the in 

in Cayman the Cayman 

the Cayman stability stability and and lifestyle. lifestyle. 

stability and lifestyle. 

Islands, Islands, 

Islands, you will you 

you do will 

will both. do both. 

do both. 

A major factor that sets the Cayman 

A major A major factor factor that that sets sets the the Cayman Cayman 

Cayman is located just one hour from Islands apart is the absence of any direct 

Cayman Cayman is located is located just one just hour one from hour from Islands Islands apart apart is the is the absence absence of any of any direct direct 

Miami, three hours direct from New taxation. The government does not 

Miami, Miami, three hours three direct hours direct from New from New taxation. taxation. The The government does does not not 

York and is served by eight international impose personal or corporate income 

York and York is served and is served by eight by international 

eight international impose impose personal personal or corporate income income 

airlines making more than 55 weekly taxes. There are no taxes on profits and 

airlines airlines making making more than more 55 than weekly 55 weekly taxes. taxes. There There are no are taxes no taxes on profits on profits and and 

flights from 13 cities in the United States, gains from investment, nor are there any 

flights from flights 13 from cities 13 in cities the in United the United States, States, gains gains from from investment, investment, nor nor are are there there any any 

Canada and the UK. In this British 

estate taxes. 

Canada Canada and the and UK. the In UK. this In British this British estate estate taxes. taxes.

There are neither property taxes nor 

controls on foreign ownership of 

property, with a robust registration system 

guaranteeing clear title. There are no 

time deadlines for building on raw land, 

ADVERTORIAL 

future generations. 

There are no exchange control restrictions 

or regulations in the Cayman Islands. The 

Cayman Islands dollar is tied to the US 

dollar and the latter is freely accepted and 

used within the local economy. 

centre with more than $1.4 trillion in assets, 

Cayman is the world’s number-one hedge 

fund jurisdiction. Cayman has attracted all 

the Cayman Islands’ legal and regulatory 

frameworks, stability, infrastructure and 

access. None comes close to Cayman’s 

quality of life - Caribbean living with 

amenities on par with many world 

capitals. 

With its state-of-the-art infrastructure 

excellent hotel and conference facilities, 

stable economic and political climate, high 

standard of living and a well-educated 

talent pool, Cayman is quite literally built 

for investment success. 

To live and work in Cayman is to be a part 

of something magical. A warm, welcoming 

community surrounded by unmatched 

natural beauty and an enviable quality of 

life, Cayman offers island ease with the 

conveniences of city living. 

neighbourhoods and housing options, but 

also in the number of quality educational 

institutions that dot the Islands, as well as 

in the abundant sports and recreational 

activities and shopping options. 

The Islands also boast top-notch 

healthcare services and state-of-the-art 

hospitals, including Health City, recently 

opened centre of excellence in cardiac 

surgery, cardiology and orthopedics. 

Beyond the practicalities of living, Cayman 

offers seemingly endless opportunities for 

both adventure and serenity. 

If you love the water, few places compare 

to the Cayman Islands, not only for 

luxurious waterfront living it affords, but 

also for the thrills it provides. 

Long regarded as one of the world’s 

premier dive and snorkelling destinations, 

Cayman is famous for watersports ranging 

and kayaking as well as environmental 

conservation efforts. 

If golf is your passion, Grand Cayman 

features an 18-hole Championship 

Course, along with two 9-hole courses 

designed by Jack Nicklaus and Greg 

Norman. Here you can also take part in 

tennis, squash, rugby, soccer and more. 

Dubbed the “Culinary Capital of the 

Caribbean”, Cayman is home to over 

200 restaurants, including those by 

acclaimed chefs Michael Schwartz, Cindy 

Hutson and Eric Ripert of Le Bernardin, 

who hosts the annual Cayman Cookout– 

one of many international events held each 

year that have enhanced Cayman’s global 

visibility and cosmopolitan reputation. 

All of which makes it little wonder why so many of the world’s leading 

funds in Cayman, but to build their lives here as well. 

Nowhere is the cosmopolitan Caribbean more vibrant than in the town 

of Camana Bay. Dart Realty’s mixed-use development offers shops, 

of being the most livable community in the Caribbean.


While Cayman’s role in the global 

economy is better understood 

in financial circles, it is less well 

appreciated that IFCs in general 

and the Cayman Islands to a large 

extent, also help development in 

emerging nations. IFCs have been 

responsible for some of the biggest 

moves out of poverty on the planet, 

according to leading economists, 

which contrasts with accusations 

that the activities offshore hinder 

the developing world. 

the service sector. The results of 

this deliberate policy have been 

extremely successful in terms of 

mobilising inward foreign direct 

investment. According to a 2010 

report from the World Bank – 

Foreign Direct Investment – The 

China Story, China received some 

20% of all FDI to developing 

nations over the previous ten 

years. The World Bank said that 

inbound FDI played a significant 

role in economic development 

involved to a significant extent. 

Sharman’s report, citing 2008 

data from the US China Business 

Council, showed that international 

capital routed through the Cayman 

Islands is the sixth biggest source of 

foreign direct investment to China 

at US$3.2 billion. For outbound 

investment, 10 times more Chinese 

capital flows into Cayman Islands 

structures than it does to the United 

States. What this means practically 

for China is that capital can be 

The definitive economic study on 

how IFCs and their institutions 

increase growth and alleviate 

poverty in developing countries was 

written by Professor Jason Sharman 

of Griffith University in Brisbane. In 

his paper: ‘International Financial 

Centres and Developing Countries 

– Providing institutions for growth 

and poverty alleviation’, Sharman 

outlines how China’s interaction 

with IFCs like Cayman and the 

British Virgin Islands helped drive 

the fast growth rates that China has 

seen over the past 35 years. 

IFCs AND 

GLOBAL 

GROWTH: 

Often cited as the greatest example 

of poverty reduction the world 

has ever seen, economic growth 

in China took 680 million people 

out of poverty between 1981 and 

2010, according to The Economist, 

reducing its extreme poverty 

rate from 84% to 10% of the 

population along the way. 

Professor Sharman argues that 

this effect comes from the efficient 

institutions present in IFCs which 

are necessary to drive growth 

but are often unavailable locally. 

These efficient institutions promote 

growth by lowering transaction 

costs, which is attractive to 

companies in developing nations, 

often hampered by domestic laws 

and regulations which tend to be 

confusing, rigid, politically driven 

and poorly enforced. 

China is notable for its open 

door policy to IFCs, as a way of 

allowing foreign investment in its 

manufacturing industries and later 

in China, with foreign invested 

enterprises accounting for over half 

of China’s exports and imports. 

They also accounted for 30% of 

Chinese industrial output and 22% 

of profits. “Foreign investment 

has catalysed China’s economic 

reform,” the World Bank said, 

which supported a record high 10% 

growth rate during most of the 

period between 1980 and 2010. By 

engaging with IFCs, China allows 

its banks, corporates, and these 

days, its many HNWIs to take 

advantage of Cayman’s efficient 

corporate regime, which results in 

growth and investment back into 

the local economy. 

The foreign investment that 

flows into China – as well as the 

investment flows from China – 

typically pass through tax neutral 

IFCs, with the Cayman Islands 

raised and deployed in the most 

efficient manner possible, which 

means greater investment at home, 

higher employment and rising 

incomes. 

With its close proximity to Hong 

Kong it is no surprise that most FDI 

to China comes from there (US$41 

billion in 2008), but there is still 

a further role for both Cayman 

Islands and British Virgin Islands 

companies which are interposed 

in structures with the Hong Kong 

vehicle, to take advantage of the 

efficient and flexible offshore 

corporate regimes, for example 

the Cayman exempted limited 

partnership vehicle is used for 

private equity investment into 

China. 

In his analysis, Sharman outlines 

various ways in which Chinese


companies or financial institutions 

engage with IFCs and the drivers for 

that behaviour. Interestingly in most 

cases Cayman’s tax neutrality is not 

considered the primary motivating 

factor. Of more significance are the 

sophisticated, robust and efficient 

institutions they host. 

Real value is added to the Chinese 

economy through lower transaction 

costs as foreign capital raised overseas 

through IFCs is then channeled back 

into the domestic economy, essentially 

augmenting investment. Drawing 

on research from Chinese companies 

listed in New York, Sharman said 

while the ease of incorporating in 

Cayman is important (it takes just 

two to three days), even more so 

is the compatibility of Cayman 

companies with listing requirements 

on both the New York and Hong 

Kong stock exchanges, which critically 

means that the listing can take place 

in the market that will provide the 

highest valuation. 

When a Chinese company is looking 

to attract international investors for 

an IPO or acquisition, one would 

tend to see a Cayman Islands holding 

company in the US or Hong Kong, 

which owns the operating Chinese 

subsidiary. In addition to creating a 

solution for Chinese firms to transfer 

foreign currency to and from China, 

as is needed in complex operations, 

companies formed in IFCs provide 

greater flexibility for share issues, 

compared with the single class 

that China allows for foreign 

invested firms. 

Sharman concludes his analysis 

with a review of events in April 

2009 when the G20 met in London 

with France, Germany and the 

UK pressing for sanctions and 

an endorsement of the OECD’s 

list of tax havens. After strong 

disagreement from the Chinese 

delegation, which threatened to 

derail the process, a compromise 

ensured that China’s own financial 

centres of Hong Kong and Macau 

would be excluded from the list 

with an immediate end to talk of 

sanctions. With China well aware 

of the beneficial role these centres 

play in developing its economy, 

while its opposition to sanctions 

against IFCs may have been self 

motivated, China’s actions will have 

positive implications for future 

global growth in emerging markets 

and poverty alleviation for the 

developing world. 

As global economies have recovered 

from the worst of the financial 

crisis, there has been greater 

acceptance that the crash was 

caused more than anything by 

regulatory failures onshore, in 

particular regulatory failures in 

the US mortgage market. Offshore 

jurisdictions like the Cayman 

Islands, meanwhile, have seized 

the opportunity to demonstrate 

a high level of cooperation with 

international regulatory authorities 

and support the global initiatives 

on tax transparency, such as 

FATCA and the exchange of tax 

information. 

At the same time, there has been a 

greater appreciation of the benefits 

that IFCs such as Cayman bring to 

global economic growth. Cayman 

structures have been in place 

for many years to help US and 

European aircraft manufacturers 

sell commercial aircraft to airlines 

all over the world, resulting in more 

jobs for that industry. There is also 

greater understanding of Cayman’s 

role in the insurance sector as 

the traditional captive market 

has developed along the cutting 

edge with catastrophe bonds and 

alternative risk transfer. 

Despite condemnation by certain 

US politicians at the height of the 

financial crisis, Cayman vehicles 

even played an important role in 

the US government’s TALF program 

(Term Asset-Backed Securities Loan 

Facility), which aimed to get private 

investors to take toxic assets off 

bank balance sheets to try and help 

banks recover from the crisis and 

reset the financial system. 

With the economic recovery that 

followed and the spending cycle 

we are now in, billions of dollars 

of private equity investment is still 

to be deployed – much of which 

will go to the emerging markets. As 

these geographical hot spots become 

the new centres for global growth, 

Cayman partnerships and companies 

are helping channel these funds back 

into the emerging economies through 

infrastructure and energy projects, 

which in turn increase growth in the 

developing world. 

IFC incorporated companies also help 

remove some of the risks of doing 

business abroad. Where a number 

of international parties are looking 

to invest in China through a joint 

venture, each partner typically forms 

an IFC company which holds the 

operating firm in China. The benefit 

here being that if any dispute were to 

arise, it would be handled in a more 

sophisticated court system, which 

brings great comfort to investors and 

underpins investment activity. 


Jude Scott, CEO of Cayman Finance, is a 

former Audit Partner of Ernst & Young and 

former Global Chief Executive Officer of 

Maples and Calder. 

Jude has served on various Cayman 

Islands government and private sector 

committees, including the Cayman Islands 

Society of Professional Accountants, the 

Cayman Islands Financial Services Council, 

the Education Council, the Insolvency 

Rules Committee and the Stock Exchange.


THE CAYMAN ISLANDS 

FINANCIAL SERVICES 

REGULATORY 

FRAMEWORK 

By Cindy Scotland 

Prudent and robust regulation is 

central to the Cayman Islands being 

an international financial centre of 

repute. As the principal regulator 

for the financial services industry of 

the Cayman Islands, the Cayman 

Islands Monetary Authority 

(CIMA) takes its responsibilities 

very seriously. Part of the CIMA’s 

strategic planning process for 

the period 2014-16 included the 

crafting of a new mission statement 

to reflect CIMA’s evolving role, and 

the dynamic nature of the industry 

which it regulates. 

CIMA’s renewed mission is, 

“To protect and enhance the 

reputation of the Cayman Islands 

as an International Financial 

Centre by fully utilising a team 

of highly skilled professionals 

and current technology, to carry 

out appropriate, effective and 

efficient supervision and regulation 

in accordance with relevant 

international standards and by 

maintaining a stable currency, 

including the prudent management 

of the currency reserve.” 

In addition, CIMA developed its 

first vision statement to reflect 

its dedication to continuous 

improvement, which reads: 

“Committed to continually 

enhancing the Cayman Islands 

Monetary Authority’s position


as a financial services regulator 

of excellence, consistent with the 

jurisdiction’s standing as a leading 

international financial centre.” 

The Regulatory Framework 

There are several elements which 

make up the framework for 

CIMA’s regulation and supervision 

of financial services, and its 

cooperation with fellow regulators. 

Among these elements are the 

relevant laws and regulations passed 

by the government of the Cayman 

Islands; the rules and statements 

of principle and of guidance issued 

by CIMA; the regulatory policies 

and procedures detailed in CIMA’s 

Regulatory Handbook and other 

manuals; the memoranda of 

understandings (MOUs) undertaken 

by CIMA; and the international 

standards to which CIMA 

adheres. The relevant international 

standards are those set by the Basel 

Committee on Banking Supervision; 

the International Organisation of 

Securities Commissions (IOSCO); 

the International Association of 

Insurance Supervisors (IAIS); and 

the FATF’s 40 Recommendations. 

CIMA takes a combined rulesbased 

and risk-based approach 

to regulation and supervision of 

financial services. CIMA processes 

licence/registration applications 

and performs due diligence. CIMA’s 

remit includes responsibility 

for registration, licensing and 

supervision of banks, money 

services businesses, cooperative and 

building societies, trusts, insurance 

business, companies management, 

corporate services, investment funds 

and securities services. 

A major development which 

occurred since our last update 

for this publication is the coming 

into effect of the Directors 

Registration and Licensing Law 

(DRLL). Under this legislation, 

non-resident directors and Cayman 

Islands-based directors of entities 

regulated under the Mutual Funds 

Law are now required to be 

either registered or licensed with 


Authority. This requirement is also 

applicable to certain “excluded 

persons” under the Securities 

Investment Business Law. 

The filings must be done 

electronically through CIMA’s 

Director Gateway portal. This 

requirement is expected to improve 

data quality and significantly 

enhance the CIMA’s ability to 

effectively carry out its mandate 

under the Monetary Authority Law. 

Status of Cayman’s Financial 

Services Industry 

The Cayman Islands is home 

to 195 banking institutions. 

The jurisdiction is ranked fifth 

internationally based on the value of 

cross-border liabilities booked from 

the Cayman Islands and sixth in 

terms of cross-border assets booked. 

With regard to captive insurance, 

the Cayman Islands is the second 

largest jurisdiction in the world, the 

leading jurisdiction for healthcare 

captives, and a leading jurisdiction 

for catastrophe bonds. 

The Cayman Islands also continues 

to be the premier jurisdiction of 

choice for fund domiciliation. As 

at 31 December 2014, the total 

number of regulated funds under 

CIMA’s supervision was 11,010. 

It comprised 7,835 registered 

funds; 2,685 master funds; 386 

administered funds; and 104 

licensed funds. Such numbers 

indicate the strength of the hedge 

funds industry and also the 

confidence the global community 

has in the jurisdiction. It is 

therefore abundantly clear why 

the Cayman Islands was named 

the Best Hedge Funds Services 

Jurisdiction at the Hedgeweek 

2015 Awards in London. 

There were 137 trust services 

companies operating in the 

jurisdiction at 31 December 2014, 

thus maintaining the country’s 

standing as a leading domicile for 

the provision of these services. 

International Cooperation 

The Cayman Islands Monetary 

Authority is very cognisant of 

the fact that the jurisdiction’s 

thriving financial services industry 

exists as part of a global system. 

Therefore, every effort is made to 

increase international cooperation 

and collaboration, without 

compromising the rights to 

confidentiality of legitimate clients 

in order to ensure compliance with 

financial services best practice. 

CIMA is represented in various 

bodies, including: the Group of 

International Financial Centre 

Supervisors (GIFCS) (formerly 

the Offshore Group of Banking 

Supervisors (OGBS)); Caribbean 

Group of Banking Supervisors 

(CGBS); Association of Supervisors 

of Banks of the Americas (ASBA); 

International Association of 

Insurance Supervisors (IAIS); 

Group of International Insurance 

Centre Supervisors (GIICS); 

International Organisation of 

Securities Commissions (IOSCO); 

and the Financial Stability Board’s 

Regional Consultative Group for 

the Americas. 

CIMA keeps abreast of relevant 

legislation in other jurisdictions 

which has an impact, or potential 

impact, on the Cayman Islands. 

This is done with a view to 

reassessing the adequacy of the 

jurisdiction’s regulatory regime. 

For example, the Alternative 

Investment Fund Managers 

Directive (AIFMD), which was 

implemented across Europe on 

22 July 2013. This directive is 

aimed at bringing managers of 

alternative investment funds, such 

as hedge funds and private equity 

funds managed or marketed in 

Europe, under similar regulatory 

arrangements as mutual funds and 

pension funds and their managers. 

In order to ensure that Cayman 

domiciled funds continue to be 

marketed in the European Union 

(EU) under the AIFMD, CIMA 

has entered into MOUs with 27


EU countries and the Monetary 

Authority Law was amended 

in March 2013, to give CIMA 

additional powers to provide 

assistance to EU regulators pursuant 

to AIFMD requirements. 

CIMA is looking at the suitability 

of the current regulatory framework 

in light of the potential extension 

of the passport regime to third 

countries (countries outside the 

EU – including Cayman) by the 

European Union during the course 

of 2015. In August 2014, the 

Authority’s board commissioned 

the establishment of a working 

group to examine how the 

regulatory framework for funds 

and fund managers can be adapted 

to meet the needs of funds that 

would like to market their units 

in the European Union under a 

potential passporting regime. The 

working group met in December 

2014 through February 2015 and 

examined potential amendments 

to the Mutual Funds Law and 

the Securities Investments Business 

Law, including the creation of 

new regulations. 

In January 2015, CIMA issued 

two surveys to solicit the views of 

the financial services industry on 

matters relating to the AIFMD. One 

survey was intended to determine 

the needs and views of industry 

relating to the impact of the 

delegation provisions of the AIFMD 

on the Cayman Islands funds 

industry. This feedback will help 

CIMA to assess whether there is a 

The Cayman Islands is 

the second largest captive 

insurance jurisdiction in 

the world. 

need to strengthen the regime for 

fund managers that are delegates of 

European Union managers. 

The other survey looked at 

depositaries and managers. The 

AIFMD requires a fund manager to 

appoint a depositary for each fund 

it manages. There is currently no 

regulatory regime for depositaries 

in the Cayman Islands, and any 

such regime implemented in 

the jurisdiction must meet the 

requirements for depositaries 

contained in the AIFMD. 

Conclusion 

CIMA is committed to playing 

its part in helping to ensure the 

continued success of the Cayman 

Islands financial services industry. A 

significant development in the first 

part of 2015 was the establishment 

of a dedicated Onsite Inspection 

Unit. This Unit is focussing 

primarily on high-risk entities 

and developing best practices and 

standards for onsite inspections 

across all regulatory divisions. 

Another component of CIMA’s 

role is continued enhancement of 

our processes to make it easier 

for industry stakeholders to do 

business, primarily through the use 

of technology. CIMA launched a 

new online portal in January 2015, 

which enables registered companies 

and licensees to submit applications 

and make change requests 

electronically. The system is called 

Regulatory Enhanced Electronic 

Forms Submission (REEFS). 

The Cayman Islands – with its 

modern infrastructure; legal and 

financial services providers with 

strong multinational experience 

and capabilities; efficient regulatory 

body with an outstanding, proven 

track record – is well known as an 

attractive domicile for business. In 

fact, the Cayman Islands regularly 

receives high ratings and ranks well 

in the Global Financial Centres 

Index (GFCI), placing 39th in the 

GFCI 17 publication, which was 

released in March 2015. 

Working together with government 

and industry, CIMA has been an 

active participant in the National 

Risk Assessment (NRA) currently 

being conducted for the Cayman 

Islands. This NRA will assist 

in identifying any deficiencies, 

which exist in how the jurisdiction 

identifies, assesses and understands 

money laundering and terrorist 

financing risks, and contribute 

to efforts to maintaining Cayman 

as a leading international 

financial centre. 


Cindy Scotland is the Managing 

Director of the Cayman Islands 

Monetary Authority. She 

represents the jurisdiction on all 

regulatory matters with other 

international bodies including 

the Group of International 

Financial Centres Supervisors, 

the International Organisation 

of Securities Commissions, the 

International Association of 

Insurance, and the Financial 

Stability Board Regional 

Consultative Group.

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What is FATCA? 

FATCA refers to US legislation 

more fully known as the Foreign 

Account Tax Compliance Act and 

includes the US Treasury regulations 

implementing it. It was enacted 

as part of the Hiring Incentives to 

Restore Employment Act of 2010 

(otherwise known as the, “HIRE 

Act”) on 18 March 2010. 

The goal of FATCA is to enable 

the IRS to identify US persons 

(generally US citizens or residents) 

seeking to evade US taxation by 

holding assets in foreign (i.e. non- 

US) accounts, whether in their own 

name or via non-US structures such 

as trusts or funds. FATCA requires 

information about US persons and 

their foreign accounts to be reported 

directly or indirectly to the IRS. 

Non-compliance with FATCA 

may lead to a US withholding tax 

of 30% on US source income, 

including the gross sales proceeds 

of certain U.S. assets. 

What is UK FATCA? 

UK FATCA (also known as “son 

of FATCA”) is the name popularly 

(but not officially) given to a 

regime, which the UK government 

promoted from 2012 onwards in 

response to FATCA. In essence, the 

goal of UK FATCA is the equivalent 

of FATCA but in respect of UK 

residents rather than UK persons, 

i.e. it is to enable HMRC to identify 

UK residents seeking to evade UK 

taxation by holding assets in foreign 

(i.e. non-UK) accounts, whether 

in their own name or via foreign 

structures such as trusts or funds. 

How is FATCA Implemented in the 

Cayman Islands? 

The Cayman Islands entered into 

a Model 1 inter-governmental 

agreement (US IGA) with the US. 

Under Model 1 IGAs, financial 

institutions gather the relevant 

information and report this to 

their home country (usually its tax 

authority). The home country then 

forwards on the information to the


GETTING UP TO DATE ON 

FATCA 

A RECAP AND UPDATE 

By Tim Dawson 

(c) There is a special regime in 

UK FATCA applicable to 

individuals who are resident 

but not domiciled in the UK 

known as the Alternative 

Reporting Regime. 

(d) In Cayman the US IGA and UK 

IGA has been given the force of 

law by domestic legislation. The 

relevant statutory provisions for 

the US IGA and the UK IGA are 

found in the Tax Information 

Authority (International Tax 

Compliance) (United States of 

America) Regulations, 2014 

and the Tax Information 

Authority (International Tax 

Compliance) (United Kingdom) 

Regulations, 2014 respectively, 

each coming into force on 

4 July 2014. 

The Cayman regulations in essence 

impose obligations on reporting 

Cayman financial institutions to 

adopt due diligence procedures 

for identifying and reporting US 

and UK Reportable Accounts and 

require them to make an annual 

return to the Cayman Islands Tax 

Information Authority (TIA). Failure 

to comply with the regulations is an 

offence punishable by a fine and/or 

imprisonment of a term of two years. 

IRS. A similar inter-governmental 

agreement was signed with the 

United Kingdom (the UK IGA) 

(together with the US IGA, the 

IGAs), with respect to the automatic 

exchange of tax information 

relating to UK tax resident persons 

and entities. 

The draftsmen of UK FATCA 

deliberately adopted terminology 

and approaches used by FATCA in 

order to create a reporting regime 

that is similar to FATCA with a 

view to minimising the compliance 

and systems burdens faced by 

financial institutions. In particular, 

the UK IGA is based on the US IGA 

and the Guidance Notes (discussed 

below) combine the guidance 

issued in respect of FATCA with 

UK FATCA. 

There are, however, some key 

differences, as follows: 

(a) There is no equivalent in 

UK FATCA to the 30% 

withholding tax under 

FATCA as a penalty for noncompliance. 

Instead criminal 

penalties for non-compliance 

are contained in the domestic 

legislation enacting UK FATCA; 

(b) UK FATCA is targeted at UK 

residents (not citizens), whereas 

FATCA is targeted at US 

citizens (wherever resident) and 

US residents; and 

The IGAs and the domestic 

legislation are supplemented by 

extra-statutory guidance notes 

(the Guidance Notes) that provide 

some practical help on the manner 

in which the IGAs should be 

implemented. The latest version of 

the Guidance Notes from the TIA 

was issued on 15 December 2014. 

Additionally, the Cayman Islands 

Department for International 

Tax Cooperation (the DTIC) has 

released a user guide in respect of the 

Cayman Islands Automatic Exchange 

of Information Portal (the Portal), 

which is discussed further below. 

What are the Reporting 

Requirements of Cayman 

Financial Institutions? 

Broadly, “financial institutions” 

are defined in the relevant Cayman


All Cayman 

Islands financial 

institutions will be 

reporting financial 

institutions unless 

they fall within a 

narrow range of 

exemptions, which 

will be relevant in 

very few cases. 

legislation and guidance notes 

under the categories of investment 

entities, custodial institutions, 

depositary institutions and specified 

insurance companies. A Cayman 

Islands financial institution is any 

financial institution organised 

under the laws of or resident in the 

Cayman Islands. 

All Cayman Islands financial 

institutions will be reporting 

financial institutions unless they 

fall within a narrow range of 

exemptions, which will be relevant 

in very few cases. Therefore, for 

instance, the vast majority of hedge 

and private equity funds will be 

reporting financial institutions. 

Pursuant to the Cayman Islands 

implementing legislation, all 

Cayman Islands reporting financial 

institutions have to register on 

the IRS website and obtain a 

global intermediary identification 

number (GIIN). 

Cayman Islands reporting financial 

institutions had until 30 April 2015 

to notify the DTIC of: 

• their name 

• their FATCA classification 

• GIIN 

• Principal Point of Contact 

The deadline for submission of 

FATCA reports by Cayman Islands 

financial institutions is 31 May 

annually. 

The reporting format is consistent 

with currently published Schemas by 

the IRS for US FATCA and by the 

OECD for the Common Reporting 

Standard (see further below), 

and is in XML format. Cayman 

Islands financial institutions have 

the option of submitting reports to 

the DTIC individually, by entering 

information manually on the 

website, or via bulk submission by 

uploading an XML file(s). Cayman 

Islands financial institutions that 

have registered as a sponsoring 

entity have the ability to upload an 

XML file containing information for 

multiple financial institutions. 

However, according to DTIC 

releases, and contrary to domestic 

legislation in force at the time of 

writing, it is not necessary to file 

a nil return. Given their customer 

base, many Cayman financial 

institutions may not have anything 

to report. The DTIC has however 

noted that the Portal will accept nil 

returns. Furthermore, the Office of 

the Chief Counsel at the IRS has 

stated that submitting a nil return 

is “best practice” and that the IRS 

intends to use non-filing for three 

consecutive years as an indicator of 

possible non-compliance. Once a 

financial institution is registered on 

the Portal (and has carried out all its 

requisite due diligence), filing a nil 

return is straightforward. Therefore 

we expect that many financial 

institutions will choose to file a nil 

return as a matter of course. 

The Extension of FATCA to 

Other Countries 

The OECD, working with the G20 

is working on proposals to develop 

a global standard for the automatic 

exchange of information on tax, 

to be known as the “Common 

Reporting Standard”. In January 

2014 the OECD published a report 

containing its proposals including 

a template form of IGA, which 

is substantially influenced by the 

FATCA approach. On 29 October 

2014, 51 jurisdictions (including 

the Cayman Islands), signed 

an agreement to automatically 

exchange information based on 

Article 6 of the Convention on 

Mutual Administrative Assistance 

in Tax Matters. This agreement 

specifies the details of what 

information will be exchanged and 

when, as set out in the Common 

Reporting Standard. Many other 

countries have agreed to become 

signatories. Therefore, it is 

reasonable to expect that, in the 

near future, automatic exchange of 

information on tax will be rolled 

out to other EU member states and 

G20 countries and other nations 

after that. 


Tim Dawson, Senior Associate, 

leads Mourant Ozannes’ 

regulatory practice in the 

Cayman Islands. His work 

includes acting on mergers, 

acquisitions and disposals of 

regulated and unregulated 

entities, joint ventures, advising 

on regulated activities, stock 

exchange listings and the 

establishment and servicing of 

investment funds. Tim is fluent 

in Portuguese and Spanish and 

has lived and worked in Brazil.


CENTRAL 

BENEFICIAL 

OWNERSHIP 

REGISTRY: 

A CAYMAN PERSPECTIVE 

By David Roberts and Mark Lewis 

As UK politics in 2015 

moved towards the May 

general election, it was little 

surprise that the issue of beneficial 

ownership and the introduction 

of a central registry for the main 

offshore financial centres, returned 

to the political agenda. With the 

main parties battling a tight contest, 

the opportunity to shift the spotlight 

to ‘tax havens’ as hiding places for 

elusive corporate profits, provided 

plenty of sound bites for politicians 

in the run up to the election, with 

little regard for the flaws in the UK 

proposed system, the absence of 

similar reporting in other leading 

economies or the merits of beneficial 

ownership collection systems in 

IFCs, particularly the Cayman 

Islands. 

As part of the continued 

repercussions of the financial 

crisis, pronouncements from the 

G8 and G20 groups of nations 

have encompassed an international 

strategy to counter cross-border 

tax evasion and tax avoidance 

by identifying and disclosing to 

the public true beneficial ownership 

of assets and wealth within 

cross border and interlinked 

corporate structures. As part of 

this strategy, UK Prime Minister 

David Cameron stated in 2013 

that “a publicly accessible registry 

provides the best outcome for 

sound corporate behaviour”, 

with benefits for effective law and 

tax enforcement and allowing 

authorities, particularly in the 

developing world, to prevent misuse 

of corporate structures.


Alongside a raft of measures 

outlined at the G8 summit in 

Northern Ireland in summer 2013, 

Prime Minister Cameron proposed 

a public register of beneficial 

company ownership, revealing 

ultimate ownership and control. 

Taking the lead on the issue, Prime 

Minister Cameron insisted that 

the UK’s Crown Dependencies 

and Overseas Territories (IFCs) 

outline the steps they would take 

to implement central registers of 

information and open the contents 

of those central registers to law 

enforcement agencies. 

From the perspective of the 

IFCs, the UK proposals were 

Far from being a corporate 

domicile, which enables secrecy, 

Cayman’s regulatory framework 

for licensed corporate service 

providers ensures that the correct 

information is requested, recorded 

and verified, due diligence takes 

place and also that information on 

beneficial ownership information 

is regularly refreshed and updated. 

This contrasts with the UK’s selfreporting 

system, which, despite 

accessibility to the public, is easily 

manipulated where real criminal 

intent to conceal ownership exists. 

Individuals engaged in fraud are 

highly likely to provide false or 

inaccurate information, while those 

on the right side of the law that do 

The right to privacy for law-abiding 

citizens is a fundamental principal of 

common law and is enshrined in the 

Cayman Islands constitution. 

(Member States having two years 

to implement central registries in 

accordance with its provisions). It 

is noticeable that many EU Member 

States, including France and 

Germany, as well as the US, have 

failed to announce plans for any 

kind of public corporate register. 

Without a global standard yet being 

devised or applied, if any – or all 

– of the smaller IFCs introduced 

a publicly accessible database of 

ownership information, additional 

costs would likely see client business 

migrate to jurisdictions where a 

central register is not required. 

This opinion was shared by the 

leading IFCs, with a firm view being 

expressed that their processes for 

corporate ownership record keeping 

far exceed the proposed central 

registry in the UK. For the Cayman 

Islands, its regulatory framework is 

significantly superior to its onshore 

counterparts in many ways – for 

example, in 2000, when Cayman’s 

anti-money laundering regulations 

were introduced, Cayman also 

required full retrospective duediligence 

on existing client 

relationships, something said to 

be too onerous to undertake in 

the UK, US and elsewhere. 

counter intuitive. Recognising 

the importance of improving 

transparency of ownership and 

control of companies, but on a level 

playing field, the Cayman Islands 

government highlighted the merits 

of Cayman’s existing central data 

collection system where beneficial 

ownership information is collected 

by its licensed and regulated 

corporate service providers and 

trustees. This has been a legal 

requirement in Cayman for over 

10 years, as part of a licensing and 

supervision process – which includes 

onsite regulatory inspections. 

Industry bodies, including the IFC 

Forum, raised concerns about the 

viability of a public register of 

beneficial ownership on privacy 

grounds, as well as for the potential 

for abuse of the system. 

make full disclosure run the risks 

of loss of privacy and cybercrime, 

such as identity theft. The right to 

privacy for law-abiding citizens is a 

fundamental principal of common 

law and is enshrined in the Cayman 

Islands constitution. 

While considerable doubts have 

emerged over how accurate 

information could be collected via 

a central public register, from a 

commercial standpoint, industry 

figures in Cayman argued that it 

would not be in the jurisdiction’s 

best interests to lead such an 

initiative, without certainty that the 

same standards would be upheld in 

all competing jurisdictions. 

The impact of the Fourth EU 

Directive on Anti money-laundering 

(AMLD) is still a while away 

Late last year, following a period of 

industry consultation, the Cayman 

Islands rejected the introduction 

of a central register, in the form 

proposed by the UK for its IFCs. 


announced that it would instead 

continue with its current regime 

of providing beneficial ownership 

information to law enforcement, 

tax and regulatory authorities, in 

the way it had been doing for the 

past 10 years and which was in line 

with the global standards dictated 

by the Financial Action Task Force 

(FATF). The FATF prescribes three 

alternative methods of collecting 

beneficial ownership information: 

requiring a jurisdictions companies 

registry to obtain and hold the 

information (as the UK proposed), 

requiring companies to hold such 

information, or by using existing


information collected by licensed 

and regulated corporate services 

providers (as Cayman already does). 

With its regime also in line with 

the G20’s High Level Principles on 

Beneficial Ownership Transparency, 

issued in November 2014, the 

Cayman Islands government said 

it would continue with its current 

practice, rather than introduce 

a central registry, until such 

time as there is global agreement 

on appropriate exemptions 

and safeguards. 

It is interesting to note that in 

Article 30 of AMLD proposed 

registers are referred to as 

“central” or “public” which gives 

the impression that even in the 

Directive endorsed by the European 

Parliament on 20 May 2015, there 

is still uncertainty as to exactly how 

the proposed registers are expected 

to operate. All the more reason for 

the Cayman Islands to wait and see 

how the AMLD will be interpreted 

and applied in the onshore EU 

Member States. 

Political posturing continued going 

into the final weeks of the UK 

election, when Ed Miliband, leader 

of the opposition Labour Party, 

suggested that unless the IFCs 

cooperate with the drive against 

tax avoidance within six months 

of his taking office, a new Labour 

government would introduce 

sanctions and demand the OECD 

blacklist these nations. These 

comments clearly demonstrated a 

significant lack of understanding 

about the extensive tax avoidance 

activities already adopted and 

supported in the financial services 

sector in the Cayman Islands, but 

perhaps could only be expected of 

politicians ahead of a public vote. 

For 2015, the Cayman Islands 

government has taken the initiative 

of introducing its own Action Plan, 

which will, among other things, 

streamline access to beneficial 

ownership information for tax, 

regulatory and law enforcement 

authorities. The Action Plan 

includes the introduction of 

legislation that will require 

corporate service providers to 

ensure that relevant information 

requested by law enforcement or 

regulatory officials is made available 

within a period of 24 hours from 

initial request. 

Other proposals aim to further 

improve the quality of information 

collected, including a required 

annual filing of legal beneficial 

ownership for exempted companies 

– the most popular Cayman 

vehicle for international business 

– by corporate service providers 

to the General Registry, something 

already in place for all Cayman 

ordinary companies. Corporate 

services providers will also have 

to designate a person locally to be 

accountable to Cayman authorities 

for making the beneficial ownership 

information available and for the 

ongoing monitoring and testing at 

specified intervals. 


David Roberts is the 

Managing Director of Cayman 

Management Ltd., a licensed 

Companies Management firm 

providing a broad range of 

corporate and Funds services 

in the Cayman Islands for over 

40 years. David is a Fellow 

of the Institute of Chartered 

Secretaries and Administrators, 

a long standing Director of 

Cayman Finance and sits on a 

number of specialist finance 

sector boards and committees. 

Further, legislation will be enacted 

to allow the General Registry to 

wind up an entity, which has not 

complied with legal or beneficial 

ownership filing requirements 

within a specified timeframe. 

While it remains to be seen whether 

a significant number of jurisdictions 

will line up behind the UK’s 

plan for a public registry of 

beneficial ownership information, 

the Cayman Islands has said the 

steps it is taking to enhance its 

method of collecting and verifying 

this data will ensure it continues 

to provide an efficient platform for 

legitimate international business. 

Collection, verification and 

recording of beneficial ownership 

information are areas in which 

Cayman can justifiably say it not 

only plays its part, but leads the 

way. The G8 and G20 nations 

would do well to not only take note, 

but learn from the Cayman Islands 

extensive experience in this area. 


Mark Lewis is the Senior 

Partner at Walkers and 

specialises in all aspects of the 

firm’s mainstream investment 

funds practice, particularly 

hedge funds. He has in excess 

of 30 years post qualification 

experience, the last 20 of 

which have been with Walkers 

in the Cayman Islands. Mark 

is a Director of Cayman 

Finance, a member of the 

Council of the Cayman Islands 

Stock Exchange and a former 

Chairman of the Executive 

Committee of AIMA Cayman.

40 Cayman. Moving finance forward.


CAYMAN ISLANDS 

GOVERNMENT By Hon. Wayne Panton 

MINISTRY OF FINANCIAL 

SERVICES, COMMERCE AND 

ENVIRONMENT UPDATE 

In recent months, the Cayman 

Islands government has made 

amendments and introduced 

legislation to stimulate and improve 

the industry, while allowing industry 

to better serve its clients. 

In April 2015, my Ministry passed 

three bills through the Legislative 

Assembly that will broaden the 

scope for business in the aviation 

sector. The International Interests 

in Mobile Equipment (Cape 

Town Convention) Law 2015; 

The Civil Aviation Authority 

(Amendment) Law 2015; and The 

Bills of Sale (Amendment) Law 

2015 are intended to increase the 

international prestige of Cayman’s 

aviation sector and attract 

additional aircraft finance business 

to Cayman. 

The International Interests in 

Mobile Equipment (Cape Town 

Convention) Law 2015 seeks 

to enable the extension of the 

Cape Town Convention to the 

Cayman Islands. The Cape Town 

Convention is an international 

treaty that aims to standardise 

transactions involving movable 

property, such as aircraft, which 

often utilise Cayman. 

The Civil Aviation Authority 

(Amendment) Law 2015 intends 

to add the registration of aircraft 

mortgages as a function of the Civil 

Aviation Authority, which that 

regulatory body currently deals with 

on a day-to-day basis. However, 

for historical reasons, this function 

is presently governed under a UK 

statutory instrument. 

Also in April, government passed The 

Directors (Registration and Licensing) 

(Amendment) Law 2015. Although it 

is a minor change, the legislation adds 

an additional overseas regulatory 

body to the list of foreign authorities 

in the Schedule to the Directors 

Registration and Licensing Law, 

2014 as well as clarifies the section 

regarding appeals to the Grand 

Court. 

This legislation complements several 

major laws or amendments that 

were enacted in 2014, including the 

Contracts (Rights of Third Parties) 

Law; the Mutual Funds Law; and 

the wholesale revision of our 

Exempted Limited Partnerships Law, 

which provides a product that better 

manages the increasing complexity of 

transactions undertaken in Cayman. 

Within the last fiscal year, it should 

also be noted that our jurisdiction 

witnessed the introduction of 

regulations under our Insurance 

Law to allow for portfolio insurance 

companies, or PICs. Available for 

use by the international insurance 

market, this new product ranks with 

other jurisdictions, including the 

Delaware Series LLC. 

Developed in conjunction with 


Authority (CIMA), our financial 

services industry regulator, we 

believe PICs offer better value for 

global captive sponsors and their 

consultants when considering a cell 

company structure. 

PICs have been structured to 

achieve all the benefits of an 

incorporated cell company (ICC) 

and the Delaware Series LLC. 

However in addition, PICs operate 

squarely within fundamental and 

well-understood principles of 

corporate law, and do not involve 

the highly creative and untested 

jurisprudence involved in an ICC. 

Moreover, as an extension of 

our existing segregated portfolio 

company regime, as opposed to the 

creation of standalone legislation,


PICs have the dual benefit of being 

as robust as ICCs, while being more 

efficient and cost-effective. 

In addition to these laws, Cayman is 

modernising its intellectual property 

regime, by enhancing copyrights, 

trade marks and patents. 

Our improved IP framework is 

intended to position technology 

as another pillar of the Cayman 

economy. Potential investors will 

have the added security provided by 

stronger IP protection to safeguard 

their current works, and to engage 

in either the development of new 

business or the relocation of 

businesses to Cayman. 

We achieved an important step 

when the UK extended its 

1988 Copyright Act to Cayman, 

with the UK Privy Council passing 

the Copyright (Cayman Islands) 

Order 2015 in March. The 

1988 Act revokes the extension 

of the UK’s 1956 Copyright 

Act to Cayman. The Order will 

come into force in the next fiscal 

year, after a public education 

campaign has been conducted and 

necessary arrangements made for 

local implementation. 

With trade marks, we plan to 

introduce local registration by the 

second half of 2015, which will 

make this protection more accessible 

to local individuals and companies. 

We are also improving the ability of 

local trade mark holders to extend 

rights internationally, through 

several international treaties 

and conventions. 

With patents, minor updates 

are currently planned to 

existing legislation. Our focus 

is on becoming part of several 

international treaties and 

conventions that will assist in 

securing protection internationally. 

Legislatively, we plan to continue 

developing products that will 

Cayman is a member of the OECD’s 

Global Forum on Transparency 

and Exchange of Information for 

Tax Purposes, which is the largest 

tax body in the world with 

127 member countries. 

maintain and strengthen Cayman's 

position as the premier financial 

services jurisdiction. In order to 

deliver total value for clients, the 

operations which underpin our 

legislation must be exceptionally 

strong. With that, Cayman has 

made two significant operational 

improvements in technology. 

First, feedback from industry has 

been overwhelmingly positive 

regarding the Cayman Islands 

Online Registry Information 

Service, or CORIS. Subscribers to 

CORIS have the benefit of tracking 

their submissions and easily 

retrieving documents, but perhaps 

the biggest benefit to industry is that 

by going paperless, our Companies 

Registry has significantly reduced 

turnaround time. 

Instead of taking three to five 

days to register a company, regular 

incorporations now take fewer 

than 48 hours through CORIS. An 

expedited service is also available 

within four hours, compared to the 

previous time of 24 hours. 

In order to continue to provide a 

more robust platform for service 

providers, the next phase of CORIS 

is now being developed. We will 

share the full details later this year, 

but in brief it is a portal platform 

that will revolutionise access and 

delivery of information to clients of 

the jurisdiction and will even allow 

information in relation to non- 

Cayman Islands companies in client 

portfolios to be maintained in the 

client’s secure portal platform and 

accessed 24/7. 

Over at CIMA, the first phase of 

the Regulatory Enhanced Electronic 

Forms Submission system, known 

as REEFS, is now being piloted. 

CIMA officials expect the online 

system will allow their analysts 

to devote more time to financial 

oversight and review.


Phase 1 of REEFS, which was 

launched in January 2015, focuses 

on the fiduciary and insurance 

divisions. Once it goes fully live, 

REEFS will allow industry to 

prepare and submit financial 

filings; facilitate new applications 

and registrations; and submit 

any changes to existing licencee 

information already on file. The 

next phase of REEFS, which will 

focus on both the banking, and 

investments and securities divisions, 

will roll out later this year. 

In addition to legislation and 

operations, Cayman continues 

to be engaged in the exchange 

of information (EOI) for tax 

purposes. In March 2015, we 

announced the opening of our 

portal for automatic exchange 

of information (AEOI), which 

completes our process for building 

an AEOI compliance framework. 

The portal enables Cayman 

financial institutions to comply with 

their reporting obligations under 

domestic law, and in accordance 

with intergovernmental agreements 

including US FATCA; and it permits 

the secure transmission of the 

reported information, direct by the 

Cayman Tax Information Authority 

to the US IRS. Moreover, the portal 

positions us to respond to future 

global AEOI initiatives. 

The portal opening is another 

indicator of the strength of 

Cayman’s EOI position, which 

is based on our consistent global 

engagement, spanning decades, 

in these matters. Our extensive 

network now includes nearly 100 

EOI relationships, all of which are 

in line with the global standard. 

This figure includes partners 

covered by the OECD Multilateral 

Convention; and Cayman’s own 35 

bilateral agreements. 

Cayman is a member of the OECD’s 

Global Forum on Transparency 

and Exchange of Information for 

Tax Purposes, which is the largest 

tax body in the world, with 127 

member countries. We sit on the 

Global Forum’s 19-member Steering 

Group, which prepares and guides 

the Global Forum’s work; and we 

are one of the 30 members, and one 

of the four vice-chairs, of the Global 

Forum’s Peer Review Group, which 

carries out extensive Peer Reviews 

to evaluate the tax information 

exchange regimes of OECD and 

non-OECD countries. 

In addition to the Global 

Forum, Cayman’s engagement in 

international regulatory initiatives 

includes our participation since 

2005 in the EU Savings Directive; 

and our membership through CIMA 

in the Offshore Group of Banking 

Supervisors; Working Group on 

Cross Border Banking; Caribbean 

Group of Banking Supervisors; 

and the Association of Supervisors 

of Banks of the Americas (ASBA), 

among others. 

Cayman’s legislative and regulatory 

framework makes it absolutely 

clear that Cayman is a progressive 

country. We have a demonstrably 

strong track record of thinking 

globally and acting locally, in 

response to international financial 

services initiatives. 

We are applying this same process 

to the subject of beneficial 

ownership. Following a period of 

international public consultation, on 

30 December last year the Cayman 

Islands government published a 

report stating that Cayman will 

continue with our current method 

of providing beneficial ownership 

information to law enforcement, tax 

and regulatory authorities, through 

licenses and regulated corporate 


Our stance is validated by the fact 

that Cayman’s regime is firmly in 

line with the G20’s High-Level 

Principles on Beneficial Ownership 

Transparency, which were issued in 

November 2014; in other words, 

we align with principles that the 

G20 countries themselves uphold. 

Cayman’s current system also is 

consistent with the global standard, 

as defined in the Financial Action 

Task Force Recommendations. 

We conclude our report by stating 

that in light of evolving, current 

international discussions, we will 

make further improvements to our 

financial services regime. As such, 

Cayman has identified specific 

steps – including enhancing the 

accuracy, accessibility, availability 

and monitoring and enforcement of 

ownership information – that will 

further strengthen our beneficial 

ownership framework. 

In Cayman, we appreciate our 

Islands are recognised as a worldclass 

international financial 

centre because of our strong and 

sustainable infrastructure. With 

our recent amendments and new 

legislation; and our continuing 

engagement and adherence to 

global regulatory standards, we 

will maintain our strength and 

attractiveness for clients, both 

now and in the future. 


Minister Wayne Panton’s 

successful law career included 

sitting on Walkers’ threemember 

Management 

Committee during a very 

significant growth period; he 

retired as the Walkers group’s 

chairman in 2011. He was 

elected to the Cayman Islands 

Legislative Assembly, and 

appointed Minister of Financial 

Services, Commerce and 

Environment in 2013.


NATIONAL 

RISK 

UNDER THE 

MICROSCOPE 

ASSESSMENT 

By Sandra Edun-Watler 

The Cayman Islands is currently 

undergoing its first National 

Money Laundering/Terrorist 

Financing (“ML/TF”) Risk 

Assessment. The objective of a risk 

assessment is to identify the threats 

or potential threats to the Anti- 

Money Laundering (AML) regime 

that the jurisdiction has in place. 

History 

The requirement to perform 

a National Risk Assessment 

stems from the Financial 

Action Task Force’s (FATF) 40 

Recommendations on International 

Standards on Combating Money 

Laundering and the Financing of 

Terrorism and Proliferation issued 

in 2012. The FATF is an intergovernmental 

body established 

in 1989, and its mandate is to set 

standards and to promote effective 

implementation of legal, regulatory 

and operational measures for 

combatting money laundering, 

terrorist financing and the financing 

of proliferation, as well as other 

related threats to the integrity of the 

international financial system. This 

is achieved by member countries, 

of which there are 34, adopting 

these standards and adhering to 

the recommendations that have 

been issued. Although the Cayman 

Islands are not a member of the 

FATF, they are a member of its 

regional standard setter associate 

member, the Caribbean Financial 

Action Task Force (“CFATF”), 

which was established in 1996. 

The CFATF is an organisation 

of 27 states and territories in the 

Caribbean basin which have agreed 

to implement common countermeasures 

against ML/TF through 

endorsing the 40 recommendations 

produced by the FATF. 

The National Risk Assessment 

comes about as a result of 

the revisions to the FATF 

Recommendations in 2012. The 

first recommendation in this list 

is that countries should identify, 

assess and understand the money 

laundering and terrorist financing 

risks that exist in their countries and 

should take action to coordinate 

efforts to assess these risks. As 

this is a completely new global 

process, introducing a brand new 

methodology for assessments, it 

is being undertaken for the first 

time at a national level by many 

countries that adhere to these 

international standards. Norway 

and Spain have been the first two 

countries to be assessed with the 

new methodology last October by 

the FATF. Assessments are done 

via mutual evaluations that are 

conducted with the country and 

representatives of the FATF or 

regional standard setter. 

Why is it Being Done? 

Any jurisdiction that expects to be 

at the forefront of international 

financial services should ensure 

that risks are identified, assessed 

and action taken to mitigate issues 

regarding money laundering and 

terrorist financing. The National 

Risk Assessment is to ensure 

that the Cayman Islands have 

appropriate ML/TF policies and 

procedures in place, that these 

policies and procedures are being 

followed and that all the identified 

‘risk’ areas can be addressed. The 

successful passing of this assessment 

will ensure Cayman retains its high 

international reputation. This means 

that there must be policies, controls 

and procedures in place, not only 

at a national level but also within 

the various industries and sectors 

that enable the management and 

effective mitigation of risks that 

have been identified. Additionally, 

systems need to be installed to 

monitor the implementation of 

those controls and to enhance 

them, if necessary. It is useful 

if the process is as inclusive and 

co-operative as possible. 

The objective and the whole basis 

of a National Risk Assessment is 

to ensure that measures in place 

to prevent or mitigate money 

laundering and terrorist financing 

are proportionate with the risks


that have been identified. A 

risk-based approach, through a 

risk assessment, is an essential 

foundation in allocating AML/ 

Combating the Financing of 

Terrorism (CFT) resources 

efficiently to the perceived threats. 

Importantly, there should be 

sufficient breadth and depth 

devoted to potential threats and 

vulnerabilities, as well as their 

consequences. It is worth noting 

that ML/TF risks are inherently 

difficult to describe or to measure 

in quantifiable or numerical 

terms, therefore a risk assessment 

will involve making judgements 

about these perceived issues. The 

National Risk Assessment is the 

forum for which jurisdictions will 

demonstrate that these issues have 

been considered and therefore 

ensure that exposure to these 

elements are limited. Jurisdictions 

should consider the capacity and 

AML/CFT-relevant experience of 

particular sectors and industries, 

because in order to properly assess 

the risks, it is important to identify 

certain key components where 

such vulnerabilities may exist. Risk 

is not static but is a constantly 

changing metric. More significant 

areas of vulnerability can be found 

where it has been determined that 

certain customers, countries or 

geographic areas, products, services 

or transactions may pose a higher 

threat to the financial system for 

ML or TF. 

It is important to point out that 

the risk approach for money 

laundering and terrorist financing, 

while intrinsically linked, can 

actually vary significantly as the 

mechanisms for detecting them are 

quite different. While the focus 

on TF aims to prevent future such 

acts of terrorism from taking place, 

authorities looking to combat 

money laundering are usually 

dealing with criminal activity that 

has already happened. Essentially, 

private sector involvement can be 

extremely valuable to this process, 

in order to help build up a complete 

picture of the national ML/TF risks. 

Who Will it Impact? 

The National Risk Assessment 

will impact any entity conducting 

relevant financial business including, 

and not only, regulated entities 

such as banks, corporate service 

providers, insurance companies 

investment and securities services, 

but also ‘Designated Non-Financial 

Businesses and Professionals’ 

(DNFBPs), such as money 

remittance service providers, 

jewellery stores and real estate 

agents, basically anyone where 

such risks are inherent to their 

businesses. While traditionally seen 

as only relevant to the financial 

industry and parties regulated by 

CIMA, AML/CFT transcends that 

notion and is at the heart of any 

financial transaction. Anywhere 

where there is movement of money 

there is a perceived threat and the 

aim is to prevent criminals from 

using the financial system to move 

their ill-gotten gains. 

Have There Been Any Previous 

Types of National Reviews? 

Since the implementation of 

the FATF recommendations in 

1989, there have been three 

rounds of mutual evaluations 

internationally, this now being the 

fourth round with new and revised 

recommendations. All countries 

adhering to the FATF standards 

will have to implement this new 

recommendation before their 

mutual evaluations are conducted. 

In the past the focus has been more 

on ensuring that legislation and 

systems are in place by countries 

to detect ML/TF. This mutual 

evaluation, however, is different as 

the focus now is on the effectiveness 

of the regime in place. Hence this 

risk assessment is very important 

as it will determine how effective 

the systems put in place really 

are. In previous reviews, blacklists 

had been implemented as a 

deterrent for financial business in 

certain listed jurisdictions. 

The last CFATF review of the 

Cayman Islands took place in 

June 2007, and the Cayman 

Islands financial services sector 

was reported as having a ‘Strong 

Compliance Culture.’ That 

evaluation rated Cayman as 

‘compliant’ or ‘largely compliant’ 

with 38 out of 40 of the then FATF 

recommendations and nine special 

recommendations (as it then was). 

The ratings are Compliant, Largely 

Compliant, Partially Compliant 

and Non-Compliant. This 

compared very favourably with 

third round evaluations to date 

of other FATF countries. 

When Will it Take Place? 

The fourth round of evaluations 

for the Cayman Islands will take 

place in the first quarter of 2017. 

Preparations can take place as 

early as a country would like. The 

process itself starts roughly six 

months before the onsite visit by 

the assessors and lasts roughly six 

months after the visit with follow 

up meetings and the presentation of 

the final assessment and findings at 

the Plenary, held bi-annually. The 

onsite inspection includes not only 

interviews with government officials 

but also with various financial 

industry and association members. 


Sandra Edun-Watler is the 

Head of Compliance (Americas) 

for Walkers with responsibility 

for the firm’s Cayman and 

BVI offices. She is an attorneyat-law 

with expertise in all 

aspects of regulatory law 

and is the current President 

of the Cayman Islands 

Compliance Association.

SUPERYACHTS 

AND THE CAYMAN ISLANDS 

By David Cooney 

“Money can’t buy you happiness, but it can buy you a yacht 

big enough to pull up right alongside it.” — David Lee Roth 

According to Boat International’s 

“Market Intelligence“ a total of 

412 superyachts changed hands 

in 2014, having a combined 

asking price of over £3.2 billion 

(approximately US$5 billion). 

That amount is greater than the 

IMF’s calculation of the GDP of 

Kyrgyzstan for 2013. Sale numbers 

were up 16% over 2013 figures and 

up over 52% against equivalent 

2012 figures. The superyacht 

market is booming and 2015 looks 

set to be an even stronger year. 

The world’s wealthiest families 

have more money than ever at their 

disposal and are finding ever-more 

expensive toys on which to spend 

it. The world’s longest superyacht is 

around 180 metres (590 feet), with 

longer yachts under construction, 

or in the design stages. Whether 

seen as the ultimate status symbol, 

a decadent display of wealth, or 

merely a fun and luxurious way 

to escape to a floating palace of 

solitude, more and more people are 

joining the superyacht owners club. 

Once a decision to purchase a 

superyacht has been made, two 

very important decisions follow 

almost immediately. The first is 

how to own the vessel, the second 

is where to flag the vessel. Cayman 

offers attractive solutions to both 

of these decisions. 

How to Own the Vessel 

Most superyachts are owned by 

companies established solely for 

that purpose. This has long been 

considered best practice by maritime 

lawyers. These corporate ownership 

vehicles offer liability protection 

and a degree of confidentiality 

around ownership: whilst the 

wealthy are keen to own these 

vessels, they are often less keen on 

others knowing they own them. 

Ostentatious displays of wealth can 

make the owners, and their families, 

targets for kidnappers, nuisance 

lawsuits, or adverse publicity, in a 

world that only recently emerged 

from a global recession. 

The ownership of the shares in the 

owning company varies from case 

to case, influenced by the wider 

considerations and concerns of the 

ultimate owner. In many cases the 

shares of the owning company are 

held by another company. In other 

cases, the ultimate owner directly 

holds the owning company shares 

and, in other cases still, those shares 

are held as part of a trust structure. 

Where families own multiple 

superyachts (another emerging 

trend), it is common to see each 

vessel held in a separate company 

and for all of the shares to be 

owned by the same trust. 

Cayman has long been a hub 

for private client structuring and 

offers a flexible trust regime to allow 

clients to tailor the terms of the 

trusts to meet their family’s unique 

needs. Coupled with the fact that 

Cayman has a high number of wellqualified 

professionals to establish 

and support the structures required 

by clients, it is a popular place for 

superyacht purchasers to set up their 

ownership structures. 

Company incorporation procedures 

are quick and well-established in 

Cayman. There are no nationality 

or residency requirements for 

shareholders and directors. When 

the owners look to “flag” the vessel 

(to which we turn below) they can 

be confident that the process of 

doing so in Cayman is simplified 

where the vessel is owned by a 

Cayman company. 

Flagging the Vessel 

The second consideration for a 

would-be superyacht owner is where 

to “flag” the vessel. “Flagging” is the 

process of registering the vessel with 

a shipping registry somewhere in the 

world, the vessel thereafter flying the 

flag of that jurisdiction. Flagging is 

a requirement for vessels sailing in 

international waters and entering 

foreign ports (because it allows a 

vessel to prove its nationality), it 

secures title to a movable asset for 

the owner, and it allows the vessel 

to be used as security to obtain a 

marine mortgage (the mortgage, in 

turn, being registered).


Selecting an appropriate flag for a 

superyacht is a complicated matter 

and one of the most important 

decisions for an owner. That 

decision needs to take into account 

privacy, taxation, commerciality, 

liability considerations and (in 

some cases) borrowing needs. 

It is also necessary to look at 

international reputation and the 

crew employment requirements 

imposed by each potential flag state. 

The tax considerations surrounding 

flag state selection are magnified 

where the vessel will, or might, 

be chartered. 

Cayman is part of the “Red Ensign 

Group”. Collectively, this group 

flags around 80% of the world’s 

superyachts, with Cayman leading 

the way amongst the members. 

Cayman is considered to be 

the world’s leading superyacht 

registration jurisdiction, having 

more large yachts on its register 

than anywhere else in the world. 

The Red Ensign Group is comprised 

of the UK, and such of its crown 

dependencies and its overseas 

territories that operate shipping 

registers. Cayman, as an overseas 

territory, operates a “Category 

1 register”, meaning that it can 

register ships of unlimited tonnage 

and type. 

Amongst a long list of benefits of 

flagging in a Red Ensign Group 

jurisdiction is that it uses the “Large 

Yacht Code” (the Code) for building 

and equipping commercial yachts. 

The Code means that vessels which 

are built and/or operated under it 

are recognised as complying with 

high international standards. It is 

accepted throughout the yachting 

industry that compliance with the 

Code can also result in higher resale 

values for vessels. 

In addition, Cayman features on the 

“white list” maintained by the Paris 

Memorandum of Understanding on 

Port State Control, and has done so 

for many years. By appearing on the 

white list, Cayman flagged vessels 

are subject to fewer boardings (for 

inspection purposes) when they 

enter foreign ports. This offers a 

considerable practical benefit to 

flagging in Cayman. 

Cayman Islands Shipping Registry 

The Cayman Islands Shipping 

Registry (the Registry) was 

established well over 100 years 

ago, in 1903. It presently has 

offices in Cayman as well as the 

UK, Greece, USA, France, Japan, 

Singapore and Hong Kong. 

This allows the registry to offer 

assistance in a variety of time-zones 

and geographical locations. 

The Registry does not impose a 

formal age limit on vessels that it 

is willing to register, although an 

ongoing target of the Registry is to 

keep the average age of its fleet at 

less than 15 years. 

Several types of vessel registration 

are available, including a form 

of registration for vessels under 

construction. This is essential where 

the construction is to be financed 

by borrowed funds as it allows 

the lender to register the mortgage 

against the vessel. 

Here at Ogier in the Cayman 

Islands, we have dealt with a 

number of superyacht registrations 

where we have needed to close 

the deal whilst the vessel was in 

international waters somewhere in 

the world. This requirement means 

that the closings often happen in 

the middle of the night, Cayman 

time. The fact that the Cayman 

Islands Shipping Registry is always 

able to make arrangements to 

accommodate this requirement, 

even on short notice, is a major 

attraction of the jurisdiction. 

Why Cayman? 

The superyacht industry continues 

to grow at an impressive rate, 

as does competition between 

jurisdictions for new vessels. 

Cayman enters this battle from 

a position of strength: as the 

acknowledged front-runner for 

superyacht registrations. The 

jurisdiction fights hard to ensure 

that it retains this title. 

Overseas registry offices, out of 

hours (and same day) registration 

services, a wide network of vessel 

surveyors, and slick and efficient 

registration services all help to 

maintain this reputation. 

More broadly, the absence of 

income tax, capital gains tax, 

corporation tax, wealth tax, estate 

tax and gift tax (minimising the 

“tax leakage” involved in any 

deals), coupled with a favourable 

climate for proper structuring 

allow Cayman to offer a complete 

package for anyone looking to own 

and operate a superyacht. 

For as long as uber-rich continue 

to believe that a superyacht buys 

them a mooring right alongside 

‘happiness’, the value of this market 

internationally will continue to rise. 

Cayman is well placed to capitalise 

on this growth and to consolidate 

the view that it is the best place in 

the world to flag a superyacht. 


David Cooney, Partner at Ogier, 

specialises in Private Client 

& Trust work, with particular 

expertise in structuring 

involving the acquisition and 

ownership of superyachts, 

relocation of ultra-high net 

worth clients to the Cayman 

Islands and the establishment 

of complicated trust structures.


AT A GLANCE 

BANKING 

Overview: Cayman’s banking sector is a vital support mechanism for the 

financial services industry. Banking in Cayman provides a dual-functioning role, 

providing a full range of products and services to residents and international 

clients alike. Cayman banks also have speciality industry knowledge and expertise 

to support the needs of other financial services, such as the fund investment and captive fund 

insurance and captive sectors. insurance sectors. 

T 

he banking sector in Cayman 

experienced unprecedented growth 

in the late 1960s after the first 

banking and trust law was enacted 

in 1966, laying the foundation 

for the modern financial services 

infrastructure that exists today. 

The banking industry thrived as 

the jurisdiction’s broader financial 

services industry took shape and 

grew in sophistication and service 

offering. 

Today Cayman offers a breadth of 

banking services that is on par with 

the major financial centres of the 

world. As at the end of 2014, there 

were 195 licenced banks in Cayman, 

six of which are retail category ‘A’ 

banks licensed to conduct business 

with domestic and international 

clients. There are seven non-retail 

category ‘A’ banks and 185 category 

‘B’ banks, servicing international 

clients and carrying out limited 

domestic activity. 

The retail category ‘A’ banks in 

Cayman are: Butterfield Bank 

(Cayman) Limited, Cayman 

National Bank Ltd., Fidelity Bank 

(Cayman) Limited, FirstCaribbean 

International Bank (Cayman) 

Limited, RBC Royal Bank 

(Cayman) Limited and Scotiabank 

& Trust (Cayman) Ltd. The retail 

banks report total assets of US$14.8 

billion, are well capitalised and 

maintain a sound financial position 

as highlighted in Tables 1 and 2. 


Authority (CIMA) is the governing 

body with responsibility for 

supervision and regulation of 

the banking industry. The 

jurisdiction is recognised by the 

IMF and other global agencies 

as having a comprehensive 

regulatory and compliance 

framework and is underpinned 

by a well-developed banking 

infrastructure and internationally 

experienced workforce. 

Today both local and international 

clients can expect a full range of 

banking products and services, 

including personal, corporate 

and wealth management. Specific 

offerings include foreign exchange, 

deposit products, residential


THE STATS 

mortgages and commercial 

loans. Retail banks offer robust 

electronic-delivery channels 

including online banking, as well 

as local and international ATM 

and POS networks. Banks 

in Cayman also manage and 

administer a variety of corporate 

structures, which cover aspects 

of the industry such as managed 

banks and trust companies, and 

custodial and treasury services. 

Cayman, as a global financial 

centre, plays an integral role in 

the management of capital flows 

worldwide. Cayman continues to 

be ranked fifth based on banking 

liabilities of US$1.49 trillion, 

as highlighted in Table 3, 

highlighting its role as a key 

financial intermediary. 

The banking industry in Cayman 

remains multi-faceted and is 

extremely effective at servicing 

the needs of residents and 

international clients alike. 

Total Assets 

Table 1: Cayman Retail Bank Figures 

All currencies in US$ billion 

Total Loans 

of which 

Resident Loans 

Total Deposits 

of which 

Resident 

Deposits 

2011 17.5 7.5 3.57 15.9 6.42 

2012 13.6 7.6 3.69 11.8 6.25 

2013 14.8 8.4 3.58 13.1 6.26 

Table 2: Financial Soundness Indicators for Cayman Retail Banks (in %) 

Capital Adequacy 

Regulatory capital to risk-weighted assets 

Asset Quality 

Non-performing loans to total loans 

Liquidity 

Liquid assets to total assets 

Table 3: Cross-Border Assets & Liabilities 

All currencies combined in US$ trillion 

2011 2012 2013 

21.5% 20.63% 21% 

2.7% 3.51% 3.4% 

48.1% 32.2% 28.3% 

Assets 

Liabilities 

Jun 2011 1.65 1.69 

Jun 2012 1.42 1.47 

Jun 2013 1.50 1.49 

Produced with kind assistance 

from the Cayman Islands 

Bankers’ Association (CIBA). 

Statistics sourced from Cayman Islands Monetary Authority (CIMA)


BANKING 

While the global 

private banking 

sector continues 

to face numerous 

challenges, the 

Cayman Islands is 

crucial to servicing 

the world’s ever 

increasing wealth. 


STILL A TOP CHOICE FOR HIGH NET WORTH INDIVIDUALS 

(HNWIs) AND INVESTORS 

By Bruce John 

Despite signing up to the 

European Savings Initiative, 

USA and UK FACTA, and 

completing International Tax 

Exchange Agreements with 35 

countries, Cayman continues to 

attract quality HNWIs to live, work 

and invest. Long gone are the days 

when HNWIs would use Cayman 

and other offshore jurisdictions 

to hide their wealth from the tax 

authorities. The landscape has 

changed considerably over the 

last 20 years through G8 and G20 

initiatives and through the OECD's 

global drive to eliminate corruption, 

money laundering and tax evasion. 

Cayman made the decision early 

on as a jurisdiction to embrace the 

changes in international sentiment. 

Like no other international 

financial centre, it has consistently 

demonstrated a commitment to 

transparency, creating a highly 

cooperative compliance culture. 

Cayman remains today, one of 

the world’s leading international 

financial centres, ranked as the 

fifth largest international banking 

centre, the second largest domicile 

for captive insurers and the largest 

domicile for investment funds. A 

supportive government, strong


regulator, sound international 

financial institutions and highly 

qualified professionals have made 

Cayman a centre of excellence for 

banking, trust, fiduciary, investment 

vehicles and corporate services. 

The Global Growth of HNWIs 

According to the Capgemini and 

the RBC Wealth Management 

2014 World Wealth Report, both 

the number of HNWIs (over US$1 

million in investible assets) and the 

amount of their investible wealth 

increased significantly over prior 

years reaching a record in 2013 of 

13.7 million HNWIs, while their 

wealth increased to US$52.62 

trillion. Five countries control 

almost 64% of the top 25 countries 

with a HNWI population. These 

five countries include the US with 

4,006 HNWIs, followed by Japan 

with 2,327, Germany with 1,130, 

China with 758 and the UK with 

465. The compound average growth 

rate for both HNWIs and wealth 

is 9.9% for 2008-2013. HNWI 

wealth is expected to reach another 

record of US$64.3 trillion by 2016, 

representing a 22% growth over 

2013. Since the financial crisis, there 

has been an exponential growth in 

HNWIs in Asia, the US, emerging 

markets and Europe. 

Servicing the Needs of HNWIs 

Most HNWIs often look 

beyond their home country for 

opportunities and solutions 

to enhance and protect their 

wealth. They are becoming more 

sophisticated and astute, and often 

demand high levels of service and 

advice from qualified and responsive 

professionals. They invest in real 

estate, global financial markets, 

hedge funds, derivatives and private 

equity. Doing so can create tax, 

legal, asset protection and estate 

planning issues requiring them to 

seek expert advice from investment, 

legal, tax, accounting and estate 

planning professionals. They seek 

out reputable, highly regulated, 

tax-efficient and safe jurisdictions 

with reputable financially strong 

financial institutions that are able 

to offer access to global financial 

markets, hedge funds, derivatives, 

private equity and credit. They 

seek highly qualified professionals 

to advise them on tax, legal, asset 

protection and estate planning. An 

experienced and knowledgeable 

private banker will often take a 

holistic approach. He or she will 

take the time to understand clients’ 

financial positions and what they 

would like to achieve. The private 

banker will often take a lead role in 

organising introductions/meetings 

with qualified professionals who 

offer credit, investment, tax, legal, 

asset protection and estate planning 

advice, and work together to offer 

comprehensive solutions to meet the 

needs of the client. 

Why is the Cayman Islands Still the 

Jurisdiction of Choice of HNWIs and 

Investors? 

As an Overseas Territory of the 

United Kingdom, Cayman enjoys 

a secure relationship with the UK. 

Its legal system is based on English 

Common Law and provides the 

certainty and comfort that investors 

require. Cayman has a stable 

government with no exchange 

controls. With a population of 

over 58,000, residents enjoy one 

of the highest standards of living 

in the world. 

There are no direct personal 

income, corporate, property or 

estate taxes in Cayman. The 

government relies on a system of 

indirect taxation collecting import 

duties on most goods and fees from 

companies, banks, trust companies, 

insurance companies and policies, 

mutual funds, work permits, tourist 

accommodation, travel and cruise 

ship taxes. 

Cayman has a strong and reputable 

regulatory regime with the Cayman 


(CIMA) providing independent 

oversight for banks, money service 

businesses, cooperative and 

building societies, trusts, insurance 

company management, corporate 

services, investment funds and 

securities services. 

Cayman is recognised as one of 

the top 10 international financial 

centres in the world, with over 

40 of the top 50 banks holding 

licenses here. As at December 

2014, Cayman was home to 195 

banking institutions and is ranked 

fifth internationally and sixth in 

terms of cross-border assets booked. 

There are six retail and seven nonretail 

Category ‘A’ banks and 185 

Category ‘B’ banks. The majority of 

these banks are branches (127) and 

subsidiaries (49) of international 

banks from North America, Europe 

and South America. A number 

of the institutions offer wealth 

management services and are staffed 

with experienced private bankers, 

investment advisers/asset managers 

and trust and estate practitioners. 

Due to its legal system, tax 

neutrality and number of skilled 

trust, legal and audit professionals, 

Cayman has been for many 

years the jurisdiction of choice 

for establishing trusts for estate 

planning and asset protection. As 

at 31 December 2014, Cayman had 

140 trust licenses in operation. 

Cayman is also the second largest 

domicile in the world for captive 

insurers with over 759 captive 

insurers under the supervision 

of CIMA as at 31 December 

2014. These insurance companies 

are serviced by 29 licensed 

professional firms. 

Cayman is of course, the largest 

domicile for international hedge 

funds with 7,835 registered funds 

and 2,685 master funds at 31 

December 2014. These funds are 

administered by 104 Cayman 

licensed fund administrators and 

other approved administration 

firms around the world. 

Servicing and advising Cayman’s 

financial, insurance and funds


BANKING AT A 

GLANCE: 

INVESTMENT 

FUNDS 

industry are over 40 law firms, eight 

of which are large international 

law firms with offices in other 

major international and offshore 

centres, and nine audit firms, 

including the ‘big four’ international 

auditors. There are also 98 licensed 

company management and 17 

licensed corporate service providers. 

Cayman has more highly skilled 

and qualified professionals than 

most offshore jurisdictions and is 

a leading centre of excellence for 

financial services. 

Other advantages include Cayman’s 

proximity to the North America, 

Europe, Central and South 

American markets, its high standard 

of living, low crime, its diverse 

ethnic population, the friendly 

people, turquoise Caribbean Sea, 

sandy beaches and sunshine. 


Bruce John is a private banking 

professional based in Grand Cayman. 

He is a career banker, with more than 

30 years of international experience 

in wealth management, investment 

advisory, trust and corporate and 

commercial banking. Bruce is a 

member of the Society of Trust and 

Estate Practitioners, has completed 

the Canadian Securities course 

and holds an Honours Degree in 

Business Administration. 

“The team impresses clients with its 

commercial and practical advice.” 

- Chambers Global (Cayman) 

Experienced legal specialists in Cayman Islands investment funds, 

litigation, insolvency, trusts and corporate transactions. 

www.harneys.com 

Anguilla | British Virgin Islands | Cayman Islands | Cyprus | Hong Kong | London | Mauritius | Montevideo | Sao Paulo | Singapore | Vancouver 

Mauritius service provided through an association with BLC Chambers.

53 

BANKING 

STRIKING THE 

RIGHT BALANCE – 

RESPONDING TO 

GLOBAL REGULATORY 

By Andrew Schofield 

CHALLENGES 

In the wake of the global financial 

crisis, an unprecedented wave 

of regulation has swept through 

the financial services industry, 

impacting market participants 

at every level. As the industry 

grapples with the challenges and 

costs of implementation, it is an 

opportune time to pause and 

reflect on initiatives undertaken in 

the Cayman Islands to implement 

global regulatory changes in an 

innovative and balanced manner. 

As a preeminent international 

financial centre, the Cayman 

Islands faces unique challenges 

implementing regulatory reform 

as it does business with every 

recognised financial centre globally. 

Accordingly, it is subjected to 

regulatory reforms originating from 

numerous international regulators. 

These global regulatory initiatives 

have, for the most part, focused on 

two key themes: 

• enhancing financial stability in 

the wake of the financial crisis; 

or 

• raising revenue for fiscally 

challenged governments. 

The Cayman Islands is also 

subjected to international regulatory 

reform across a number of 

industries. More than 40 of the 

world’s top 50 banks are licensed 

in the Cayman Islands, and 

liabilities on deposit total US$1.4 

trillion, making it the world’s fifth 

largest financial centre in terms 

of cross border liabilities. The 

Cayman Islands is also home to 

over 11,000 registered hedge funds 

which comprise the majority of the 

estimated US$2.9 trillion hedge 

fund assets under management 

globally, as well as thriving captive


BANKING 

insurance and structured finance 

markets. All of these industries have 

attracted the attention of global 

regulators, looking to address 

one, or both, of the objectives 

described above. 

The Challenge 

All of these factors combine to 

create a challenge for Cayman 

Islands regulators: how to create a 

framework where businesses, and 

the jurisdiction as a whole, are able 

to comply with these regulatory 

changes while maintaining a 

competitive environment where 

capital can be allocated efficiently 

across the globe. 

formulating policies in response to 

international regulatory changes. 

An extensive industry consultation 

exercise was undertaken for both 

the US Foreign Account Tax 

Compliance Act (FATCA) and 

the Alternative Investment Fund 

Managers Directive (AIFMD). By 

undertaking industry consultation 

and acting to implement the 

legislation and associated tax 

information agreements quickly, the 

Cayman Islands government has 

demonstrated its commitment to 

implementing solutions that balance 

the needs of the local financial 

services industry with the broader 

international regulatory agenda. 

prior to the implementation of the 

Basel II framework. 

Banks are required to report 

prudential, statistical and financial 

information to CIMA as below: 

• annual audited financial 

statements within three months 

of the bank’s financial year-end; 

• quarterly Locational Banking 

Statistics Survey; 

• quarterly Basel II and Quarterly 

Prudential Reports (“QPR”) 

Form; and 

• annual Basel II – Pillar II 

Internal Capital Adequacy 

Assessment Process (“ICAAP”). 

A look at the 

Cayman Islands’ 

track record 

in response to 

recent regulatory 

challenges 

shows good 

results to date. 

A look at the Cayman Islands’ 

track record in response to recent 

regulatory challenges shows good 

results to date. 

A Collaborative Approach 


has demonstrated a willingness 

to collaborate with the financial 

services industry to ensure that an 

optimal outcome is achieved when 

Bank Specific Regulations 

Basel II 

The implementation of Basel II 

provides an example of the financial 

services regulator, the Cayman 


(CIMA), undertaking industry 

consultation, in this instance 

with the Cayman Islands Bankers 

Association, to ensure appropriate 

feedback and resolution of issues 

Foreign Regulation 

CIMA also recognises that many 

banks licensed in the Cayman 

Islands are regulated by another 

regulator in the home country of 

the bank. In this instance, CIMA 

will ensure that the licensee is 

subject to effective supervision 

as part of the home country 

regulator’s supervision of the overall 

group. Such supervision must be


conducted under an internationally 

recognised regulatory framework 

that is acceptable to CIMA. In this 

way, banks operating in Cayman 

remain under effective, consolidated 

supervision by the home regulator, 

while not overly burdened with 

redundant supervision by CIMA. 

Flexibility of Licensing 

The Cayman Islands offers a flexible 

range of bank licensing options, 

depending upon the nature and 

extent of the operations the bank 

will undertake. The categories of 

licenses can be paraphrased as: 

Class A – allows the licensee 

to carry on banking services 

within the Cayman Islands as 

well as internationally. 

Class B Unrestricted – allows 

the licensee to carry on 

unrestricted banking services 

internationally. Making loans 

to and accepting deposits from 

residents of the Cayman Islands 

is specifically prohibited. 

Class B Restricted – allows the 

licensee to carry on banking services 

outside the Cayman Islands only 

with persons listed in the license 

application. This is typically used to 

facilitate the treasury functions of 

large corporations. 

Banking in Cayman 

The different licensing options 

provide banks with the ability to 

cost effectively execute their strategy 

through a structure that is tailored 

for their needs. The licences allow 

them to operate out of a jurisdiction 

with a legal system that is both 

traditional and robust yet flexible 

and conducive to business. Of the 

229 bank licences issued as of Q1 

2015, the vast majority (183) were 

Class B. For the large international 

banking groups, operating out 

of many markets, the domestic 

restrictions are not relevant, as their 

Cayman branches or subsidiaries 

interact with other entities within 

its group, or with international 

clients, in order to set out their 

financial transactions in the most 

efficient manner. 

Many bank licences in Cayman 

are issued to banks in developing 

countries, which allows them to 

offer certain products and services 

that they would be unable to do 

in their home countries, where 

foreign exchange controls limits 

access to global markets. Trade 

finance instruments, such as letters 

of credit, that smooth the process of 

international business are important 

in this regard. Banks also trade 

Eurobonds through Cayman for 

their own treasury operations or 

those of their customers. 

Capital Adequacy Requirements 

CIMA has set minimum capital 

adequacy requirements of 12% for 

subsidiaries of foreign banks that are 

subject to consolidated supervision, 

as described above, and 15% for 

locally incorporated banks. 

Branches (rather than locally 

incorporated entities) of foreign 

banks do not need to meet the above 

capital adequacy requirements 

subject to the overall bank group 

meeting the capital adequacy 

requirements of its home jurisdiction. 

Longstanding Recognition 

Evident of the high esteem in which 

international banking clients hold 

the Cayman Islands, a recent survey 

in The Banker magazine named 

the Cayman Islands as the world’s 

best Specialist Financial Centre, 

which was the sixth consecutive 

year in which Cayman had topped 

the rankings in this particular 

survey. This shows how the industry 

professionals in the Cayman Islands 

are consistently providing high levels 

of service and really underscores 

how Cayman is perceived as the 

leading international financial centre 

in terms of providing specialized 

financial products. 

The industry is represented 

domestically and abroad by 

the Cayman Islands Bankers 

Association (CIBA), which was 

formed in 1979. In addition to 

playing a role in shaping new 

legislation and the implementation 

of international regulation, through 

its work with government and 

the various legislative committees, 

CIBA is active in supporting 

training and industry relevant 

education in the areas of 

banking, trust administration 

and fiduciary practices. 

Innovative Solutions to Strike 

the Right Balance 

As the global regulatory reform 

process continues, CIMA, the 

Cayman Islands government and 

the financial services industry will 

need to adapt to the challenges of 

new regulation. Given the recent 

history of industry consultation, a 

willingness to implement legislative 

changes and the adoption of 

innovative solutions, the financial 

services sector in the Cayman 

Islands is well-placed to strike the 

right balance between maintaining 

an efficient model to facilitate 

the global allocation of capital 

and conforming to ever-changing 

international regulation. 


Andrew Schofield is a Director 

with KPMG in the Cayman 

Islands and leads KPMG’s 

banking practice. Andrew 

provides audit and advisory 

services to a range of banking, 

alternative investment and 

structured finance clients.


AT A GLANCE 

INVESTMENT 

FUNDS 

Overview: Cayman’s The growth banking of the sector offshore is a sector vital support in Cayman mechanism coincided for with the 

financial the liberalisation services industry. of international Banking finance, Cayman as well provides as the a removal dual-functioning of currency role, 

providing controls and a full international range of products trade barriers. and services This resulted to residents in a growing and international demand for 

clients the core alike. services Cayman Cayman’s banks financial also have experts speciality provide, industry and knowledge as hedge funds and expertise emerge 

to as a support prominent the needs investment of other vehicle financial globally, services, Cayman such became as the fund the incorporation 

and captive 

insurance jurisdiction sectors. of choice. The Cayman Islands laid the foundation for its status as a 

leading hedge fund domicile in 1993, by being the first Caribbean jurisdiction 

to implement hedge fund legislation. 

The Cayman Islands hedge fund 

sector has facilitated hundreds of 

billions of dollars of investment 

into OECD-based economies such 

as the United States using hedge 

funds. These funds enable investors 

from countries around the world to 

participate in a tax-neutral venture 

for the purpose of investing into 

major projects. Hence, contrary to 

popular opinion, there is effectively 

no true “capital flight” from 

OECD economies as a result of 

international financial centres such 

as the Cayman Islands. In fact, 

when one follows the path of funds 

in a typical hedge fund transaction it 

shows that offshore centres actually 

facilitate major inward capital flows 

into OECD-based economies from 

global investors. In addition to the 

successful legislation governing the 

Cayman Islands hedge fund sector, 

and the value added to international 

investors, the hedge fund sector’s 

impressive growth is also due to the 

very high calibre of professionals 

servicing investment fund clients. 

The Cayman Islands continues 

to boast impressive access to the 

world’s leading legal, accounting 

and fund-administration firms in 

this respect. The fund industry 

continues to grow in the Cayman 

Islands. With 7,481 registered 

funds in 2006, growing to 10,273 

(registered and master funds) 

as at 31 March 2015, Cayman 

continues to be the domicile of 

choice for global investment 

managers. The fund landscape will 

continue to develop throughout 

2015, with further implementation 

of fund specific initiatives such 

as the AIFMD, the EU Financial 

Transaction Tax, the OECD 

Common Reporting Standard and 

the first round of FATCA reporting 

for hedge funds. As at 31 March 

2015, approximately 8,000 fund 

directors have been registered and 

licensed with CIMA. 

In addition, impact will be felt from 

the Base Erosion and Profit Shifting 

project, as well as issues arising 

from IRS code section 871(m)


THE STATS 

withholding on convertible debt 

and swap contracts. Also on the 

horizon will be; the proposed 

introduction of capital gains taxes 

in such jurisdictions as Hungary, 

Mexico, Ukraine, Argentina and 

Poland; the continued focus upon 

cybersecurity for fund service 

providers and directors along with 

changes to the Markets in Financial 

Instruments Directive. 

Mutual Funds 

Registered Master Administered Licensed Total 

2006 7,481 – 548 105 8,134 

2007 8,751 – 543 119 9,413 

2008 9,231 – 510 129 9,870 

2009 8,944 – 448 131 9,523 

2010 8,870 – 435 133 9,438 

2011 8,714 – 424 120 9,258 

2012 8,421 1,891 408 121 10,841 

2013 8,235 2,635 398 111 11,379 

2014 7,835 2,685 386 104 11,010 

*2015 7,597 2,676 379 103 10,755 

* to 31 March 2015 

Mutual Fund Administrators 

Full Restricted Exempted Total 

2006 91 57 5 153 

2007 95 52 5 152 

2008 102 49 4 155 

2009 97 42 2 141 

2010 94 38 2 134 

2011 92 35 2 129 

2012 90 32 2 124 

2013 88 31 2 121 

2014 84 29 2 115 

*2015 82 28 2 112 


from the Alternative 

Investment Management 

Association (AIMA). 

* to 31 March 2015 



INVESTMENT 

FUNDS 

CAYMAN FUND 

SECTOR RISES 

TO REGULATORY 

CHALLENGES 

By David Roberts 

With a demonstrable 

commitment towards 

transparency, alongside 

new legislation, which has left 

the jurisdiction advantageously 

positioned for the implementation 

of global regulatory reform, recent 

events in the Cayman Islands 

have served to underscore its 

attractiveness as an international 

fund domicile. 

Modern and forward-thinking, 

Cayman’s regulatory framework 

constantly evolves to meet the 

ever-changing needs of investors. 

Recently named the best Hedge 

Fund Services Jurisdiction in the 

Hedgeweek Annual Global Awards 

2015, the Cayman Islands continues 

to be recognised as the market 

leader. All sectors of the industry 

work together, including service 

providers, professionals, industry 

associations and the regulator, to 

ensure that Cayman’s fund product 

sets the highest standards. Investors 

and stakeholders appreciate 

Cayman’s robust legal system and 

its political and economic stability, 

as much as the high calibre of its 

professional advisors. Investor 

protection is paramount and, 

while CIMA regulates the industry 

effectively, it is still able to maintain 

a strong relationship with local 

professionals and service providers 

which is built on consultation and 

mutual trust and respect. 

The international regulatory 

picture is constantly changing 

and, as fund managers have been 

considering the likely impact 

of FATCA and the Alternative 

Investment Fund Managers 

Directive on their operations, the 

Cayman Islands has responded 

positively to recent international 

initiatives. CIMA has shown a 

strong desire to cooperate with all 

global regulatory requirements, 

understanding that the reputation 

of the jurisdiction would only be 

enhanced by following this course 

of action. The CIMA has taken a 

proactive approach in respect of 

AIFMD and signed a Memorandum 

of Understanding with European 

regulators to enable the continued 

marketing of Cayman Islands 

hedge funds throughout the 

European Union. 

FATCA has, of course, presented 

a considerable challenge to service 

providers, but the industry as a 

whole has stepped up with all 

sectors working together to ensure 

that entities subject to the regulation 

are fully compliant. The full impact 

of FATCA – and that of similar 

legislation in the UK – is only really 

starting to be felt now, as the first 

reporting deadlines are reached. 

Fund managers can then begin 

to focus on the next significant 

initiative looming on the horizon, 

the full effect of which can only be 

imagined, with the implementation 

of the Common Reporting Standard 

(CRS) for automatic exchange of 

information. Sometimes referred 

to as “Global FATCA”, CRS poses 

significant difficulties for fund 

managers in jurisdictions that have 

adopted the standards. Significantly, 

funds will need to identify financial 

accounts held directly or indirectly 

by residents in a large number of 

partner jurisdictions, which will be 

a huge undertaking. The Cayman 

Islands was among the first group of 

jurisdictions to sign up to CRS and 

is expected to adopt the necessary 

legal framework in a timely fashion 

in order to effect reporting in 2017. 

It is suggested that those institutions 

that adopted a flexible approach 

to FATCA compliance will be best 

prepared for the more extensive 

and broader scope of CRS. Either 

way, there will certainly be more 

volume in terms of information to 

be reported. 

Locally, there have also been 

some important developments 

regarding corporate governance, 

as the industry digested the 

introduction of a Statement of 

Guidance on governance standards 

from the regulator, as well as the 

repercussions of the “Weavering


Case” (which may yet be subject 

to a further appeal). Clearly, many 

diverse matters have impacted the 

funds industry over the past year. 

However, the sector remains strong. 

Regulation in balance 

Predominant in the international 

hedge fund industry, it has been no 

surprise that the Cayman Islands 

has played an important part in 

the global debate on corporate 

governance for hedge funds and, 

in particular, the role of directors. 

The Directors Registration Law 

of 2014 was enacted by the 

Cayman Islands government in 

order to ensure that directors 

will be subject to regulation and 

inspection by CIMA and will be 

expected to undertake their roles 

in an appropriate manner and in 

accordance with sound corporate 

governance practices. It is intended 

that, in due course, directors will be 

required to consider their personal 

capacity before taking on new 

director appointments. Adherence 

to the Statement of Guidance on 

Corporate Governance for Mutual 

Funds is not onerous and should be 

appreciated as a safeguard to proper 

performance by those entrusted 

with the control and direction of 

fund activities. When compared to 

other fund domiciles, the current 

regulatory framework in the 

Cayman Islands achieves a perfect 

balance, in helping to preserve our 

reputation as a global leader in the 

funds industry while contributing 

to the ultimate protection of the 

investor and his/her money. 

The global initiatives have had a 

seismic impact on the funds industry 

which has had to adapt to the 

new regulatory order. From our 

discussions with managers, there is 

not just a greater understanding of 

the benefits of independent directors 

on the board, but an appreciation 

of the particular attributes that 

the right board of directors can 

provide to a fund. The independent 

directors of today need to have 

a flexible approach backed by a 

wealth of experience. Funds should 

be looking for breadth of skills and 

a responsible attitude in selection 

of their directors. Importantly, 

funds should understand that this 

is not a “nominee” appointment 

and a director should be expected 

to engage fully with the investment 

manager and the administrator of 

the Fund, as well as other service 

providers, usually through the 

medium of regular board meetings. 

Attendance at regular meetings 

should be expected, to discuss 

and determine the complex issues 

affecting current day funds, whilst 

ensuring the maintenance of high 

standards of corporate governance. 

Whilst the delegation of certain 

specialist responsibilities is to be 

expected, independent directors 

must not forget their ultimate 

responsibility to the investors. 

There is a wealth of experience in 

the Cayman Islands offered by the 

many long established professionals 

who have worked in the industry 

since its inception in the 1990’s. 

There are some that believe that, in 

the future, it will become more and 

more important that funds operate 

with at least one Cayman based 

independent director. Fortunately, 

such services are available through 

a spectrum of service providers, 

ranging from large, multi-national 

firms to niche Cayman based offices. 

Going Forward 

With the improved global economic 

picture, financial commentators 

seem to be in broad agreement that 

the funds industry worldwide is 

set to continue to show consistent 

growth, as investors persist in their 

search for alternatives to traditional 

equity and fixed income markets. 

As Cayman’s industry professionals 

and service providers continue to 

demonstrate excellent service and 

sound products, as well as face the 

challenges of the ever increasing 

regulatory climate, there is no 

reason to suggest that the Cayman 

fund industry should not continue 

to benefit from this trend and 

continue its growth and market 

leadership. Industry stakeholders 

are well aware that business will 

only continue to flourish while 

Cayman maintains the confidence 

of investors through a robust 

regulatory framework. Meeting 

the international initiatives “head 

on” has been a successful model 

for Cayman in the past and the real 

challenge ahead will be to maintain 

its position as the domicile of choice 

through the provision of quality, 

timely and cost effective services, 

with high levels of corporate 

governance, in a progressive but 

balanced regulatory environment. 


David Roberts is the 

Managing Director of Cayman 

Management Ltd., a licensed 

Companies Management firm 

providing a broad range of 

corporate and Funds services 

in the Cayman Islands for over 

40 years. David is a Fellow 

of the Institute of Chartered 

Secretaries and Administrators, 

a long standing Director of 

Cayman Finance and sits on a 

number of specialist finance 

sector boards and committees.


INVESTMENT 

FUNDS 

PRIVATE EQUITY IN CAYMAN 

By Jason Allison and Bicrom Das 

BIG IS BACK – The increased 

global momentum in private 

equity activity has been 

reflected in the Cayman Islands, 

highlighting its importance as a 

centre for fund formation, secured 

fund financing and downstream 

transactions. But whilst the big 

players have been raising, and 

looking to spend, eye-catching 

amounts there remains space at the 

table for the mid-market houses and 

ambitious start-ups. 

The number of Cayman Islands 

exempted limited partnerships, the 

primary Cayman Islands vehicle 

through which private equity funds 

and investments are structured, has 

been rising steadily. There were 

2,861 such partnerships registered 

in 2014, a 20% increase from 2013, 

whilst the first quarter of 2015 

alone has shown a 22% increase


3500 

New Partnerships Registered 2005 - 2014 

3000 

2500 

2000 

1500 

1000 

500 

0 

y. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

from the corresponding period in 

the previous year. 

The increased formation activity 

is indicative of the work which 

we have been doing for our 

institutional clients recently, 

from which a few key points 

have stood out: 

• The power players are flexing 

their muscles: The last few 

months have seen the closing 

of a number of multi-billion 

dollar mega funds by the 

major private equity houses. 

Investors are comfortable in 

continuing to allocate capital to 

private equity but, sensitive to 

memories of the trauma of the 

crash, feel more comfortable 

investing with the established 

global managers. This has led 

to some big launches and the 

prospect of significant dry 

powder to be expended as 

investment periods start to 

kick in. 

• But there is still some space at 

the table: Mid-market firms 

have also been active in the 

market, having some success 

in raising capital, and even one 

or two start-up managers have 

successfully closed initial funds 

with the backing of cornerstone 

investors. There is still some 

appetite for less established 

managers that are able to 

provide a compelling story, but 

the perceived risk is typically 

required to be mitigated by 

pressure on both management 

and performance fees, as well 

as exposure to removal rights. 

We are also seeing the reemergence 

of managers who 

had shelved plans to raise funds 

back in 2008/2009. 

• Investors remain comfortable 

with Cayman: The status 

of the Cayman Islands as 

a well-established, stable 

jurisdiction from which to 

conduct private equity activity 

continues to attract managers 

and investors alike. The 

Exempted Limited Partnership 

Law, revised in 2010 and 

replaced in its entirety in 

2014, specifically addresses a 

number of the issues for which 

we have previously needed to 

provide legal workarounds 

when advising on private 

equity matters. The private 

sector worked closely with 

government to make the 

exempted limited partnership 

an even more user-friendly 

vehicle specifically tailored to 

the needs and concerns of the 

private equity industry, with a 

statutory footing behind such 

focus. The ability of service 

providers in the Cayman 

Islands to communicate the 

concerns and issues faced by 

the private equity industry 

to the lawmakers and the 

willingness of the Cayman 

Islands government to carefully 

consider and enact legislation 

to address certain of those 

issues has highlighted the 

flexibility of the Cayman 

Islands as a jurisdiction, a 

flexibility that has continued to 

be rewarded by ongoing and 

increased activity in the private 

equity space. 

• Even more so than before…: 

Most funds have historically 

had onshore (typically through 

Delaware) and Cayman access 

points for investors. Whilst, in 

general, successor funds have 

sought to retain the structure 

of their predecessors we have 

seen a couple of large successor 

funds move their primary fund 

vehicles from Delaware to the 

Cayman Islands, highlighting 

further the increased confidence 

in the jurisdiction amongst 

managers and investors alike. 

• Multi vehicle structures are 

OK: For larger funds with 

material numbers of limited 

partners, and significant capital 

to deploy, managers and 

investors are often looking to 

segregate categories of investors 

into various side-by-side silos, 

with investors able to access 

such funds through a choice of 

fund partnerships. Cross-voting 

and cross-collateralisation 

are common features in these 

structures. The additional costs 

and administrative burden in 

maintaining a larger number 

of Cayman Islands exempted 

limited partnerships are 

not proving to be material, 

highlighting once more the 

efficacy of the exempted limited 

partnership as a private 

equity vehicle. 

• I would rather play on my 

own: Leading on from above, 

we have seen an increase in 

the number of funds-of-one


INVESTMENT AT A 

GLANCE: FUNDS 

INVESTMENT 

FUNDS 

whereby large investors have 

asked to be split out into 

a separate Cayman Islands 

exempted limited partnership in 

which they are the sole limited 

partner, and this partnership 

broadly participates in the same 

investment program as the 

main fund. 

• Side letters have not been 

put aside: Whilst the 

prevalence of “most favoured 

nation” provisions and the 

administrative issues in 

tracking terms agreed with 

multiple investors in separate 

agreements had led to a 

feeling that the majority of 

commercial terms would end 

up being reflected in exempted 

limited partnership agreements 

going forward, a number of 

closings have continued to be 

accompanied by the negotiation 

and entry into detailed side 

letter provisions with multiple 

limited partners covering, 

as expected, both fee terms 

and any esoteric regulatory 

issues but also more general 

commercial terms which 

managers have felt obliged to 

concede but uncomfortable 

including in the constitutional 

documents of their funds. 

• We want more: Whilst 

exempted limited partnership 

agreements have historically 

contained a general ability 

to co-invest, more and more 

limited partners are notifying 

managers of their interest in coinvestment 

opportunities, often 

formally recording such interest 

in side letters. For funds 

which have moved into their 

investment periods we have 

seen, from initial investments 

onwards, the establishment 

of further Cayman Islands 

co-investment vehicles through 

which select limited partners 

have sought to access a further 

slice of the relevant investment 

through the Cayman Islands 

(often for lower fees). 

• Subscription line financings 

are going strong: We have seen 

a large number of financing 

deals secured over, among 

other things, the unfunded 

capital commitments of limited 

partners. As the rights to call 

and receive capital are set out 

in the Cayman Islands law 

governed exempted limited 

partnership agreements 

the situs of the asset is the 

Cayman Islands, and lenders 

are requiring comfort from 

Cayman Islands counsel 

that their security will be 

enforceable. The procedures 

required to ensure that security 

over capital commitments is 

valid and will have priority 

are well understood in the 

jurisdiction, and they are 

becoming familiar to lenders 

and their onshore advisors. 

With so much capital raised and dry 

powder still to be spent for existing 

funds, downstream M&A and IPO 

activity has continued to be busy 

with a large proportion of such 


Jason Allison is a partner in 

the Walkers Global Investment 

Funds Group. He advises on 

Cayman Islands corporate and 

investment funds law, with 

particular expertise advising 

institutional clients on all 

aspects of structuring and 

establishment of private equity 

funds and hedge funds, and the 

related downstream M&A and 

corporate finance aspects. 

activity continuing to be structured 

through the Cayman Islands. The 

nature of the deals being undertaken 

has been varied, reflecting the wide 

number of asset classes in which 

private equity now deals and is 

comfortable taking through the 

Cayman Islands. We have seen a 

wide range of investments, from 

acquisitions of infrastructure 

to highly regulated financial 

services providers, real estate to 

heavy industry, all of which have 

been structured with a Cayman 

Islands component. 

As such, the Cayman Islands are 

continuing to consolidate their 

position as a jurisdiction ideally 

suited to accommodating the entire 

range of matters arising throughout 

the lifecycle of a private equity 

fund structure. As more funds close 

and more capital is subsequently 

deployed the Cayman Islands will 

continue to cater to and service the 

needs of the private equity industry 

and provide a range of innovative 

solutions to satisfy its requirements. 


Duis Bicrom eu Das ligula is an auctor, associate in 

fermentum the Walkers felis Global eu, Investment sagittis 

diam. Funds Nam Group gravida who advises convallis on 

libero, private in equity sodales fund metus formation 

tincidunt and downstream sit amet. transactional Aliquam 

mollis work. orci Bicrom pharetra has extensive tellus finibus 

finibus. experience Pellentesque advising a ornare broad 

semper range of ligula, investment sagittis managers, lectus 

semper private equity eget. Aenean houses and dignissim other 

convallis institutional nulla clients at commodo. in respect In of 

nec various placerat Cayman libero. legal Nunc issues. vel 

luctus lectus.

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© 2015 KPMG, a Cayman Islands partnership and a member firm of the KPMG network of independent member firms 

affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.


INVESTMENT 

FUNDS 

HOW 

INSTITUTIONAL 

INVESTORS ARE 

CHANGING THE 

FUND INDUSTRY 

By Kevin Phillip 

As institutional investors 

continue to drive asset 

growth in the hedge fund 

industry since the 2008 financial 

crisis, they are also acting as a 

catalyst for positive change that 

benefits the interests of all investors. 

These institutional investors include 

pension funds, both public and 

private, insurance companies, 

foundations and endowments and 

sovereign wealth funds, whose 

capital account for the majority of 

the industry. 

A global survey of institutional 

investors, conducted in 2013 

by AIMA’s Investor Steering 

Committee, found that institutional 

investors had either invested in 

hedge funds for the first time, or 

had increased their allocations, in 

some cases to more than double 

since the financial crisis. Quite 

significantly, the survey also 

revealed that investors viewed 

hedge funds as a vehicle to help 

them “meet individual objectives 

in terms of risk-adjusted returns, 

diversification, lower correlations, 

lower volatility and downside 

protection” and that they were 

quite bullish about allocating even 

more to hedge funds in the future. 

A Call for Greater Transparency 

Generally, institutional investors 

welcomed the industry’s increasing 

emphasis on transparency, the 

survey found, and were not at all 

daunted by the increasing regulation 

of the industry, except for some 

disquiet about the cost of such 

regulation. In fact, these investors 

have called for even greater 

transparency, changes to governance 

within the industry and enhanced 

operational infrastructure. 

These and other considerations 

are helping to fuel a new round 

of debate amongst industry 

participants and give institutional 

investors, in particular, a bigger say 

about the future of the industry. 

Indeed, new investor advocacy 

groups of influential institutional 

investors formed during 2014 are 

adding new perspectives to these 

core issues. 

A Focus on Independent Directors 

Governance is of particular 

importance and the value of 

independent directors who are nonaligned 

to the investment manager 

and its service providers is being 

further underscored. 

The U.S. Securities and Exchange 

Commission’s (SEC) fund 

governance standards released in 

2004 (Federal Register/Vol. 69, 

No. 147/Monday, August 2, 2004/ 

Rules and Regulations) provide 

the hedge fund industry with 

benchmark guidelines for some of 

the key governance issues that are 

of lingering concern to institutional 

investors. In particular, the role of 

independent directors on the fund’s 

board and how directors act in the 

interest of investors will always be a 

salient issue. Institutional investors 

are making it a point to not only 

ensure that the funds they’re 

investing into have independent 

directors, but to meet with and 

assess these independent directors. 

From our experiences, we have 

seen the benefits of an independent 

board where a fund finds itself 

in a distressed situation. Where 

questions of redemptions and 

payouts arise, an investment 

manager could act on his own 

accord and, without the impartial 

oversight and other checks and


balances, could potentially “loot” 

the fund of its resources under 

the veil of a required indemnity 

for example, or make preferential 

payments to affiliated parties. 

Quality, institutional hedge 

fund boards must be capable of 

managing conflicts of interest and 

ensuring that investors have all 

the information they need to make 

an informed investment decision. 

Approving material changes 

within the fund structure like 

service providers, approving side 

letter terms, approving financial 

statements and ensuring the fund’s 

compliance with what has been 

stated in its Offering Memorandum 

are a few of the examples of the 

responsibilities that an independent 

hedge fund director may need to 

undertake to achieve this. 

Today, some key fund governance 

considerations remain around board 

performance and the quality of 

fund documentation. 

Board Performance 

Board and committee performance 

continues to be a focal point of 

institutional investors and should 

be assessed in-depth at least 

annually. Consider whether the 

composition of the board, the 

capacity of its members, plus the 

frequency (and location) of its 

meetings and transparency reporting 

meet stakeholders’ expectations. 

Direct interactions with board 

members have continually increased 

since the 2008 financial crisis, 

with board members now providing 

greater transparency and more 

information to demonstrate 

and explain board involvement, 

performance and effectiveness. 

A critical part of this assessment, 

however, is out of the control 

wof the board and the scope of 

its authority. If the voting shares 

of the fund are not held by an 

independent party, or the fund is 

a feeder into a master fund that 

is not governed independently, 

or the fund documents impose 

undue constraints, the board may 

be rendered impotent or severely 

hampered in achieving effective 

fund governance. In these instances, 

board composition, capacity and 

other performance considerations 

become less relevant. 

It is important to review the tax 

status of the board members 

annually and ensure that all 

directors or officers of the fund 

have provided evidence of required 

filings with their home jurisdictions. 

For example, US citizens and 

US residents who are officers, 

directors, or shareholders in certain 

foreign corporations (including 

offshore investment funds) may 

be responsible for filing Form 

5471 Information Return of US 

Persons With Respect to Certain 

Foreign Corporations. The form 

and attached schedules are used to 

satisfy the reporting requirements 

of transactions between foreign 

corporations and US persons under 

sections 6038 and 6046 of the 

Internal Revenue Code. Substantial 

penalties exist for US citizens and 

US residents who are liable for filing 

Form 5471 and who fail to do so. 

The location of board meetings 

is also important. In recent years, 

a series of US court decisions 

have found that the center of 

main interests (COMI) of various 

Cayman Islands funds was not in 

the Cayman Islands. An important 

consideration of these courts in 

determining the COMI, included the 

finding that “none of the directors 

resided in the Cayman Islands and 

there was no evidence of any board 

meeting taking place there”. If a 

Cayman Islands fund is assumed by 

an official authority to not conduct 

a trade or business in the Cayman 

Islands, it may cause adverse tax 

and regulatory consequences for 

the fund. It is generally accepted 

that “substantially all” of the board 

meetings of a Cayman Islands 

fund be conducted in or from the 


Fund Document Review 

Material fund documents should 

be reviewed at least annually to 

ensure they are fully and fairly 

informing investors of current 

practices, considering the pace of 

regulatory changes in the industry 

and fiduciary obligations. The board 

should consult with its professional 

advisors on any proposed changes, 

including benchmarking current and 

proposed practices against industryleading 

trends, to ensure fund 

documents remain compliant with 

best industry practices. 

Conclusion 

With greater scrutiny from 

institutional investors, and as the 

hedge fund industry evolves its 

governance structure to respond 

to the new reality, the onus is not 

just on directors, but all service 

providers and fiduciaries to hedge 

funds to advance their practices to 

institutional standards. 


Kevin Phillip is an Executive 

Director of DMS Offshore 

Investment Services and 

Business Unit Leader of 

the DMS International Tax 

Compliance Group and DMS 

Outsourcing Ltd. He leads a 

team of professionals at DMS, 

supervising the governance 

of hedge funds and Cayman 

Investment Managers, 

and provides guidance on 

accounting, regulatory, legal 

and financial matters. He also 

serves on the boards of a 

variety of hedge funds and 

related structures.


INVESTMENT 

FUNDS 

SURGE PREDICTED 

IN GLOBAL ASSETS 

UNDER MANAGEMENT 

By Graeme Sunley 

With an overview of the conditions that the global asset 

management industry will face over the medium term, PwC 

examines the impact on the leading offshore fund domicile. 

With significant 

implications for the 

Cayman investment 

fund sector, research from PwC 

predicts that global assets under 

management (AuM) will rise to 

around US$101.7 trillion by 2020, 

from a 2012 total of US$63.9 

trillion. This represents a compound 

annual growth rate of nearly 6%. 

The report, Asset Management 

2020: A brave new world, finds 

that assets under management in 

the SAAAME (South America, Asia, 

Africa, Middle East) economies 

are set to grow faster than in the 

developed world in the years leading 

up to 2020, creating new pools of 

assets that can potentially be tapped 

by the asset management industry. 

However, the majority of assets will 

still be concentrated in the US 

and Europe. 

The report also predicts that 

alongside rising assets, there 

will be rising costs. The costs of 

responding to and complying with 

regulation will remain high. Fees 

will be under continued pressure 

amid the ongoing push for greater 

transparency and comparability 

from investors and policymakers. 

Investment in technology and 

data management will need to be 

increased in most cases to maximise 

distribution opportunities and to 

cope with regulation and reporting. 

In addition, full transparency over 

investment activity and products 

will exist at all levels, resulting 

in there being nowhere for noncompliant 

managers to hide as 

regulatory and tax reciprocal rights 

extend across the globe. 

Asset managers will need to respond 

PwC has identified six game 

changers that asset managers will 

have to analyse and address in order 

to capitalise on the opportunities 

this changing landscape presents: 

1. Asset management moves 

centre stage: Asset management 

has long been in the shadows of 

its cousins in the banking and 

insurance industries. By 2020, 

it will have emerged definitively 

from their shadows. 

2. Distribution is redrawn 

– regional and global 

platforms dominate: By 

2020, four distinct regional 

fund distribution blocks


2020 will see the emergence of 

global managers, with highly 

streamlined platforms, targeted 

solutions for the customer and 

a stronger and more trusted 

brand. 

will have formed which will 

allow products to be sold 

pan-regionally. These are: 

North Asia, South Asia, Latin 

America and Europe. As these 

blocks form and strengthen, 

they will develop regulatory 

and trade linkages with each 

other, which will transform the 

way that asset managers view 

distribution channels. 

3. Fee models are transformed: 

By 2020, virtually all major 

territories with distribution 

networks will have introduced 

regulation to better align 

interests for the end-customer, 

and most will be through some 

form of prohibition on having 

the asset manager allocate to 

distributors as evidenced in 

the UK’s Retail Distribution 

Review (RDR) and the Markets 

in Financial Instruments 

Directive II (MiFID II). This 

will increase the pressures of 

transparency on asset managers 

and will have a substantial 

impact on the cost structure of 

the industry. 

4. Alternatives become more 

mainstream, passives are 

core and ETFs proliferate: 

Traditional active management 

will continue to be the core 

of the industry as the rising 

tide of assets lifts all strategies 

and styles of management. But 

traditional active management 

will grow at a less rapid pace 

than passive and alternative 

strategies, and the overall 

proportion of actively managed 

traditional AuM will shrink. 

PwC estimates that alternative 

assets will grow by some 9.3% 

a year between now and 2020, 

to reach US$13 trillion. 

5. A new breed of global 

managers: 2020 will see the 

emergence of global managers, 

with highly streamlined 

platforms, targeted solutions 

for the customer and a stronger 

and more trusted brand. These 

managers will not only emerge 

from the traditional fund 

complexes, but from among 

the ranks of large alternative 

firms, too. 

6. Asset management enters 

the 21st century: Asset 

management operates 

within a relatively low-tech 

infrastructure. By 2020, 

technology will have become 

mission critical to drive 

customer engagement, data 

mining for information on 

clients and potential clients, 

operational efficiency and 

regulatory and tax reporting. 

At the same time, cyber risk 

will have become one of the 

key risks for the industry, 

ranking alongside operational, 

market and performance risk. 

PwC survey finds 88% of Asset 

Management CEOs are confident of 

revenue growth in 2015 

More recently, PwC’s 18th Annual 

Global Survey of more than 1,300 

CEOs, which includes responses 

from 155 Asset Management 

CEOs in 46 countries, found that 

Asset Management CEOs are also 

confident about revenue growth. 

A high of 88% are either ‘very’ or 

‘somewhat’ confident about their 

revenue growth, rising to 95% 

over the next three years. China 

and the US are viewed as the 

most important countries for 

growth prospects. 

However, with fees under pressure 

from the rise of ETFs and passive 

funds, asset management CEOs 

remain vigilant on costs, with 

almost half (46%) aiming to 

cut costs in 2015 and 28% looking 

to outsource. 

More than a quarter of asset 

managers reported entering a new 

segment of the industry over the 

past three years. A further 18% 

say they have looked into doing 

so. Indeed, PwC has seen asset 

managers disrupt banking by, 

for example, acquiring portfolios 

of real estate loans and lending 

to corporates. Alternative asset 

managers have broadened their 

product ranges to include private 

lending arrangements, primary


INVESTMENT AT A 

GLANCE: FUNDS 

INVESTMENT 

FUNDS 

securitisations and off balance 

sheet financing. 

Asset Management CEOs see their 

future competitors coming from 

technology, financial services or 

business services. Already ‘robo 

adviser’ business models are 

appearing to threaten to disrupt 

wealth management activities 

through automating 

asset allocation. 

From a business perspective, 68% 

of asset management CEOs are 

concerned about the availability 

of key skills whilst 63% fear 

mounting cyber threats, such as 

data security, which have become 

an ongoing business risk. What is 

more, even seven years on from 

the financial crisis, lack of thrust 

in business remains a concern 

according to 61%. 

On the regulatory front, asset 

management CEO anxiety about 

tax issues is a constant theme. 

67% in PwC’s survey state an 

internationally competitive 

and efficient tax system should 

be a government priority in 

their country, although half see 

government as having failed to 

achieve this. However, they do see 

some benefits from regulation with 

53% saying improved regulatory 

coordination is increasing crossborder 

capital flows. 

What does this mean for the 

Cayman Islands? 

From a Cayman perspective this 

predicted growth is certainly 

positive news. Home to the majority 

of the world’s offshore alternative 

fund products, including hedge and 

private equity funds, Cayman will 

without a doubt continue to fulfil a 

crucial role in the industry. 

With regard to alternatives in 

particular, which is especially 

relevant from a Cayman 

perspective, alternatives will become 

more mainstream. As noted earlier, 

alternative assets are predicted to 

grow by some 9.3% a year between 

now and 2020, to reach US$13 

trillion. It should also be noted 

that the majority of assets will still 

continue to come from the US and 

Europe – which are the traditional 

stronghold markets within which 

Cayman funds are distributed and 

from which they are managed. 

Such growth is predicted within 

the environment of a maturing 

alternatives industry, which will 

also experience the rise of the so 

so-called ‘mega manager’. In other 

words, growth in alternatives AuM 

does not necessarily indicate a 

proportional increase in the number 

of managers or funds coming to 

market. The Cayman industry and 

all of its participants need to be 

cognisant of this dynamic. 

The PwC research confirms that 

regulatory and tax reciprocal 

agreements will continue to expand 

across the globe. It can therefore 

be expected that the Cayman 


(CIMA) will continue to negotiate 

and refine its regulatory and tax 

cooperation agreements with its 

global regulatory counterparts. 

Furthermore, arrangements 

similar to the Cayman Islands 

Governments (CIG) recent Model 

1B Intergovernmental Agreement 

reached with the US pursuant 

to the US Foreign Account Tax 

Compliance Act (FATCA) are 

planned to be expanded to 

multiple jurisdictions. 

Cayman will continue to stay at 

the forefront of such regulatory 

and tax transparency initiatives, 

thanks in part to a constructive 

and consultation based relationship 

that exists between CIMA, CIG 

and the private sector. Other 

recent developments in this regard 

have included bringing master 

funds into the scope of the 

mutual funds law and the recent 

registration and licensing regime 

for directors to certain Cayman 

registered funds. All of these 

are examples of appropriate 

responses to the international 

regulatory agenda. 

Considering these growth prospects, 

for the Alternatives sector in 

particular, there will be significant 

opportunity, and the influence 

and reach that Cayman has as a 

relevant player in the financial 

services industry will continue to 

be significant. 

To download a copy of Asset 

Management 2020, please visit 

www.pwc.com/assetmanagement 

PwC’s report ‘Redefining 

competition in a world without 

boundaries: Asset Management 

Summary’, is based on the response 

from 155 asset management 

CEOs in 46 countries. To see the 

full results of PwC’s 18th Annual 

Global Survey, please visit www. 

pwc.com/ceosurvey 


Graeme Sunley is a Partner as 


well as the Asset Management 

Duis and Territory eu ligula Leader auctor, of PwC 

fermentum Cayman Islands. felis eu, He sagittis has nearly 

diam. 20 years Nam of gravida professional convallis 

libero, experience in sodales and specialises metus in 

tincidunt Alternative sit Investment amet. Aliquam fund 

mollis products orci with pharetra a variety tellus of finibus 

finibus. strategies Pellentesque and legal structures. ornare 

semper Graeme ligula, is a Past in sagittis President lectus of 

semper the Cayman eget. Islands Aenean Society dignissim of 

convallis Professional nulla Accountants at commodo. and In 

nec former placerat member libero. of the Nunc Executive vel 

luctus Committee lectus. of the Cayman 

Chapter of AIMA.

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BANKERS’ ASSOCIATION 

The CAACI works in 

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law, finance, tax and insurance. 

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Email: civil.aviation@caacayman.com | www.caacayman.com


INVESTMENT 

FUNDS 

EXPORT 

CAYMAN 

HEDGE FUNDS IN ASIA 

The importance of Asia, its 

growing dominance of global 

financial assets – and its 

role as an engine of growth for the 

world economy, is reflected in 

the region’s strong links with the 


industry, particularly Hong 

Kong, Singapore and Japan, all 

key export markets for Cayman 

financial product. 

When the major Cayman Islands 

law firms were looking to open 

offices in Asia to provide time-zone 

sensitive support to an expanding 

client base in the region, Hong 

Kong’s stable environment and 

well developed financial architecture 

made for a natural choice. Singapore 

has also become an important 

outpost for the leading firms in 

recent years, while Appleby and 

Ogier have each established a 

presence in Shanghai. 

By David Bentley 

The success of Brand Cayman in the 

Far East can be attributed to the fact 

that Cayman Islands corporates and 

partnerships are both widely accepted 

and familiar to investment managers 

and financial institutions. Cayman 

is favoured for its flexible corporate 

regime under UK common law 

and is widely used for financing 

work, corporate restructurings and 

forming investment vehicles. “Much 

of the work we do for our clients in 

the region continues to involve the 

use of Cayman Islands structures,” 

said Walkers partner Arwel Lewis, 

based in Hong Kong. “In particular 

in China, Chinese State Owned 

Enterprises and private entities 

use these structures for outbound 

investments, both as holding 

companies for external investment 

and to provide investment capital 

in investment funds for outbound 

investment.” 

Walkers said it has demonstrated 

a longstanding commitment to 

the Asia-Pacific region having 

established a dynamic presence 

through continual regional growth. 

“Over the last 12 years, we have 

steadily expanded in Asia to 

meet the growing demand from 

increasingly sophisticated regional 

clients, not only by offering 

time sensitive advice but also in 

the client’s own language be it 

Mandarin, Cantonese, Japanese 

and others,” Lewis said. 

“Asia has always been an important 

part of Maples and Calder’s global 

footprint. Established in 1995, 

our Hong Kong office was the first 

office our firm set up outside of the 

Cayman Islands as we recognised 

the importance of Asia to the 

alternative investment industry,” 

stated Global Managing Partner, 

Henry Smith. “We expect this trend 

to continue as fund managers based 

in the region continue to grow and 

diversify their business, and we 

anticipate that fund raising outside 

the region from US and European 

investors and use of Cayman, BVI 

and Irish domiciled investments 

funds and holding companies will 

become even more important and 

prevalent.” 

Maples said its Asian investment 

funds team is recognised as a 

market leader across all the key 

fund jurisdictions in the region, 

including Hong Kong, Mainland 

China, Singapore, Japan, Korea 

and Taiwan. With strong Chinese 

language capabilities and a team of 

lawyers from diverse backgrounds, 

Maples said it advises a large 

number of start-up and established 

hedge fund managers in the region, 

while its MapleFS affiliate has 

grown substantially. 

Cayman’s influence on corporate 

dealmaking in Asia is significant 

and well illustrated by the recent 

move by Hong Kong billionaire Li 

Ka-Shing to restructure his US$100 

billion business empire away from 

Hong Kong to the Cayman Islands. 

In what was described as an exercise 

to improve transparency within his 

conglomerate corporate structure, 

news that Asia’s richest man was 

re-domiciling to Cayman certainly 

grabbed the headlines. “Cayman 

Islands structures are increasingly 

popular in Asia, with over 75% of 

the companies listed on the Hong 

Kong Stock Exchange in the last 

10 years being incorporated in the 

Cayman Islands,” Walkers’ Lewis 

said. “We have seen increasing 

use of Cayman Islands domiciled


hedge and private equity funds and 

Cayman Islands corporates being 

used as holding companies to pool 

investor funds into investments in 

the region.” 

Alex Last, partner with Mourant 

Ozannes in Hong Kong, which 

set up its office there in 2012, said 

Cayman’s traditional leadership 

in the offshore funds sector is an 

important factor. “In Asia, Cayman 

is almost seen as the default option 

when structuring investment funds. 

It has had first mover advantage and 

is supported by a very high quality 

network of lawyers and other 

service providers who operate in 

the Asia time-zone,” Last said. 

“Cayman has an important role to 

play in both inbound and outbound 

investment into the region,” Last 

added. “The stable and robust legal 

regime in the Cayman Islands makes 

it an attractive structuring option 

for international investors who 

are looking to invest in emerging 

markets. Typically, such investors 

are looking to take investment 

risk but are unwilling to take 

structural risk. Using a jurisdiction 

like Cayman which provides a 

significant degree of legal certainty 

helps to mitigate this.” 

Across the region 

As hedge fund and private equity 

markets have developed further 

in Asia, since the financial crisis 

there have also been regional 

regulatory changes and an influx 

of new managerial talent. A 

number of high profile launches 

have taken place where managers 

have broken away from their 

former shops or investment banks 

in response to the Volcker Rule, 

such as former Goldman Sachs 

star trader Morgan Sze in Hong 

Kong with Azentus Capital. The 

capital raising environment is as 

tough in Asia as it is elsewhere and 

with ever increasing compliance 

costs, the larger managers have had 

more success fundraising as they 

are better able to meet the new 

regulatory requirements. 

In Singapore, tighter regulations 

introduced by the Monetary 

Authority of Singapore, have had 

a more significant impact on the 

smaller end of the market. Among 

the changes were new capital 

requirements and limits on investor 

numbers, along with more onerous 

requirements for reporting and 

auditing. Smaller managers have 

been able to overcome these tricky 

regulatory issues and meet the 

licensing requirements by joining 

platforms which provide office space 

and infrastructure to managers 

that otherwise wouldn’t be able to 

get to the launch stage. The 2014 

partnership between Singapore 

sovereign wealth fund Temasek 

and one such platform – Dymon 

Asia – was a landmark event for the 

jurisdiction, as the state agency’s 

$500 million investment was seen 

as a major vote of confidence and 

likely to spur further growth. 

Japan was thrust back into the 

spotlight for institutional investors 

as the Abenomics-inspired market 

bounce in 2013 saw asset allocation 

and exposure to the region 

increase. Increased risk appetite 

internationally for Japanese assets 

came alongside a notable move 

by Japan’s Government Pension 

Investment Fund – the pension fund 

for public sector employees in Japan 

and one of the biggest retirement 

savings pools in the world – to 

increase exposure of its US$1.2 

trillion portfolio to equities. The 

announcement in October 2014 

saw target exposure to domestic 

and international stocks more than 

double from 12% to 25%, while 

domestic bonds dropped from 

60% to 35% of the portfolio and 

international bonds increased from 

11% to 15%. Officials said the 

move was a response to Japan’s 

departure from an economy with 

persistent deflation and analysts 

expect funds to continue their focus 

on Japan, with major infrastructure 

investments taking place ahead 

of the 2020 Tokyo Olympics and 

continued recovery from the 2011 

Tohoku earthquake. Japanese 

equities continued to perform 

during the first half of 2015, with 

the Nikkei 225 reaching a 15-year 

high. Managers with funds targeting 

Japan continue to favour Cayman 

exempted limited partnership and 

unit trust vehicles, Walkers said in 

a recent research note, with most 

of the bank and trust companies 

they deal with, establishing Cayman 

unit trusts for ultimate distribution 

in Japan. 

Against a global backdrop of 

rapidly increasing compliance and 

operational costs, raising barriers 

to entry in the hedge fund sector, 

managers located in Asia have also 

had their own local regulatory 

challenges to contend with. Despite 

the obstacles, funds continue to 

launch in this competitive market. 

If we are now living in the ‘Asian 

Century’, Cayman Islands funds 

look set to play an increasingly 

prominent role. 


David Bentley is a financial 

writer and editor with over 20 

years’ experience, specialising in 

offshore finance and regulation. 

Reporting in London, he worked 

for Dow Jones Newswires, 

appeared in the Wall Street 

Journal and covered structured 

finance for the International 

Financing Review. Currently 

with a specialist Cayman-based 

writing agency, he is a former 

editor of the Cayman Financial 

Review and spent six years 

with one of Cayman’s biggest 

offshore law firms.


AT A GLANCE 

INSURANCE 

Overview: Fuga. Itae vendam nonectia sequi offictora quam excessitem 

hit rerum liquis expliquis audiciis eiciam etur? Udaepero ellupta ssimetur aut 

hitiore commoluptat lam eictiunt iundae. Invelesequi consecuptur aut providucid 

ince the early 1970s, the Cayman manner. Instead of enacting a in 1980, according to the AM 

mo Islands minctotae have been blazing repeliciis the trail et quatios whole new possima swathe of gnimporum legislation, earci Best Captive dolut Centre. et que The nos Cayman nim 

for the development of the captive Cayman wisely chose to amend Islands remains the second-largest 

in net enda nullatusdae offic to beatemquid quidele ssimpella sundior alistorit pa 

Sinsurance and the alternative risk 

transfer industries. By providing 

ima evento quias aut as 

robust yet familiar corporate 

structures for captive insurance 

companies, enacting progressive 

legislation and implementing 

risk-based regulation, the Cayman 

Islands quickly became a leading 

domicile of choice for captives as 

well as other corporate insurance 

products, including insurance 

linked securities. 

Cayman has continued to innovate, 

modernising its legislative and 

regulatory infrastructure and 

responding to market demands in a 

business-centric, yet appropriately 

governed environment. The most 

recent legislative development has 

been the implementation of the 

Portfolio Insurance Companies 

(PIC) Regulations (2015), 

which reinforce and enhance the 

insurance statutory framework 

by providing greater flexibility 

and do so in a robust and efficient 

its long established and widely 

understood Segregated Portfolio 

Company (SPC) legislation. This 

gives to Cayman all the beneficial 

characteristics of Incorporated Cell 

Company legislation but none of 

the potential uncertainty or the law 

of unintended consequences, which 

can be associated with enacting 

“new” legislation. 

Cayman’s regulatory model 

is noteworthy as it provides 

regulation based both on the type 

of structures utilised as well as 

the composition of the given risk 

profile. Transparency is paramount, 

providing a perfect balance between 

heightened oversight for companies 

with higher risk profiles and a more 

efficient approach for those vehicles 

that are predominately investment 

in nature. 

There are more than 5,000 

captive insurance companies in 

the world, up from roughly 1,000 

captive domicile in the world 

(Cayman, Bermuda and Vermont 

being the most well-known) out 

of the more than 70 jurisdictions 

now providing captive insurance 

domiciliation. Cayman has 

continued to fare comfortably 

in this increasingly competitive 

marketplace because of its long and 

successful history and its extensive 

level of experience and expertise. 

The healthy, but arms-length 

industry-to-regulator-to-legislators 

relationship fosters innovation and 

timely implementation of leadingedge 

products that answer market 

demand. 

To be more specific, as at 31 March 

2015, there were 760 Class B, C 

and D insurance companies under 

supervision of the Cayman Islands 

Monetary Authority with pure 

captives and SPCs representing the 

lion’s share of these, 414 and 139 

respectively. Total assets held were 

reported at US$54 billion and total 

premiums at US$12.4 billion.


THE STATS 

Healthcare captives are particularly 

prominent and Cayman has been 

the leading jurisdiction for this 

sector of business since Harvard 

Medical School selected Cayman 

over Bermuda as its domicile 

of choice back in 1976. Thirtyfour 

percent of Cayman’s captive 

insurance companies are healthcare 

related and medical malpractice 

liability is the largest line of business 

underwritten. That being said, 

Cayman has developed other areas 

of business including workers’ 

compensation, life, professional and 

product liability, property and a 

host of other categories, including 

some that are non-traditional, such 

as environmental pollution, cyber 

and terrorism risks. 

The Insurance Managers 

Association of Cayman (IMAC), 

the industry body with 

responsibility for promoting the 

jurisdiction’s captive insurance 

industry in its target markets, is 

actively developing previously 

untapped markets, including 

Canada and Latin America, where 

there are numerous benefits for 

companies in these regions to 

use a Cayman-domiciled captive 

insurance company, in addition 

to those traditionally used by 

American companies. 

Total Companies 

by Category 

Updated as at 31 

March 2015 

Total Companies by 

Risk Location 

Updated as at 31 

March 2015 

0.13% Reinsurance Companies 

4.34% Special Purpose Vehicle 

5.66% Commercial Insurer 

16.97% Group Captive 

54.47% Pure Captive 

0.26% Pacific Rim 

0.79% Africa, Asia & Middle East 

1.97% Europe 

3.03% Caribbean & Latin America 

3.95% Worldwide 

90.00% North America 


from the Insurance Managers 

Association of Cayman (IMAC). 



INSURANCE 

The new Portfolio 

Insurance Company 

structure gets the best 

out of the popular 

Segregated Portfolio 

Company regime in the 


PORTFOLIO 

THE 

INSURANCE COMPANY 

ANOTHER IMPORTANT TOOL IN THE BOX FOR 

CAYMAN’S CAPTIVE INSURANCE INDUSTRY 

By Paul Scrivener 

Since their introduction in 

1998, segregated portfolio 

companies (SPCs) have proved 

to be extremely popular vehicles 

in Cayman’s captive insurance 

industry. SPCs were originally 

developed to provide an improved 

model of the traditional contractual 

rent-a-captive. However, in the 

almost 17 years that they have 

been on the statute book, they 

have been used in many different 

circumstances. Indeed, they have 

been used wherever there was a 

need to create legally “ring-fenced” 

accounts or portfolios within a 

single licensed insurer thereby 

ensuring that policyholders or 

other creditors only had recourse 

to the assets of a specific account 

or portfolio and not the entire 

balance sheet of the SPC. Statistics 

of the Cayman Islands Monetary 

Authority (CIMA) bear witness 

to their popularity with captive 

owners and their consultants. As at 

30 September 2014, there were 138 

SPC insurers, out of a total of 765 

Cayman captives, writing in excess 

of US$750 million in premiums. 

Can the SPC be Enhanced? 

Although not relevant to all SPC


insurers, for some a drawback 

of the SPC was that none of the 

segregated portfolios, or cells for 

short, was a separate legal entity. 

Only the SPC itself was a legal 

entity and the cells were simply 

ring-fenced divisions of that legal 

entity. Why was this a drawback? 

There are two principal reasons. 

First, any contract between one cell 

and another cell of the same SPC 

can never be legally binding. This 

is because of the absence of two 

legal parties. This therefore prevents 

reinsurance and risk pooling 

arrangements between cells of the 

same SPC, which for some SPCs 

is a definite disadvantage. Second, 

there is considerable uncertainty 

over the US federal tax status of an 

unincorporated cell of an offshore 

insurer casting doubt over whether 

a cell can be treated as a separate 

taxpayer and make its own tax 

elections such as a 953(d) election 

and an 831(b) election. These issues 

were capable of being addressed if 

it were possible for an SPC insurer 

to incorporate one or more of its 

cells and thereby create the separate 

legal identity that was needed. How 

could that be best achieved? 

On 16 January 2015, the Cayman 

Islands government brought into 

force certain sections of the new 

Part 4A of the Insurance Law, 2010 

and passed the Insurance (Portfolio 

Insurance Companies) Regulations, 

2015, thereby allowing SPC insurers 

to enjoy the same benefits as 

incorporated cell companies in other 

jurisdictions. It is, arguably, the 

most significant legal development 

for Cayman’s insurance sector since 

the introduction of SPCs in 1998. 

These legislative developments 

was widely anticipated and were 

the product of a tremendous 

collaborative effort between the 

Cayman Islands government, the 

Insurance Managers Association of 

Cayman (IMAC) and the Financial 

Services Legislative Committee, 

a private sector/public sector 

committee tasked with maintaining 

Cayman’s financial services 

legislation at the cutting edge. 

Cell Incorporation the Cayman Way 

Incorporated cell legislation is not 

new and was first developed in 

Jersey several years ago. However, 

the Cayman Insurance Law now 

provides a model for incorporated 

cells, which differs from that in 

Jersey and other domiciles. It is 

specific to the insurance sector 

because of the pressing need for 

incorporated cells for the reasons 

outlined above and, at this stage, 

does not extend to other sectors of 

Cayman’s financial services industry. 

The primary legislative amendments 

have been made to the Insurance 

Law rather than the Companies 

Law and were deliberately crafted 

as a modification to the existing 

regulatory regime for SPC insurers 

rather than a change to substantive 

law, which would have taken much 

longer to implement. 

However, the most important 

difference with the Cayman 

model is that cell incorporation is 

achieved by a separate company 

being established by the SPC 

underlying the relevant cell and 

registered with CIMA rather than 

the cell itself taking on incorporated 

status. Cayman has adopted a 

more conservative solution than 

competitor jurisdictions, one that is 

based on clear and well-established 

principles of corporate law. An SPC 

insurer that wishes to incorporate 

one of its cells will set up a regular 

Cayman exempted company 

– called a portfolio insurance 

company or PIC for short – which 

will be owned and controlled by 

the SPC insurer on behalf of the 

cell in question. Effectively, the cell 

will own the PIC and the PIC, for 

all practical purposes, will replace 

the cell. So if the cell has an existing 

insurance program, going forward, 

that program would be expected 

to be operated by the cell’s PIC 

and no longer by the cell. A PIC 

is simply a subsidiary of the SPC 

but tied to a particular cell of that 

SPC, a concept which can readily be 

understood by parties dealing with 

an SPC and its PICs. Only one PIC 

can be established under each cell. 

Whilst PICs were developed to 

address the intra-cell contracting 

problem and provide much greater 

certainty as to the US tax status 

of a cell of an offshore insurance 

company, PICs have a number of 

other benefits over a traditional 

cell. Although they would have 

to be approved by CIMA (unless 

already approved), the members 

of the board of directors of the 

PIC need not be the same people 

as the members of the board of 

directors of the SPC insurer itself. 

This provides governance flexibility 

and gives a voice at the board table 

for the economic owners of the 

cell, which they typically do not 

have with an unincorporated cell. 

This is because for an SPC with 

unincorporated cells there is a single 

board at the core level responsible 

for the affairs of all cells of the 

SPC as it is not possible to have 

boards of directors at the cell level. 

For third parties unfamiliar with 

SPCs and the cell concept, a PIC 

is probably easier to understand 

than a cell simply because it is a 

separate company. A PIC can also 

transition more easily to a standalone 

captive than a cell because 

it is a separate legal entity with its 

own constitutional documents and 

board of directors. Therefore, the 

transition is likely to be much less 

disruptive than would be the case 

with the hiving-off of a 

cell. In addition, a 

PIC is able to 

merge with 

another


INSURANCE AT A 

GLANCE: 

INVESTMENT 

FUNDS 

company under statutory merger 

provisions and can be used to 

facilitate the redomestication of a 

foreign captive into the Cayman 

Islands. It is also worth noting 

that there is very limited judicial 

authority in any jurisdiction 

surrounding the legal efficacy 

of the ring-fencing concept in a 

traditional cell company and whilst 

legal experts generally agree that 

the concept will withstand close 

judicial scrutiny in the case of a 

properly established and operated 

cell structure, there is no doubt 

that a PIC will benefit from already 

well-developed case law supporting 

corporate limitation of liability. 

Regulatory Aspects 

A PIC will be regulated by CIMA 

but as long as it remains a PIC it 

will not need its own insurance 

licence. Instead it will operate under 

the umbrella of the licence held by 

the SPC insurer, which controls 

it. The legislation provides for a 

straightforward registration process 

with CIMA for each PIC and once 

registered the PIC will be able to 

write its own insurance business 

within the parameters of its business 

plan filed with CIMA. 

The level of regulatory oversight 

that CIMA will have over a PIC 

will be largely the same as for 

a stand-alone captive. So, 

for example, audited financial 

statements reflecting the financial 

condition of each PIC will need 

to be filed with CIMA. 

A PIC must at all times be under 

the control of the relevant cell of its 

SPC and so the voting shares in the 

PIC must be registered in the name 

of the SPC on behalf of the relevant 

cell although it is permissible for 

non-voting participating shares to 

be issued to the economic owner(s) 

of the PIC. So that its status is 

readily identifiable, a PIC must 

include in its corporate name 

“Portfolio Insurance Company”, 

“PIC” or “P.I.C.”. 

The minimum capital (MCR) and 

risk based capital (PCR) for a PIC 

will be the same as for a standalone 

captive writing the same level 

of related party business. So for 

example, for a PIC which would 

fall within class B(i) if it were a 

stand-alone captive, the total MCR 

will be US$100,000 and the PCR 

will be the same as the MCR. It 

is anticipated that many PICs will 

fall within this categorisation. 

To provide a level of flexibility 

in circumstances where it would 

be inappropriate for a PIC to be 

capitalised as outlined above, CIMA 

has the discretion to modify both 

MCR and PCR. The minimum 

margin of solvency for a PIC will be 

the same as its PCR. 

Automatic Novation 

The incorporation of the PIC will be 

the same as any incorporation in the 

Cayman Islands – a 24 hour process 

once the necessary due diligence/ 

know your customer information 

has been provided on the directors 

and shareholder(s). The registration 

of the PIC with CIMA will be 

largely the same as the current 

procedure for creating a new cell 

for an SPC. Creating a cell generally 

takes just a matter of a few days at 

the most. 

In developing the new legislation 

one of the issues that had to be 

considered was the need for a 

streamlined process for novating 

the assets and liabilities of an 

existing cell program to the 

underlying PIC. This is addressed 

in the legislation by providing 

for an automatic novation by 

operation of law by simply filing 

with CIMA a straightforward 

declaration sworn by two 

directors of the SPC containing 

certain prescribed particulars. In 

addition, creditor consents must 

be obtained. Of course, some PICs 

will be established for a brand new 

insurance program rather than an 

existing program and in that case 

the PIC will be formed under a 

newly established cell of the SPC. 

Potential 

Discussions with clients and 

consultants in Cayman and the U.S. 

point to the fact that the ability to 

set up PICs will bring new insurance 

business to Cayman which might 

otherwise have been lost to other 

domiciles. Therefore, PICs should 

provide an important new revenue 

stream for CIMA and the Cayman 

Islands government and help in 

maintaining Cayman’s position at 

the cutting edge of developments 

in alternative risk management. It 

is certainly very encouraging that 

the very first PIC was incorporated 

within a few short days of the new 

legislation coming into force. 


Paul Scrivener is a partner 

and head of the insurance 

group at leading Cayman 

Islands law firm, Solomon 

Harris. Paul is a well-recognised 

captive insurance expert 

with over 15 years’ experience 

in the sector. He has been 

instrumental in the development 

About of the portfolio the Author insurance 

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AT A GLANCE 

TRUSTS 

Overview: Cayman’s banking sector is a vital support mechanism for the 

financial services industry. Banking in Cayman provides a dual-functioning role, 

providing a full range of products and services to residents and international 

clients alike. Cayman banks also have speciality industry knowledge and expertise 

to support the needs of other financial services, such as the fund and captive 

s a recognised global centre of 

insurance excellence for sectors. trusts, Cayman’s 

financial sector has serviced 

international clients for decades 

with what is the most flexible 

instrument for wealth structuring 

and estate planning within a 

common law framework. 


Authority’s (CIMA) regulatory 

framework covers a range of 

licences for the trust sector, 

allowing for the provision of trust 

services to individuals, families and 

organisations. An unrestricted Trust 

Licence authorises the undertaking 

of business acting as a trustee, 

executor or administrator for 

private wealth, corporate, collective 

investment schemes or charitable 

structures. There are also categories 

of licences for Restricted Trust and 

Nominee Trust business, which 

allow for operating in a specific role 

only. In addition, CIMA regulates 

private trust companies, which 

are companies established for the 

sole purpose of engaging in trust 

business, effectively as a corporate 

trustee to either a trust or a group 

of ‘connected’ trusts, usually within 

the same family and typically 

utilised by high net worth families. 

Finally, there is a further licence 

category for trust services involving 

a Controlled Subsidiary where there 

is a desire for a licensed provider to 

operate a certain category of clients 

under a specific entity without 

requiring an additional full license. 

In addition to traditional wealth 

planning, Cayman’s trust companies 

are used extensively in capital 

markets transactions and structured 

finance deals, by major institutional 

investment managers, financial 

institutions and investment banks. 

Japanese investors, for example are 

very familiar and comfortable with 

Cayman unit trusts to structure 

hedge fund investments. As with 

other sectors, trust legislation in 

Cayman has evolved to meet the 

rapidly changing needs of the 

industry. The innovative STAR 

Trust regime, developed in 1997, 

significantly expanded trust 

planning capability, providing for 

trusts to be established for any 

purpose, provided it is lawful and 

not against public policy. 

With steady and dependable 

growth, trusts have remained 

an important component of the 

financial services industry in 

Cayman, where there are currently 

140 licensed trust companies, 

confirming the jurisdiction’s status 

as a leading centre for global wealth 

management and planning. 


from The Society of Trust 

and Estate Practitioners 

(STEP).


THE STATS 

Licensees/Registrations under the Fiduciary Services Division 

Trust Companies 

Licensees under the 

Companies 

Management Law 

Period Unrestricted Restricted Nominee 

Total 

Number 

of Trust 

Companies 

Registered 

Controlled 

Subsidiaries 

Registered 

Private Trust 

Companies 

Company 

Managers 

Corporate 

Services 

Providers 

2001 54 62 31 147 – – 51 0 

2002 53 67 28 148 – – 81 1 

2003 49 74 26 149 – – 73 5 

2004 51 74 22 147 – – 69 5 

2005 48 78 20 146 – – 68 5 

2006 51 83 27 161 – – 70 5 

2007 51 87 21 159 – – 69 7 

2008 54 87 18 159 4 – 74 6 

2009 

QTR. I 55 86 22 163 8 7 75 6 

QTR. II 53 85 22 160 9 9 77 6 

QTR. III 53 85 22 160 13 18 82 7 

QTR. IV 53 83 21 157 15 24 77 7 

2010 

QTR. I 52 78 21 151 13 29 77 7 

QTR. II 50 78 21 149 14 37 77 7 

QTR. III 51 78 22 151 18 40 79 7 

QTR. IV 51 76 23 150 20 44 80 9 

2011 

QTR. I 53 72 23 148 21 50 81 9 

QTR. II 53 71 23 147 23 56 82 9 

QTR. III 52 71 23 146 28 60 82 10 

QTR. IV 54 69 24 147 29 65 83 9 

2012 

QTR. I 53 71 24 148 32 65 84 10 

QTR. II 53 71 24 148 34 70 86 11 

QTR. III 53 69 24 146 34 77 87 12 

QTR. IV 52 66 24 142 30 77 86 12 

2013 

QTR. I 52 67 23 142 32 83 91 14 

QTR. II 51 67 22 140 35 85 93 15 

QTR. III 51 67 22 140 34 87 92 17 

QTR. IV 50 67 22 139 34 88 93 17 

2014 

QTR. I 49 65 27 141 38 88 90 18 

QTR. II 49 65 27 141 38 91 97 16 

QTR. III 49 64 27 140 38 93 98 16 

QTR. IV 47 63 27 137 36 95 96 16 

2015 

QTR. I 50 63 27 140 32 100 98 17 

Statistics sourced from Cayman Islands Monetary Authority


TRUSTS 

RISK RETENTION AND 

EMERGING STRUCTURES 

EXTRACTED FROM MAPLES AND CALDERS’ 

THE CLOSER, PUBLISHED FEBRUARY 2015 

By Mark Matthews, Nicola Bashforth and 

Stephen McLoughlin 

Risk retention (RR) has 

loomed large on the US CLO 

horizon since 2011, and 

despite industry lobbyists having 

advocated hard for the exclusion of 

CLOs from the ‘skin in the game’ 

provisions during the intervening 

period, the final rules, which were 

adopted in October 2014 and 

published on 24 December 2014, 

made no exception for CLOs. RR 

comes into effect on 24 December 

2016. Those managers that do not 

already have RR financing in place 

are now seriously looking at sources 

of RR capital and at structural 

solutions that may alleviate or 

reduce funding shortfalls. Structural 

solutions already adopted for 

European RR, and some of the 

newer structures developed in the 

last few months of 2014 for US 

RR, certainly provide some room 

for optimism, although market 

participants are still searching 

for a ‘holy grail’ RR structure 

that meets the RR requirements 

of both EU and US regulators and 

one which is tax efficient and not 

overly complicated. The European 

market has been grappling with 

RR for several years now, yet 2014 

was the most successful year for the 

European CLO 2.0 market. Some of 

the solutions and structures that are 

seen in Europe are transferable to, 

and have already been utilised by, 

the US market whose RR rules are 

substantially similar. 

Summary of the Rules 

Whilst we defer to the expertise 

of our onshore legal colleagues 

in providing a complete and 

comprehensive analysis of the 

US and European RR rules, 

we have, in layman’s terms, 

outlined some of the key rules 

below for the purposes of 

this article. 

US Rules 

Under the final rules, the ‘sponsor’ 

of a CLO is required to hold at 

least 5% of the credit risk of all 

of the securities issued in the 

transaction for the active life of 

the deal. There are different sunset 

dates but the general view is that 

the retained notes will have to be 

held until, at the earliest, the end of 

the reinvestment period (typically 

four years from the closing date 

of the CLO). A sponsor is the 

person who organises and initiates 

the securitisation transaction 

by selling the assets directly or 

indirectly (e.g. through an affiliate) 

to the CLO issuer. As CLOs do 

not originate the loans that they 

securitise but purchase them from 

third party originators in the open


market, lobbyists and the industry 

participants sought to differentiate 

CLOs and CLO managers from 

other ABS products/managers on 

this basis. However, no exemption 

was granted. The retention 

requirement can be complied with 

by the sponsor either: (a) taking 

a 5% vertical slice of each class 

of securities issued (based on par 

value); (b) taking a portion of the 

equity tranche equal to 5% fair 

value of all the securities issued 

(horizontal interest); or (c) a 

combination of (a) and (b) above 

(a so-called “L-shaped” interest). 

In terms of who and how the 

retained interest can be held, there 

are four main options: the CLO 

manager as sponsor; a majorityowned 

affiliate of the CLO manager, 

or retention by the originator or 

the arranger. 

Where a manager cannot take 

a direct 5% holding, or chooses 

not to, the majority-owned 

affiliate (of the manager) is a 

good alternative as it significantly 

reduces the capital required to 

meet the RR requirements, while 

ensuring retention by the manager 

of a significant financial interest 

in the affiliate. 

One point of interest is the 

narrower interpretation of the US 

rules, compared with the EU, on 

what constitutes ‘originating’. In 

the US, for example, whilst middle 

market lenders are considered to 

originate loans, lenders under US 

broadly syndicated loans are limited 

for these purposes to lead arrangers 

and do not include CLOs that take 

participations in such loans. In 

the European market, however, 

the consensus is that an originator 

can be any named lender of the 

original loan, including entities 

taking participations on to their 

balance sheet in order to sell them 

on to a CLO. 

Conversely, in Europe there are no 

majority-owned affiliate or arranger 

options, only sponsor, originator 

and “original lender” and only 

some EU regulated managers may 

satisfy the definition of sponsor. 

One of the current areas of debate, 

particularly in Europe, is how 

long an asset must be ‘seasoned’ 

or held by an entity before it can 

be transferred to the CLO issuer 

to enable such entity to qualify as 

an “originator” for these purposes. 

EU regulators have not given 

any guidance on this issue yet 

and the concern among industry 

participants is that the regulators 

will clamp down on originators 

that only hold assets for short 

periods of time, such as 24 to 48 

hours, before transferring them. 

Consensus seems to be building, 

however, that 15 to 30 days or so 

is a reasonable time period to 

‘season’ loans before selling them 

into a CLO. 

The regulators in the EU and the 

US have also taken different 

approaches in terms of enforcing 

compliance with the applicable RR 

rules. In Europe, non-compliance 

affects ‘credit institution’ investors 

whose capital risk weighting 

requirements increase significantly 

where they invest in non-compliant 

deals. In the US, however, the onus 

falls upon the sponsor of the CLO 

to ensure compliance with the rules 

with significant penalties for failure 

to do so. 

Structures We are Seeing 

As the Maples group acts on the 

Cayman Islands legal and fiduciary 

side on over 60% of the US CLO 

market, and a significant portion 

of the European market, and has 

capabilities in the Cayman Islands, 

Ireland, Luxembourg, Holland and 

Delaware, we see the innovative 

products that are being developed 

on both sides of the pond to address 

RR. Whilst a number of US deals 

in 2014 closed as EU RR compliant 

with the manager sponsor retaining 

the 5% stake, below are just some 

of the other solutions we are seeing 

implemented to address RR. 

Originator/Originator Funds 

GSO pioneered the first originator 

fund in the summer of 2014. In 

outline, an originator fund invests 

in a loan originator entity established 

by the manager (the “Originator”) 

via the purchase of equity (shares) 

or profit participating notes, or 

a combination thereof, issued by 

the Originator. 

The Originator in turn makes direct 

investments in European and/or US 

senior secured loans and on a CLO 

closing, transfers some or all of 

the loans to the CLO issuer under, 

for example, either a sale and 

purchase, a forward sale or a master 

participation agreement. The 

Originator will then typically retain 

a majority portion of the equity in 

that CLO. 

Maples and Calder acted on the first 

US CLO originator transaction in 

2014 structured to meet and comply 

with EU RR rules as well as strategic 

preparation for US risk retention. 

A special purpose Cayman Islands 

vehicle acted as retention holder and 

accumulated middle market loans, 

at the same time as entering into a 

matching future sale agreement with 

the CLO issuer. 

We have been working with a 

number of managers who are setting 

up their own European originator 

structures and originator funds. 

These funds tend to be established 

by asset managers that already run 

investment or hedge fund businesses 

and can easily accommodate a CLO 

originator fund alongside existing 

investment and credit funds. 

Majority-Owned Affiliates 

We have also established Cayman 

Islands majority owned affiliate 

vehicles in which the manager owns 

a majority interest but which have 

significant third party investors. The 

special purpose affiliate then typically 

acquires a horizontal interest in the 

CLO by purchasing subordinated 

notes to satisfy the 5% retained 

risk requirement. As the horizontal 

5% equity investment will have


TRUSTS AT A 

GLANCE: 

INVESTMENT 

FUNDS 

to be calculated based upon ‘fair 

value’ we understand that this 

option may become less attractive 

going forward because, in order to 

calculate fair value, accountants 

will require disclosure in the CLO 

offering document of any discounts 

provided to investors across the 

entire capital stack. 

Cross Border Solutions 

We have already seen, and 

expect to see, an increase in 

structures established to maximise 

jurisdictional advantages and 

to combine features across 

jurisdictions to provide structural 

solutions for RR. The use of Irish 

section 110 companies tacked 

on to Cayman Islands structures 

and Cayman Islands incorporated 

Irish tax resident entities are two 

such examples which provide cross 

border flexibility. 

CLO Manager Consolidation? 

While the expected market 

consolidation at the start of the 

decade failed to materialise, as 

the CLO 2.0 bull run reinvigorated 

the space, with RR and other 

regulatory concerns, such as Volker, 

now very much in focus, it would 

actually appear that the forecasters 

may have been right with their 

predictions, albeit a year or two 

early. Consolidation is now front 

and centre once again as pundits 

predict a significant amount of 

manager consolidation ahead 

of the RR rules going live at the 

end of 2016. 

We believe that, whilst a modest 

amount of consolidation is 

inevitable, a number of factors 

mitigate the effects of mass 

consolidation that some market 

participants foresee. These 

include the development of 

structural solutions to address RR, 

the availability of risk retention 

investors (including certain 

arrangers providing such assistance) 

and the fact that many managers, 

including smaller managers with 

whom we have spoken, already 

have alternate solutions in place 

through access to other sources 

of capital. There may be surprises 

as certain ‘smaller’ managers 

not only continue to issue CLOs 

but also look to increase issuance 

volumes and move into the 

‘larger’ manager bracket. On the 

flip side, not all larger managers 

have RR financing locked down 

so, whilst the CLO manager 

landscape will no doubt change, 

it may change in ways people do 

not necessarily anticipate. 


Mark Matthews specialises in 

structured products and has 

extensive experience in SIVs, 

securitisations, repackagings 

and credit funds including 

hybrid funds and CLO/CDOs. 

He has also worked on private 

equity and hedge fund related 

matters since 1998. Mark 

also has experience in general 

corporate, partnership, banking 

and regulatory matters. 


Nicola Bashforth specialises 

in structured finance 

transactions, particularly CLOs, 

securitisations, repackagings, 

credit funds and other 

CLO investment structures. 

Recognised as a leading 

offshore lawyer in the credit 

market, she works closely with 

all arrangers, CLO managers 

and their counsel, helping to 

establish and structure their 

CLOs, warehousings and 

refinancings, based on a solid 

understanding and experience 

of the market pre, during and 

post credit crisis. Nicola also has 

experience in general corporate, 

finance and regulatory matters. 


Mark is head of the Cayman 

Finance group and co-head 

of the Sports, Media & 

Entertainment group. 

Stephen McLoughlin advises 

on a wide range of capital 

markets and structured finance 

products and related issues, 

including CLO, RMBS and 


other securitisation structures, 

Duis fund-linked eu ligula structured auctor, products, 

fermentum repackagings felis and eu, debt sagittis issuance 

diam. programmes. Nam gravida He also convallis advises 

libero, on regulatory in sodales issues metus impacting 

tincidunt on structured sit amet. finance Aliquam vehicles 

mollis including orci those pharetra in relation tellus finibus to 

finibus. the Prospectus Pellentesque Directive, ornare Market 

semper Abuse Directive, ligula, in AIFMD, sagittis lectus EMIR 

semper and risk eget. retention Aenean requirements dignissim 

convallis for securitisations nulla commodo. under In 

nec the Capital placerat Requirements 

libero. Nunc vel 

luctus Regulation. lectus.


TRUSTS 

TRUST INDUSTRY 

EVOLVES IN 

CHANGING WORLD 

By William Walmsley and Tamara Corbin 

The private trust industry 

is changing and will 

undoubtedly continue to 

evolve as the industry moves 

forward. The robustness of private 

trusts is being tested through 

challenges such as the right to 

privacy, versus the desire on the 

part of governments for greater 

transparency and reporting 

initiatives, including the US 

Foreign Account Tax Compliance 

Act (FATCA), UK FATCA and 

the Organisation for Economic 

Co-operation and Development 

(OECD) Common Reporting 

Standard (CRS). As a result of 

high profile tax evasion cases 

in recent years and the need for 

governments across the world to 

grow tax revenue, the industry 

is under increased scrutiny from 

international legislators, regulators 

and tax authorities. These initiatives 

and pressures increase the cost of 

carrying on trust business and the 

risks associated with that business, 

leading some to question the future 

of the industry. However, there is 

and will continue to be a place for 

private trusts in the wealth planning 

for international families and 

businesses. 

In order to appreciate how the local 

industry will evolve it is important 

to understand how the landscape 

of trusts in the Cayman Islands has 

changed in the past two decades.


TRUSTS 

Twenty years ago a typical portfolio 

of trust business was comprised 

of relatively straightforward trusts 

of varying types, with underlying 

holding companies mainly holding 

asset classes of financial investments 

or real estate for the first generation 

of stakeholders. Today, trust 

structures are generally much more 

sophisticated. They hold a full 

range of asset classes including 

operating businesses, they involve 

private trust companies (PTCs), 

and family office functions and 

they are often for the benefit 

of two or three generations of 

family members living in multiple 

jurisdictions. Trust companies 

servicing those structures provide 

a full range of services, including 

provision of independent directors 

to PTCs and other family 

companies, and they are required 

to liaise with international advisers 

on an ongoing basis to assist family 

members to remain tax compliant 

in the relevant jurisdictions. 

Cayman is one of the leading 

international centres for the creation 

of complex trust structures. The 

trust industry in Cayman has kept 

pace with client requirements 

over the years due to a number of 

important factors. Cayman has a 

solid Trusts Law, it led the way with 

the creation of the Special Trusts 

Alternative Regime (STAR), it 

provides for the licensing of PTCs as 

restricted licensed trust companies, 

and has more recently introduced 

a registered PTC regime. Trust 

legislation is supported by a strong 

and highly regarded local judiciary. 

In addition, the industry has been 

assisted by the jurisdiction’s ability 

to respond and deal appropriately 

with various international initiatives 

including US and UK FATCA 

and other challenges that have 

been ongoing for over a decade. 

The demonstrated ability of local 

service providers to support the 

more sophisticated trust structures 

has been crucial in enabling the 

jurisdiction to stay ahead of its 

competitors. Cayman's 

service providers are 

amongst the most highly 

regarded trust practitioners 

internationally. 

The before mentioned 

factors form a solid 

foundation for the future. 

The question now is how 

does the industry continue 

to evolve to meet the 

changing needs of families 

as their wealth continues 

to grow, as that wealth 

transitions to second, third 

and even fourth generations, 

and as the more charitableminded 

consider how 

they can change the world 

for the better through their 

philanthropic giving. The 

industry will also need to 

consider how it can assist 

families to balance their growing 

international reporting obligations 

while maintaining the privacy that 

they require regarding their personal 

affairs. A glimpse into the future 

would suggest that some of the 

developments around the world that 

will provide opportunities for the 

Cayman trust industry include those 

outlined below. 

Tax Planning and Beyond 

While historically the creation of 

trusts offshore has often been driven 

by tax planning for the current 

generation, this is changing. While 

overall tax considerations will 

always be taken into consideration, 

the focus is changing to planning for 

the protection of assets and wealth 

succession for future generations 

of the family. Cayman provides a 

tax neutral, stable, sophisticated 

environment for such planning. 

The jurisdiction seeks to balance 

the need for privacy against the 

demands for greater transparency 

in a sensible and mature manner. 

The New Rich 

There has been significant wealth 

generation in both new and 

Cayman is one 

of the leading 

international 

centres for the 

creation of 

complex trust 

structures. 

developed markets across the 

globe. A significant portion of 

that wealth has been generated 

by entrepreneurs, and as those 

entrepreneurs reflect on their 

recent riches they need to consider 

how to protect and sustain that 

wealth going forward. They 

require sophisticated structuring 

advice which often includes trusts. 

This creates new opportunities 

for Cayman service providers as 

they can not only assist with the 

creation and administration of 

such structures, but also with the 

education of the family members 

to ensure the ongoing integrity of 

such structures, the sale or listing 

of private companies within those 

structures and the future investment 

of funds raised from such sales 

or listings. 

Relocation of Families 

The world has changed. The 

ability to stay in touch with family 

members across the world is easier 

than ever. People can work from 

anywhere there is an internet 

connection. This allows families 

to be even more mobile than they 

have been previously, and to move


to jurisdictions that provide them 

with a high quality of life and 

which welcome them and provide 

an environment conducive to 

the management of their wealth. 

Cayman provides that type of 

environment and service providers 

need to communicate that message 

to their wealthy clients. Relocation 

to Cayman provides a different 

set of opportunities for local service 

providers as those families will 

seek to invest in the jurisdiction 

over time. 

Family Office Functions 

As trust structures become more 

sophisticated it may be important 

that they include a family office to 

support the administration of such 

structures. Looking forward it is 

likely that the location of a family 

office in the jurisdiction in which 

the structure is created will become 

more important. This means the 

movement of staff and their family 

members to that jurisdiction and 

the creation of additional jobs 

for local residents. The Cayman 

Islands boasts world class living 

accommodations, restaurants, 

schools, political stability and a 

legal framework that is attractive to 

wealthy families considering family 

office possibilities. Service providers 

have an opportunity to assist 

stakeholders with the establishment 

of family offices and/or to provide 

family office functions. 

Philanthropic Giving 

Wealthy families are increasingly 

looking for opportunities to use 

their wealth for positive social 

change around the world. While 

many do this through existing 

charitable organisations, others 

create their own foundations to 

focus on their own particular areas 

of interest. There is an increasing 

opportunity for Cayman service 

providers to assist with such 

foundations, which can be created 

within Cayman trust structures. 

These structures often use Cayman 

PTCs to allow the family some 

active involvement in the day-to-day 

decisions of the foundation. 

STAR trusts provide opportunities 

to create structures that are not 

for strictly charitable purposes 

but which are still philanthropic 

in nature. 

Wealth Management 

Wealth management is not as 

prevalent in Cayman as it is in 

other jurisdictions. There is 

certainly an opportunity to attract 

such business to Cayman for many 

of the reasons already noted. As 

the industry continues to grow, 

families and family offices will 

require an increasing range of 

services from wealth managers 

located in Cayman. As those 

services are demanded locally there 

will be international managers who 

will seek to take advantage of the 

opportunities as they arise. 


Tamara Corbin is a Partner with 

Rawlinson & Hunter Cayman 

Islands. She specialises in 

private client services including 

international trust structures, 

private trust companies and 

purpose trusts, estate planning 

and wealth management. 

Tamara is a qualified CPA, a 

member of STEP and CISPA. 

She is an Executive Committee 

Member of the Cayman 

Islands branch of STEP. 

Conclusion 

In summary, while the trust 

industry has faced, and continues 

to face, international pressure 

and challenges there remain 

many opportunities for it to 

grow and thrive in Cayman. The 

complex structures that families 

now require to hold established 

business ventures, intellectual 

property rights, alternative financial 

investments, real estate and other 

assets provide many opportunities 

for Cayman. Private trust 

companies, family office services 

and philanthropic foundations 

require a jurisdiction that meets 

all their needs and Cayman 

practitioners are strategically 

placed to seize the opportunities 

and provide the services to trust 

structures that global private 

clients require and demand. 


William Walmsley is a Partner 

with Rawlinson & Hunter 

Cayman Islands. He specialises 

in private client services and 

advises on the establishment 

and ongoing administration 

of Cayman Islands trusts and 

companies, including acting 

as a director of a number of 

private trust companies and 

other regulated entities. 

William is an FCA (Ireland), 

a member of STEP, former 

Vice Chairman and Treasurer 

of the Cayman Islands branch 

of STEP, is a board member 

of Cayman Finance and a 

member of CISPA.


CISPA: 

PROMOTING AND 

PRESERVING CAYMAN’S 

ACCOUNTING INDUSTRY 

By The Cayman Islands Society of 

Professional Accountants 

The Cayman Islands Society 

of Professional Accountants’ 

(CISPA) story began in 

1970 when Cayman’s financial 

services was in its infancy. The local 

accounting fraternity recognised 

that together, they could help 

blaze the trail for accountancy in 

Cayman. For more than 30 years, 

the society worked alongside fellow 

financial services providers to help 

catapult the Cayman Islands to 

become one of the world’s largest 

financial centres. 

As the regulatory landscape 

changed, CISPA needed to change 

with it. In 2008, the Public 

Accountants Law came into effect 

ushering in a new era of regulatory 

oversight of the accounting 

profession in the Cayman Islands, 

with CISPA taking on the role of 

regulator. In 2014, CISPA appointed 

its first CEO, Sheree Ebanks, to shift 

management responsibilities from a 

voluntary council with outsourced 

support, to a full-time office. The 

regulatory framework is itself 

evolving, as draft changes to current 

legislation will further strengthen 

CISPA’s regulatory oversight. 

CISPA’s fifth strategic objective is, 

“to strengthen and promote highquality 

practices by the accounting 

profession locally.” Achieving 

this objective requires a multifaceted 

approach including quality 

assurance reviews of firms, stringent 

requirements for Regular Members 

and Licensed Practitioners, as well 

as a complaint and investigation 

process. 

Quality Assurance Reviews 

In 2013, CISPA was admitted as 

a full member of the International 

Federation of Accountants (IFAC) 

representing another milestone in 

Cayman’s accounting infrastructure. 

Since then, CISPA has been 

monitoring compliance with the 

International Standard of Quality 

Control (ISQC1) within the firms 

of licensed practitioners. In 2014, 

one large network firm, three midtier 

firms and six small firms were 

selected for reviews. The reviews 

are undertaken by the Institute of 

Chartered Accountants of England 

and Wales and look to ensure audits 

comply with professional standards, 

and firms meet the requirements 

of ISQC1 and applicable audit 

standards. Once the reviews are 

complete, firms are provided with 

the findings, and a summary report 

is published on cispa.ky. 

Membership & 

Licensing Requirements 

The criteria for membership and 

licensing speaks to applicants’ 

competence, compliance with 

International Accounting Education 

Standards (IEASB) and governing 

legislation. Ongoing membership 

of CISPA is conditional on fulfilling 

continuing obligations. Regular 

Members and Licensed Practitioners 

are expected to act diligently and 

in accordance with technical, 

professional and ethical standards. 

In order to be admitted as a Regular 

Member of CISPA, an accountant 

must be in good standing with its


Overseas Professional Accounting 

Institute (OPAI), maintain a 

minimum requirement of continued 

professional development hours and 

comply with IAESB. 

According to sections 11 and 12 of 

the Public Accountants Law (2009 

Revision), anyone engaging in 

public practice must be licensed by 

CISPA. Because of the nature and 

level of trust placed in professional 

audits, the requirements for 

Licensed Practitioners are more 

rigorous. Applicants must provide 

evidence of continuing professional 

development, a clear police record 

and must be a partner, director or 

hold an equivalent position within 

their firm. All complete applications 

for licensing and membership 

go before the Membership and 

Licensing Committee for review 

and approval. 

Complaints and Investigation 

Membership requirements and 

quality reviews look at competence 

and compliance, but that is only 

part of the picture. No oversight 

framework is complete without a 

complaints process. Governed by 

Part IV of the Public Accountants 

Law (2009 Revision), anyone may 

bring a complaint against a member 

of CISPA based on grounds ranging 

from incompetence to breach of 

professional standards. Once a 

formal complaint is received, it 

is reviewed by Council which 

determines whether the claim should 

be referred to an Investigation 

Committee. The Investigation 

Committee further refers the 

complaint to a Disciplinary Tribunal 

if there is a prima facie case. The 

Disciplinary Tribunal has three 

rotating chairs who are not CISPA 

members. This structure ensures 

a fair and impartial approach to 

complaints and disciplinary actions. 

Additional Oversight 

CISPA is not the only organisation 

with oversight responsibilities 

when it comes to accounting. For 

example, audit firms are licensed 

by the Cayman Islands Monetary 

Authority (CIMA), with additional 

reporting requirements. CISPA 

works closely with CIMA and the 

audit firms to ensure compliance 

with the Proceeds of Crime Law. In 

2011, the Auditors Oversight Law 

was passed establishing the Auditors 

Oversight Authority (AOA). The 

AOA is charged with regulating 

and supervising firms that conduct 

audits of the accounts of market 

traded companies. CISPA is also 

working with AOA to develop 

efficiencies in the review and 

oversight processes. 

Looking Ahead 

CISPA has been working closely 

with the Ministry of Finance 

on amendments to the Public 

Accountants Law. During CISPA’s 

2015 Annual General Meeting, 

incoming president Baron 

Jacob said, “We will continue 

to push toward realising the 

new Accountants and Public 

Practice Law, as well as new 

Quality Regulations and amended 

Disciplinary Regulations.” The 

proposed legislation reflects 

changes in international oversight 

practices, while ensuring CISPA 

has the framework to enforce 

international standards. 

Globalisation has created a 

competitive landscape in the world 

of accounting, and CISPA is poised 

to lead the accounting profession 

and the Cayman Islands into 

the future. 

CISPA’s newly elected Council with CEO Sheree Ebanks at the 2015 Annual 

General Meeting. Back row: Sheree Ebanks-CEO, Norm McGregor-Treasurer, 

Mike Mannisto-Secretary, James George, Baron Jacob-President, Ian Lomas, 

Colin Nicholson. Front row: Ben Leung, Serge Berube-Vice President, Peter Small, 

Sheenah Hislop, Chris Gauk, Joel Dodson, Simon Conway. Not pictured: 

Mike Penner, Graeme Sunley 

About CISPA 

CISPA was formed in the 

Cayman Islands in 1970 and 

has evolved into one of the 

largest professional societies 

in the Cayman Islands with 

more than 900 members. 

The organisation’s mission is 

to further the public interest 

through the regulation of 

the accounting profession, 

promoting the highest 

standards of professional 

and ethical conduct in 

line with the values of 

transparency, proportionality 

and accountability. In 2013, 

CISPA became a full member 

of the International Federation 

of Accountants (IFAC), the 

worldwide organisation 

representing the profession.


CYBER 

SECURITY 

IN THE 

MOBILE 

WORLD 

By Alexandra Simonova and Nick Kedney 

Mobile devices, including 

smartphones, tablets, 

e-readers, etc. have become 

an important and inevitable part 

of our lives. In the past decade 

mobile technologies have advanced 

to the point where individuals and 

organisations can take advantage 

of everything true mobility has 

to offer. 

Employees, including senior 

executives, are demanding greater 

choice, flexibility and capabilities 

as they rapidly adopt and extend 

their use of smart phones and 

tablets, and increasingly leverage 

these devices in their day-to-day 

work and personal lives. 

For the enterprise, application 

enhancements extend the desktop 

to handheld devices and deliver 

more powerful tools to employees, 

potentially increasing productivity 

and improving bottom line 

performance. Organisations are 

motivated to utilise the maximum 

efficiency from its employees, so 

they are supporting Bring Your 

Own Device (BYOD) policies. 

Additionally, companies take 

advantage of mobile technologies to 

extend their current online business 

models, open up new channels 

and expand their reach into new 

and existing markets. We see 

organisations across the industries 

developing internal and externalfacing 

mobile applications that 

drive revenue, build brand loyalty


and create tighter partner and 

customer relationships. 

However, increased dependence 

on mobile devices for carrying out 

financial, business transactions has 

made these devices an attractive 

target for cyber criminals which in 

turn has put mobile security on the 

radar of the enterprise board. In 

considering the current environment 

we have below outlined the key 

threats and their impact, which 

enterprises should take into account 

when developing a go-forward 

strategy. We also examine incident 

response and litigation support 

issues from the perspective of 

collecting mobile device data. 

Mobile Security Challenges 

What makes mobile devices 

valuable from a business perspective 

– portability, usability and 

connectivity to the internet and 

corporate infrastructure – also 

presents significant risk. In the 

past decade new risks have been 

introduced at the device, application 

and infrastructure levels, requiring 

changes in security policy and 

strategy. There are also a number 

of challenges that organisations 

face when implementing security 

programs related to mobile devices. 

As the number of devices grow and 

increasing numbers of employees 

use their personal devices for 

work, significant challenges for 

the enterprises may arise relating 

to data ownership on BYOD 

devices, as well as complex 

operations management with 

entropy of supported devices, and 

customised Operating Systems. 

We see a continuing evolution 

of the landscape of Mobile 

Device Management (MDM) and 

Mobile Application Management 

(MAM) platforms, whilst the 

scope of control is significantly 

reduced for IT and traditional 

methods of operations including 

configuration management policies 

and procedures. Those challenges 

are magnified by a lack of security 

awareness, training and security 

policies governing usage of data, as 

well as inadequate security controls 

to protect sensitive data. 

Looking at the history of mobile 

devices, we can see that most 

common smartphones and 

tablets in use only appeared on 

the market in the last decade in 

conjunction with rapidly increasing 

demand in applications. Mobile 

application development is a 

relatively immature science and a 

developer’s simple mistakes can 

lead to vulnerabilities that are easily 

exploited and not yet addressed, 

as more mature technologies have 

been. Multiple examples have 

already been identified and as 

applications are proliferating at 

astonishing rates, trust models 

and secure software development 

lifecycle capabilities are struggling 

to keep pace. 

Unfortunately, traditional anti-virus 

and anti-spyware programs have 

not tended to address the needs of 

mobile devices. Further, mobilebased 

anti-virus solutions, which are 

primarily based on file patterns, can 

often be ineffective when malware – 

short for “malicious software” – is 

“packed” or custom designed. To 

address this, specific configuration 

baselines need to be developed 

in order to harden the mobile 

platform and prevent infection 

or compromise. In addition, 

traditional end-point security and 

network based prevention/detection 

mechanisms do not address the 

security requirements of mobile 

devices. A thorough assessment and 

a sandboxed environment needs 

to be implemented on the device 

in order to prevent infection and 

propagation of malware through 

mobile devices. 

From an overall organisational 

perspective, existing policies 

and procedures may fall short in 

addressing the security gaps raised 

through the use of mobile devices in 

the corporate environment. Mobile 

malware is an emerging threat that 

requires dynamic security controls 

and comprehensive security policies 

and procedures. 

The Mobile Device Attack Surface 

The attack surface – the way 

by which the system could be 

successfully attacked – on mobile 

devices may seem small from 

a traditional network security 

perspective but is very deep – 

in terms of both services (e.g., 

applications, messaging, push and 

web services), and attack vectors 

targeting the user. Those vectors 

include exploiting Bluetooth, Wi- 

Fi and mobile operating system 

vulnerabilities, browser based 

attacks, social engineering attacks, 

phishing attacks targeting small 

screens, mobile malware, removable 

storage attacks, email attacks etc. 

In addition, backups and device 

synchronisation present additional 

threats to the data stored on the 

mobile devices. 

From viruses and worms to 

rootnets, trojans, bots and 

more, malware has become the 

cybercriminal’s weapon of choice 

for subverting digital devices. 

One thing to remember is that 

no device is immune: malware 

can infect anything that accepts 

electronic information, including 

such unconventional targets as cash 

registers, cameras and even cars. 

Mobile devices, especially, have 

seen a boom in malware infections 

as their popularity has grown. This 

increase may represent a significant 

vulnerability in environments where 

employees use smartphones, tablets, 

laptops and other mobile devices 

for both personal and business 

purposes. 

Highly standardised, rich, native 

application programming interfaces 

(APIs) make malware writing easier 

and distribution more scalable 

than on traditional computers. 

For instance, it is very easy for 

malware to access browser history, 

location data, SMS and email data,


address book contacts etc. on 

mobile devices. There are millions 

of devices running each of the 

major mobile Operating Systems, 

making them attractive targets for 

malware attacks, and the clear trend 

shows the number of those devices 

increasing every year. 

So what are the attackers after? 

The most common source of value 

for the attackers are personal and 

financial information stored on 

the devices. Also one of the most 

popular ways for attackers to 

monetise SMS scams are sending 

SMS messages or make calls to 

premium rate numbers – attackers 

hire premium rate/short numbers 

and have the infected devices send 

SMS messages to these numbers 

without the user’s knowledge. This 

allows for faster monetisation of 

mobile malware when compared to 

most PC malware attacks. While 

repackaging malware as part of 

‘legitimate’ mobile apps is the 

favoured malware distribution 

mechanism, some malware, apart 

from carrying out their primary 

activity, also attempt to connect 

to a remote server and download 

additional malware. 

Cyber Security Incident Response, 

Discovery and Forensics 

It is an unfortunate fact of life for 

all enterprises that incidents will 

happen, and that the organisation 

will be required to take quick and 

decisive action to mitigate the 

effects of any compromise and 

to protect its data, infrastructure 

and interests. In order to respond 

rapidly, it is necessary not only to 

have adequate MDM and MAM 

policies and tools, but also to 

have an Incident Response Plan 

that addresses key risk areas in 

the organisation’s operations and 

infrastructure. Such a plan should 

be part of the standard procedures 

of the organisation, and should be 

reviewed and updated regularly 

to address the continual change in 

technology usage by the firm and its 

employees. It also needs to address 

increasing regulatory interest in 

the risks posed to organisations by 

cybercrime – increasingly regulatory 

agencies are working to embed 

provisions addressing these risks 

in the rules and guidelines with 

which organisations are required 

to comply. 

An incident response plan should 

consider the life-cycle of a typical 

response and investigation, and 

might encompass: 

• documented disaster recovery, 

business continuity and failover 

plans should an incident 

occur; 

• up to date and comprehensive 

mapping of the enterprise’s 

information systems and data 

repositories, and a robust 

understanding of what devices 

are connecting to those systems 

– including devices which 

are not the property of the 

enterprise, such as BYOD; 

• a risk-based assessment of the 

company’s data assets – to 

what data might an intruder be 

seeking access and how would 

a compromise of this data 

affect the company’s ongoing 

organisation? For example, 

high risk data might encompass 

customer credentials and 

payment information such as 

credit card details, but other 

examples include intellectual 

property, market sensitive 

information or personal 

information which might assist 

in identity theft or other frauds, 

and which may have significant 

value in the illicit “market” for 

stolen information; 

• planning and provision for 

incident-specific penetration 

testing to be implemented 

rapidly if required after any 

compromise. Such planning 

and provision should include 

measures to address any 

business disruption that may 

be incurred; 

• documentation, regularly 

updated, identifying data such 

as security event logs, server 

logs, perimeter/access logs 

that may need to be collected 

to identify the nature of any 

compromise or intrusion; 

• documentation identifying 

which access credentials for 

key infrastructure and data 

repositories that may need 

to be changed immediately 

following any incident; and 

• an up to date data collection 

and investigation plan 

addressing not just core 

information systems and 

data repositories but also 

mobile devices, including 

those used by employees 

under BYOD policies and 

cloud-based systems. 

Proper and comprehensive 

collection of data needed to 

investigate an incident (and to 

pursue subsequent legal remedies) 

can be a major challenge for the 

enterprise, and consideration should 

be given as to what the internal IT 

function is capable of delivering, 

and where external assistance will 

be required. Forensic collection 

of data may require a qualified 

external forensics team both to 

collect the data in the timeframe 

required for rapid incident response, 

and to perform the collection to 

the required forensic standard – 

i.e. reducing the risk of spoliation 

and loss of information that is 

potentially critical for investigations 

or subsequent litigation. 

Collection of data from employee 

BYOD devices in particular 

can be challenging, and careful 

consideration by internal or external 

counsel may be required as to 

how this may be affected, should 

an incident occur. It can also be 

a major logistical challenge – in 

extreme cases collection may be 

required from hundreds or even 

thousands of smart-phones and 

tablets, both company issued and 

employee owned in organisations 

that permit BYOD. Relevant 

information may not just include 

traditional communications such


as email, but SMS data, VOIP and 

instant messaging, social media 

data and OS and application related 

data. What should and indeed can 

be collected varies widely depending 

on the type of device, and the OS 

and version in use, and any MDM 

tools used by the organisation. 

Summary and Future Outlook 

As with any aspect of cyber security, 

enabling mobility is a balance of 

technology, risk and return on 

investment – all of which need 

to be driven by and aligned with 

business needs. Technology holds 

an enormous potential to improve 

the user experience and employee 

productivity while introducing new 

cyber security concerns. The threat 

is predicted to be increasing and 

organisations need to ensure the 

appropriate controls and incident 

response plans are in place. 

Looking ahead it’s worth 

mentioning an emerging trend – 

wearable technology. Whether 

it’s smart fitness bands like the 

Nike+ Fuelband that track activity, 

calories burned and sleep quality; 

smartwatches like the Pebble that 

bring smartphone capabilities to 

your wrist; or smart pet trackers 

like the Whistle that monitor your 

pets’ behaviour, the number and 

breadth of wearable devices we own 

continues to increase. Although 

wearables can offer enterprises a 

competitive advantage, companies 

should give careful consideration 

to the business problem they’re 

solving, the users and environment 

involved and privacy and security 

concerns. In order to drive 

adoption, it’s important for 

organisations to get their employees 

excited by demonstrating how 

wearable technology will benefit 

them and explaining what’s being 

done to protect their information. 

It’s also important to test out 

whether the company has enough 

bandwidth and the right network 

infrastructure in place to support 

the wearable technology trend. 


Alexandra Simonova is a 

Manager in the Deloitte 

Cayman Islands practice. 

She has over four years of 

experience in IT management 

prior to joining Deloitte and 

over five years of performing 

IT Consulting and Cyber Risk 

services for Deloitte’s clients. 

This includes work in the 

financial services, private and 

public sector. Alexandra also 

presents at client facing Cyber 

Risk workshops in Cayman, the 

Caribbean and Bermuda. 


Nick Kedney is a Director for 

Deloitte Forensic in the Cayman 

Islands, and runs the Discovery 

and Analytic & Forensic 

Technology practice 

for Deloitte in the Caribbean 

and Bermuda. He has over 18 

years experience of forensic 

and fraud investigation, asset 

recovery and multi-jurisdiction 

litigation support.

AIMA AND HEDGE FUNDS 

A LONG AND 

DISTINGUISHED HISTORY 

By Jack Inglis 

When I visited Cayman 

in April 2015 to launch 

the latest edition of 

AIMA’s Fund Directors’ Guide – 

arguably the definitive guide to 

hedge fund directors’ roles and 

responsibilities – I was struck by 

the level of interest in this area, as 

reflected by the large turnout that 

our event at The Ritz-Carlton, 

Grand Cayman generated. So many 

changes have come on stream 

since the global financial crisis that 

there is considerable demand for 

information and guidance from 

current or prospective hedge fund 

directors, investment managers and 

fund promoters in Cayman and 

around the world. 

The Guide, last published in 2008, 

takes account of regulatory and tax 

reforms since the financial crisis, 

such as the Alternative Investment 

Fund Managers Directive (AIFMD) 

and the Foreign Account Tax 

Compliance Act (FATCA), which 

have brought significant changes to 

the role and responsibilities of fund 

directors and boards. 

New sections have been added 

covering, among other topics, 

AIMA Staff and Offices 

40 

35 

8 

7 

AIMA Staff 

30 

25 

20 

15 

10 

6 

5 

4 

3 

2 

5 

1 

0 

0 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

2014 


AIMA Staffed Offices 

AIMA Staff 

AIMA Staffed Offices 

Year


the general approach to fund 

governance, monitoring of trading 

practices and business continuity 

planning. Practical, legal and tax 

considerations when selecting 

and appointing fund directors are 

considered. The basic tasks that 

fund directors should carry out are 

explained, while issues relating to 

the way in which fund directors 

manage their relationships with the 

fund’s service providers are also 

discussed. Guidance is provided on 

several important issues, including, 

for example, the review of annual 

audited accounts and issues relating 

to directors’ and officers’ liability 

insurance. In addition, the Guide 

assesses the impact of taxation on 

the fund, its service providers and 

its directors. 

The Guide can be downloaded 

by AIMA members from the 

AIMA website. 

The decision to launch the guide 

in Cayman, of course, was no 

accident. We have many member 

firms in Cayman, and there has 

been an AIMA ‘National Group’ 

or chapter in the jurisdiction 

for almost a decade. In terms of 

offshore hedge funds, Cayman 

remains an absolutely key domicile 

for the global industry, which 

we represent. 

AIMA has been in existence for 

only slightly longer than Cayman’s 

fund industry. This year marks the 

25th anniversary of our association. 

Founded in Europe back in 1990 by 

a small group of managers realising 

the need for mutual representation, 

AIMA has grown into a truly global 

organisation, with the majority of its 

1,500 corporate member firms now 

based outside Europe’s borders. The 

global nature of investing, trading 

and regulation means our relevance 

today is as high as it has ever been. 

By the same token, the first funds 

legislation in Cayman, passed in 

1994, helped to lay the groundwork 

for the jurisdiction’s status today 

as a leading fund domicile and 

international financial centre. 

Indeed the growth of AIMA in terms 

of membership and staff reflects the 

growth of the global hedge fund 

industry. In 1990, we had only a parttime 

secretary and in 1994, we were 

still operating out of shared office 

space in Paris. As recently as 2005, 

by which time our head office had 

relocated to London, we still had only 

eight staff members. 

Today, we have a total of 35 staff; 

25 in the London head office and 

a further 10 in our representative 

offices around the world. Much of 

this additional resource has been 

added since the global financial 

crisis. The world changed in 

2008/2009, and with it, AIMA 

changed too. Following the crisis, 

we built new structures and 

brought in new people to address 

the challenges posed by the 

crisis and the regulatory reforms 

that followed. 

The Government and Regulatory 

Affairs department that we 

established after the crisis comprises 

former law firm partners and 

regulators. It provides members 

of AIMA with guidance notes and 

updates on complex initiatives, 

detailing how developments 

may affect their business and the 

advocacy positions that we are 

adopting. With our public affairs 

work on the ground in the main 

financial and political centres, we 

are able to engage in extensive 

advocacy in the best interests of 

the industry. 

Our communications team 

coordinates our engagement with 

the media globally and works 

Industry size and AIMA membership 

Number of AIMA Members 

1600 

1400 

1200 

1000 

800 

600 

400 

200 

0 

1990 

1991 

1992 

1993 

1994 

1995 

1996 

1997 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

2010 

2011 

2012 

2013 

2014 


Year 

Number of AIMA Members 

Industry size (AUM $m) 

3,000,000 

2,500,000 

2,000,000 

1,500,000 

1,000,000 

500,000 

0 

Industry size (AUM $M)


closely with the industry to 

demonstrate the value of hedge 

funds to investors, financial markets 

and the ‘real’ economy. 

At the very top of the organisation, 

we have had seven Chairs, some 

serving for five years, and only three 

Chief Executive Officers in our 25 

years. I myself took over as CEO in 

February 2014. 

From small European beginnings, 

an impressive international 

network encompassing Asia-Pacific, 

EMEA and the Americas has 

been constructed. Our members 

now come from over 50 different 

countries. The US has the dominant 

market share in the industry 

and represents over 50% of the 

aggregate AUM of our global 

membership; our Americas presence 

is further augmented by the 

existence of our National Groups 

in Canada and Cayman as 

well as our activities in Brazil. In 

Asia-Pacific, we have National 

Groups operating in Hong Kong, 

Singapore, Japan and Australia, 

all now combining under a single 

regionally focused operation. 

Our members are the backbone 

of the association and comprise 

both the largest and smallest firms 

around the world. Over 800 of our 

member contacts (roughly 10% of 

the total membership), representing 

about 370 firms, contribute to 

our more than 70 committees and 

working groups around the world. 

These groups tackle advocacy, help 

us draft our regulatory submissions, 

drive our sound practices work and 

support the development of other 

vital industry tools. 

Our focus on education and 

sound practices has resulted in 

a substantial body of work for 

investors and practitioners alike. 

The first AIMA due diligence 

questionnaire was issued in 1997, 

and has gone on to become the 

industry-standard DDQ, covering 

the selection of hedge fund 

managers, clearing members, 

prime brokers, CTAs/managed 

futures funds, fund of hedge funds 

managers and administrators. 

Our first sound practice guide 

was published in 2002, and 

our library of guides cover hedge 

fund management, valuation and 

asset pricing, administration, 

governance, business continuity, 

due diligence for managers and 

service providers and fund of hedge 

funds managers, not to mention 

our Fund Directors’ Guide. 

In terms of our events, our initial 

Regulatory Forum was held in 

2000, our 10th anniversary year, 

and our first Annual Conference 

was held in 2010, our 20th 

anniversary year. Today, the AIMA 

Annual Conference and AIMA 

Global Policy & Regulatory 

Notable dates 

in our history: 

‘92 

Launched the first member 

publication, the EMFA 

Newsletter, the forerunner to 

the AIMA Journal. Regulation 

and tax soon became key 

interests. 

‘99 

Launched our first National 

Group in Hong Kong. 

‘01 

Launched National Groups in 

Australia and Japan. 

‘90 

The forerunner to AIMA, the 

European Managed Futures 

Association (EMFA), was 

formed. By the end of that 

year, our members managed 

around US$29bn in assets, 

versus a total industry size of 

US$39bn globally. As EMFA’s 

name suggested, managed 

futures funds were then the 

core activity of the association’s 

membership, although hedge 

funds and currency funds were 

included. 

‘97 ‘00 

In the year of the Asian 

financial crisis we became 

the Alternative Investment 

Management Association 

(AIMA), recognising the 

broadened industry. AIMA 

Journal replaced the EMFA 

Newsletter. 

AIMA had over 250 

corporate members. 

‘02 

AIMA co-launched the CAIA 

qualification with the Center 

for International Securities and 

Derivatives Markets (CISDM). 

Regulation as a focus was 

firmly staying and our website 

included a regulation and tax 

section for the first time.


Forum (the successor to the 

Regulatory Forum), open to all 

AIMA members, are our flagship 

fixtures and attract hundreds of 

delegates and leading speakers from 

the industry and the policymaker 

community globally. 

We organise many additional events 

in Cayman and other jurisdictions, 

which provide helpful intelligence 

to delegates and networking 

opportunities. In 2014, we held 

over 180 events worldwide, 

with a total attendance of well 

over 10,000. 

AIMA regards the global hedge 

fund industry as a valuable 

contributor to the global economy. 

We provide a global forum for 

members to establish a common 

adherence to industry sound 

practice. Our goal remains to 

maintain a fair and functioning 

environment allowing alternative 

asset managers to contribute to 

growth through capital markets 

activities. AIMA stands for investor 

protection, global consistency 

of regulation, market efficiency 

and integrity and the mitigation 

of systemic risk by maintaining 

diversity of business models within 

the financial sector. AIMA works 

this through advocacy, awareness 

and education among policymakers, 

investors, regulators, the media and 

the wider public. 

Above all, AIMA remains a 

“people organisation”. Crucial 

to everything AIMA does are its 

members, its network and its staff. 

The voluntary work provided by 

all who contribute in committees 

and working groups, who sponsor 

and host our events and facilitate 

our product offering is a priceless 

feature of the AIMA toolbox. 

Without our members, in Cayman, 

the US, Europe, Asia and elsewhere 

throughout the world, there would 

be no AIMA. 


Jack Inglis became the chief 

Executive Officer of AIMA in 

February 2014. He has been 

involved with hedge funds 

for 25 years and has held 

leadership positions in prime 

brokerage at both Morgan 

Stanley, where he served for 16 

years, and Barclays, where he 

was prior to joining AIMA. From 

2007 to 2010 he was CEO at 

the convertible bond specialist, 

Ferox Capital Management. 

He began his career in 1983, 

and has extensive experience 

across origination, distribution 

and trading across the capital 

markets. He holds a Master 

of Arts in Economics from 

Cambridge University. 

‘04 

Launched a National Group in 

Singapore. 

‘06 

Launched a National Group in 

the Cayman Islands. 

‘10 

The industry recovered, growing 

to US$1.5 trillion in AUM. Our 

membership grew again to over 

1,200 firms. 

‘15 

25th anniversary: Currently over 

1,500 corporate members, 8,500+ 

individuals, in over 50 countries. 

AIMA’s manager members 

collectively manage more than 

US$1.5 trillion in assets. 

‘03 

Launched National Groups in 

Canada and South Africa. 

‘05 ‘07/‘08 

At the time of our 15th 

anniversary, we had 870 

corporate members (over 

3,000 individual contacts) 

in 46 countries. Our Council 

grew to 19 members. 

Our manager members’ 

AUM reached US$1 trillion 

trillion. Membership had 

become more global and 

fully reflective of industry 

interests. 

The global financial 

crisis shook everyone 

in the financial sector 

and as the hedge fund 

industry declined in 

size, so did AIMA. Our 

corporate membership 

fell from 1,300 in 2007 

to 1,170 in 2009. 

‘12 

Opened an office in New York.


Q+A 

WITH 

CAYMAN FINANCE CEO, 

JUDE SCOTT 

Q I Jude – You’re the new man 

at the helm of Cayman Finance. 

What are your priorities for your 

first term in office? 

A I Firstly, I want to say what an 

honour it has been to appointed 

in this position. I see my role as 

one of facilitating the continued 

development and growth of the 


industry and I will look to continue 

the good work of my predecessors 

in this role. I will ensure we 

continue to meet the needs of our 

clients and I’m committed to 

seeing that our industry business 

partners experience only excellence 

in all their dealings with the 


For Cayman Finance as an 

organisation, I do think it is 

important for us to remain 

accessible to our key stakeholders, 

while at the same time promoting 

the advancements being made 

within Cayman – both at a 

government and private sector level. 

This is how we have remained at 

the forefront of the global financial 

services industry over the years. 

Q I How would you describe 

the condition of the Cayman 

Islands financial services 

industry right now? What is 

our state of health? 

A I The industry is strong and firmly 

in growth mode, with the global 

economy in a major acquisition 

cycle. Many of our institutions are 

expanding and developing new 

products and as clients look to take 

advantage of the most buoyant 

market conditions in some years, 

Cayman’s reputation for being able 

to respond quickly with legislation 

to meet perceived client needs 

is an important distinguishing 

element in our success as a premier 

international financial centre. 

There will always be jurisdictions 

that try to challenge the Cayman 

Islands’ leading position, however, 

the strengths that make the Cayman 

Islands the premier International 

Financial Center are not easily 

replicated. Our high quality and 

experienced service providers 

operate in a legal and regulatory 

framework with just the right 

balance, with a government 

committed to the financial services 

industry, and an innovative 

approach to developing products 

and services that benefit the 

global economy. 

Q I What are the growth 

opportunities for the financial 

services industry in Cayman? 

A I Insurance is an area where 

we are seeing some exciting 

developments and not just in 

terms of our traditional captive 

base, which continues to thrive, 

as evidenced by the recent record 

attendance at the IMAC annual 

conference. We are also seeing some 

interesting convergence between 

insurance and the investment 

fund sector, with funds starting 

reinsurance companies and 

insurance companies managing 

funds and CLOs. The global private 

equity industry continues to grow 

fast and Cayman’s service providers, 

which have a part to play across 

the full life cycle of these funds, are 

well placed to support this growth, 

particularly the greater use of 

Cayman corporate structures in the 

global M&A boom that has been 

taking place. 

Q I Where is the business coming 

from? Which are the key regions 

in the world using Cayman 

financial services and what 

sectors are in vogue? 

A I Given our proximity to North 

America I don’t expect it is any 

great surprise that the majority of 

our clients come from that region, 

but the investors in Cayman 

structures come from every corner 

of the world, which is the essence 

of our tax neutrality. Most of the 

world’s most successful and most 

prominent asset managers, financial 

institutions and sovereign wealth 

funds are clients of the Cayman 

Islands in some form or another. 

Asia remains an important source 

of both traditional business from 

centres like Hong Kong and Japan 

and new frontier emerging markets 

such as Myanmar and Mongolia. 

Latin America is a key market 

with growth potential, particularly 

with the need for substantial 

infrastructure investment in the 

region, which IFCs like Cayman 

can play an important role in 

financing. Africa has also created 

a significant degree of interest on 

the emerging markets side for the 

private equity industry and we are 

certainly focused on where we can 

assist clients looking to explore 

opportunities in that region. 

Q I What should a mature and 

successful IFC like Cayman be 

doing to ensure it remains at the 

forefront of the global industry 

and not lose ground to rival 

jurisdictions? 

A I I have said on many 

occasions that to remain at the 

cutting edge of this industry 

and to continue to be relevant to 

our clients, we must do everything 

we can to better understand their 

needs and requirements, particularly 

in this global environment of cost 

and regulatory creep. One example 

in practice was our recent successful 

New York roadshow, where 

Cayman Finance and the Ministry 

for Financial Services co-hosted a 

breakfast briefing seminar to over 

160 key business contacts and 

partners. We spent a week meeting 

with leading firms and institutions 

in New York, collecting valuable 

input and insights on how we can 

improve as a jurisdiction, as we 

aim to continue to provide the 

products and services our clients 

need to be successful.


Q I The UK in particular believes 

it has an obligation to stamp 

out tax avoidance taking place 

in its overseas territories. How 

does Cayman’s record stand up? 

Cayman’s record stand up? 

A I I think Cayman’s record on 

transparency has been extremely 

strong over the years and I am 

going back to the start of the 

previous decade when we were 

one of the few jurisdictions to 

introduce retrospective due diligence 

on all clients for Anti Money 

Laundering, as well as signing up 

to the EU Savings Directive. More 

recently, with the various pieces of 

international regulation introduced 

since the financial crisis, Cayman 

has been swift to update its own 

procedures and our government 

has shown it will take whatever 

steps are necessary to be a willing 

and cooperative partner in 

the international exchange of 

tax information. 

Tax avoidance has certainly 

garnered more attention in the 

international media where IFCs 

are concerned and this is a 

difficult issue because while not 

necessarily being illegal, it has come 

to prominence with most major 

governments around the world 

running huge deficits. Our service 

providers have done an excellent job 

in advising clients on compliance 

with the various international tax 

initiatives, like FATCA, from a 

Cayman perspective and it is of 

course important for us to have 

clients who are taking proper tax 

advice to enable them to adhere 

to all the applicable tax rules in 

their home jurisdictions and other 

jurisdictions in which they operate. 

As such, where tax advice is needed, 

it is important for our clients to 

use the tax experts in their home 

jurisdictions to advise them on 

what can often be highly subjective 

and technical judgements relating 

to the tax laws and rules of the 

particular countries. 

Q I Where are the gaps 

in our global network of 

tax information exchange 

agreements that need to 

be filled? 

A I Our network of Tax 

Information Exchange Agreements 

has continued to expand with 

35 agreements in place, covering 

most of the world’s economically 

important nations, including 

Australia, China, France, Germany 

and Japan, as well as the UK and 

US’s FATCA frameworks which 

replaced the original TIEAs. 

While we can clearly be seen as 

an early adopter in the exchange 

of tax information, it has been 

well documented that we do not 

intend to implement a public 

register of beneficial ownership 

information without such a 

system being universally applied, 

because we believe it would be 

detrimental to the interests of our 

clients while not providing any 

tangible improvements over the 

robust validated service providerbased 

beneficial ownership system 

we already have in place. We 

are committed to the continuing 

enhancement of our world class 

regulatory and cross-border 

cooperation framework and will 

do so with balance to ensure 

implemented changes are pragmatic 

and effective. 

Q I What is more of a concern 

for Cayman Finance: a lack of 

understanding internationally 

about Cayman’s role in the 

international financial system, 

or a lack of appreciation at 

home for the benefits this 

industry brings? 

A I I’m pleased we have been able to 

make progress on both, particularly 

within Cayman through a very 

successful education programme 

about the value of financial services 

to our economy. There is clearly 

more work to do as our recent 

efforts have highlighted among 

young people in particular, a lack of 

awareness about the opportunities 

that the financial services industry 

has to offer. I’m delighted that 

we will be partnering with the 

Ministries of Education and of 

Financial Services in an initiative 

to enhance the pathways for 

Caymanian high school graduates 

to access career opportunities in 

the financial services industry. In 

terms of the international picture, 

while our regulatory and corporate 

governance standards in many 

cases exceed the international 

norms, we will continue to 

cooperate fully with the discussion 

and development of international 

initiatives and continue to focus 

on the strengths and qualities 

that have made the Cayman 

Islands a market leading IFC. The 

quality and experience of our 

professional service providers, the 

right legislative and regulatory 

balance, underpinned by a robust 

legal system, with an innovative 

approach that sees client feedback 

turned swiftly into legislative 

changes and new products, just 

like the Exempted Limited Liability 

Company, which will come on 

stream later this year. We know 

the market is eagerly anticipating 

this legislation which will create a 

multitude of options at the fund 

level for holding investments, 

among other uses. We have 

been able to take this innovative 

approach to business over the 

years, working closely alongside the 

public sector, as a result of having 

a government that is committed to 

the financial services industry and 

an industry committed to delivering 

excellence in service to our clients.


CAYMAN FINANCE 

OVERVIEW 

Cayman Finance, originally known 

as the Cayman Islands Financial 

Services Association, was established 

in 2003, with the vision of a broader 

organisation representing the 

country’s financial services industry. 

Charged with protecting and 

upholding the reputation of 

the industry, both at home and 

overseas, as well as contributing 

to the debate about the role of 

International Financial Centres, 

Cayman Finance corrects 

misinformed perceptions that fail 

to appreciate how IFCs operate and 

contribute to the global economy. 

Through cooperation and 

engagement with domestic and 

international political leaders, 

regulators, organisations and media, 

Cayman Finance plays a pivotal role 

in the defence of our jurisdiction 

by promoting the integrity and 

transparency of Cayman’s financial 

services through legislative 

and regulatory enactment and 

encouraging the sustainable growth 

of the industry through innovation, 

education and balance. 

Cayman Finance is funded primarily 

through the membership of firms 

within the Cayman Islands financial 

services sector and currently 

represents over 57% of the 

professional accountants and 56% 

of the lawyers in Cayman. 

It also receives support from the 

Cayman Islands government as 

part of a working partnership with 

the Ministry of Financial Services, 

based on the 2013 Memorandum of 

Understanding (MOU), indicating 

the desire for a more unified 

approach to promote and safeguard 

our industry in the international 

arena. With input from all major 

financial associations in Cayman


and consultations with the 

government, the financial industry 

speaks with a single cohesive 

voice ensuring the jurisdiction 

remains at the forefront of 

international business. 

In December 2014, Cayman Finance 

was delighted to announce the 

appointment of our new Cayman 

Finance CEO, Jude Scott, who 

has served the financial services 

industry in Cayman for over 25 

years. Mr Scott spent much of his 

career as an Audit Partner at Ernst 

& Young, where he specialised in 

auditing investment funds, banks 

and insurance companies. After 

retiring from the firm in 2008, 

he took the role of Global Chief 

Executive Officer of Maples and 

Calder, playing an active part in the 

strategic growth and development 

of the firm. Welcoming his 

appointment, Chairman Ian Wight 

commented that Cayman Finance 

was fortunate to have such a wellrespected 

member of the community 

take up this vital role and help guide 

its strategic development over the 

coming years. 

Elsewhere, the past 12 months 

has been marked by a number of 

positive developments, including 

the Cayman Islands being named 

as the Best Hedge Fund Services 

Jurisdiction by Hedgeweek 

magazine in its 2015 Global 

Awards. It was a particularly 

welcome recognition as it was 

the first time Hedgeweek had 

included this award category 

and demonstrates Cayman is a 

preferred place for doing business. 

Domestically we have built on the 

message of the positive contribution 

of our industry to the economy, 

with informative seminars for 

the public about the National 

Risk Assessment exercises that 

are currently underway. Looking 

to develop young talent and 

investing in our next generation 

of financial services professionals 

in Cayman, we’ve teamed up with 

1 I Jude Scott, Cayman Finance CEO, speaking 

at GAIMOps Cayman 

2 I Cayman Finance exhibition booth at 

Cayman Captives annual IMAC conference 

3 I Cayman Finance’s new office location 

4 I Cayman Finance CEO, Jude Scott, talking 

with students at the Chamber of Commerce 

Career Expo 

5 I Cayman Finance CEO, Jude Scott, 

presenting iPad Air to prize winner 

Kendra Rankin 

6 I Mark Lewis, Cayman Finance Board 

member, accepting the award for Cayman at 

the Hedgeweek Global Awards in London 

1 

2 

3 

4 

5 

6


8 

7 I Cayman Finance New York Breakfast 

Briefing. (L to R) ): Andre Ebanks, Senior 

Legislative Policy Advisor; Hon Wayne Panton, 

Minister for Financial Services, Commerce 

and Environment; Jackie Doak, COO Dart 

Enterprises; Jude Scott, Cayman Finance 

CEO; Councillor Roy McTaggart; Dax Basdeo, 

Chief Officer of Ministry for Financial Services, 

Commerce and Environment. 

8 I Jude Scott, Cayman Finance CEO, 

speaking at the Cayman Finance New York 

Breakfast Briefing 

9 I Cayman Finance New York Breakfast 

Briefing, The Harvard Club, Harvard Hall 

7 

government to create a pathway for 

high performing students towards 

a career in the financial sector. 

The Cayman Finance Student 

Education & Work Experience 

Pilot Programme, which has been 

established with the Ministry 

of Education, Employment and 

Gender Affairs and the Ministry of 

Financial Services, Commerce and 

Environment, will support 

50 dual enrolment Year 12 students, 

through a combination of in-class 

workshops, one-on-one coaching 

and a summer work experience 

placement. This new initiative 

will create early engagement and 

access to the Cayman Islands 

financial services industry for 

relevant students, helping to build 

a core of globally competitive 

young professionals. 

One of the international highlights 

was our second annual New 

York Breakfast Briefing. This 

event brought together over 

160 attendees, including 100 key 

business contacts and partners 

from leading New York firms and 

institutions, along with Cayman 

Islands government officials and 


industry representatives. We 

obtained some extremely valuable 

feedback on how we can improve 

as a jurisdiction and through greater 

understanding of our clients we 

can accelerate changes in our legal 

and regulatory framework. 

10 I Press Conference to launch the Cayman 

Finance Student Education & Work Experience 

Pilot Programme. (L to R) Jude Scott, Cayman 

Finance CEO; Hon Tara Rivers, Minister of 

Education, Employment and Gender Affairs; 

Hon Wayne Panton, Minister of Financial 

Services, Commerce and Environment. 

9 


PO Box 11048, George Town 



1 (345) 623 6725 

caymanfinance.ky 

enquiries@caymanfinance.ky 

10


CAYMAN FINANCE 

BOARD 

MEMBERS 

Our Board of Directors 

is comprised of the 

following dedicated, 

experienced and 

well-respected 

members of the 


financial services 

industry. Their broad 

range of skills and 

experience provides 

our association 

with the strong and 

capable leadership 

our industry needs 

to continue to prosper 

in the ever-changing 

landscape of 

global finance. 

Ian Wight – Chairman 

Ian Wight served as Managing Partner 

of Deloitte in the Cayman Islands for 

over 20 years with overall responsibility 

for the operations of the firm. He has 

extensive experience in insolvency 

matters and a special expertise in 

the wind-up of financial institutions, 

investment-fund companies and SPV 

companies. He has been an associate 

member of the Institute of Chartered 

Accountants in England and Wales since 

1974, and a Fellow since 1981. He has 

been a member of the Cayman Islands 

Society of Professional Accountants 

(CISPA) since 1979. Mr. Wight retired 

from Deloitte in 2012, and now works 

as a consultant, and has a consultancy 

arrangement with Deloitte. Most recently, 

he was appointed by the Governor 

as a member of the Commission for 

Standards in Public Life. 

Stuart Dack 

Stuart Dack is the Chief Executive Officer 

of Cayman National Corporation. He 

has over 40 years of experience in the 

banking and financial services industry. He 

gained 22 years of valuable knowledge 

with Midland Bank Group where he held 

a number of managerial roles at branch, 

area, and regional levels. He joined 

Cayman National as Internal Auditor 

in 1992. He has filled the role of Vice 

President of Cayman National Corporation 

in 1998, and in 2004 was appointed to 

President and Chief Executive. Stuart 

entered the banking industry in 1971, 

and obtained the ACIB qualification with 

distinction and in 2001, he was awarded 

an MBA with Merit from Southampton 

University. 

Stuart is on the Board of Directors for 

Cayman National Corporation Ltd., 

Cayman National Bank Ltd., Cayman 

National Fund Services Ltd., Cayman 

National Trust Co. Ltd., Cayman National 

Bank and Trust Company (Isle of Man) 

Limited, and Cayman National (Dubai) Ltd.


CAYMAN FINANCE BOARD MEMBERS 

Peter was admitted as an English solicitor 

(currently non-practising) in 1996, and 

granted higher rights of audience in 

2002. He was admitted as a Cayman 

Islands attorney in 2008. Peter is a 

member of the Chancery Bar Association, 

Insolvency Lawyers’ Association, INSOL 

and the Commercial Fraud Lawyers’ 

Association. 

Tania Dons 

Tania Dons is a Partner in the general 

commercial and investment funds 

teams of Conyers Dill & Pearman, with 

over 10 years of experience practising 

as an attorney in the Cayman Islands. 

She works extensively with hedge fund 

managers and their onshore counsel 

on all aspects of the establishment, 

maintenance, restructuring and financing 

of offshore investment funds. Tania’s 

practice also covers a broad range of 

general corporate, finance and insurance 

related work. Tania is recognised in 

the 2014 edition of Chambers Global 

(corporate and finance) and IFLR1000. 

She is formerly a lecturer in law at the 

University of Otago in New Zealand and 

is regularly published in leading legal 

and investment fund publications. 

Peter Hayden 

Peter Hayden is the Managing Partner 

of the Cayman Islands office of Mourant 

Ozannes. Prior to joining Mourant 

Ozannes in 2008, he worked in London 

as a partner at Matthew Arnold & 

Baldwin and before that at Allen & 

Overy. Peter has extensive experience of 

financial services litigation and insolvency 

matters. He has worked in-house at 

UBS and Barclays. 

Bryan Hunter 

Bryan Hunter is the Managing Partner 

of Appleby’s Cayman office, and the 

Corporate and Commercial practice 

group head in Cayman. He has 

extensive experience in the structuring 

and formation of hedge funds, funds 

of funds and private equity funds. He 

regularly advises on various operational 

and regulatory issues in relation to these 

funds. His practice also includes general 

corporate matters, corporate finance, 

and merger and acquisition transactions. 

Mr. Hunter is a notary public in the 

Cayman Islands. He has served as a board 

member of the Civil Aviation Authority, 

the Caymanian Bar Association (of which 

he is a past President) and the Chamber 

of Commerce, and has served as a 

member of the Financial Services Council. 

Mr. Hunter has contributed to various 

legal publications, including Legal Week 

and Cayman Financial Review. 

Mark Lewis 

Mark Lewis is Senior Investment Funds 

Partner at Walkers. He has in excess of 25 

years of post-qualification experience, the 

last 14 of which have been with Walkers 

in the Cayman Islands, specialising in all 

aspects of mainstream corporate work, 

particularly hedge funds. Mr. Lewis is 

founding board member of the Cayman 

Islands branch of Hedge Funds Care, and 

was elected Chairman of the Executive 

Committee of the Alternative Investment 

Management Association (AIMA) 

Cayman in September 2008. He is also a 

member of the Cayman Islands Monetary 

Authority’s E-Reporting Working Group. 

Frazer Lindsay 

Frazer Lindsay is the Territory Senior 

Partner for the Cayman Islands firm of 

PricewaterhouseCoopers (PwC). He joined 

the firm in 1992 and was admitted to 

the PwC partnership in July 2000. Mr. 

Lindsay is a member of the Institute of 

Chartered Accountants in Scotland. He has 

25 years of audit experience, 22 of which 

in offshore jurisdictions. His base includes 

bank and trust companies, offshore 

hedge funds, financing companies and 

special purpose vehicles. These clients 

generally report under international or 

US accounting standards. Mr. Lindsay is 

a former Lead Partner for the banking 

industry of PwC, a past President of CISPA 

and is also a past Chairman of the Public 

Practices Committee of this society.



Kevin Lloyd 

Kevin Lloyd is Managing Partner 

at KPMG in the Cayman Islands, 

joining the office of the firm in 1991. 

He became a partner in 1997, and 

was appointed Regional Head of 

Audit in 2004, and then Managing 

Partner in 2012. He has led the audit 

practice through significant growth 

and regulatory change, driving 

industry specialisation, collaboration, 

leadership and engagement. Mr. Lloyd’s 

responsibility as Partner in charge of 

People, Performance and Culture was 

critical in ensuring that KPMG recruits, 

develops and retains high performers 

who are passionate about delivering 

real value to its clients. His client base 

focuses on entities in the insurance and 

banking sectors and he served as Lead 

Insurance Partner for many years. 

Conor O’Dea 

Conor O’Dea is Senior Executive Vice 

President, International Banking for 

the Butterfield Group with oversight of 

all of Butterfield’s banking operations 

internationally. He has a strong 

background in audit, having worked 

with a large international accounting 

firm prior to joining Butterfield as their 

Financial Controller in 1989. Mr. O’Dea 

is a past president of the Cayman 

Islands Chamber of Commerce, and the 

Cayman Islands Bankers’ Association. 

He also served on the Cayman Islands 

Government National Advisory Council 

from 2002-2005. 

Nick Rogers 

Nick Rogers joined Ogier as a partner 

in 2010. He advises on a wide range of 

corporate matters with a focus on hedge 

fund and private equity fund formation, 

joint ventures, acquisitions and venture 

capital financing transactions. 

His principal areas of practice are 

investment funds, corporate and 

commercial business and trust law 

group and listing services. 

David Roberts – Treasurer 

David Roberts is the Managing 

Director of Cayman Management 

Ltd., the longest established pure 

management office in the Cayman 

Islands. He represents the Cayman 

Islands Managers Association on 

the Cayman Finance board. 

Don Seymour 

Don Seymour is the Founder of DMS 

Offshore Investment Services and is 

recognized by the Financial Times as 

one of the most influential men in the 

global hedge fund industry. He was 

directly responsible for the creation of 

the Investment Services Division of the 


(CIMA), where he is credited with the 

development and implementation of its 

market-friendly and responsive regulatory 

framework for regulating 

hedge funds that propelled the Cayman 

Islands to become the leading hedge 

fund jurisdiction in the world. After his 

tenure as Heads of Investment Services, 

he served as a member of the board of 

directors of CIMA. 

A Notary Public, he holds a Bachelor 

of Business Administration degree in 

Accounting from the University of Texas 

at Austin and a Certified Public 

Accountant certificate from Illinois.



Financial Advisory Services in the Deloitte 

Caribbean & Bermuda Cluster, as well 

as a member of the America’s Financial 

Advisory Services board. 

Rohan Small 

Rohan Small is a partner in the Bahamas, 

Bermuda, British Virgin Islands and 

Cayman Islands (BBC) region of Ernst & 

Young’s Financial Services Organization. 

He has more than 20 years of audit 

experience in the financial services sector 

serving numerous large hedge funds, 

private equity funds, special purpose 

vehicles and banks. He is currently the 

IFRS leader for the BBC. 

Rohan received Bachelor Degrees in 

accounting and computer science from 

the University of Texas located in Austin. 

He is licensed as a CPA in the State 

of Illinois, a member of the American 

Institute of Certified Public Accountants 

(AICPA) and a member of the New York 

State Society of CPAs. 

Rohan has served on various 

government, statutory and service 

organization boards and committees. 

Rohan is a past Chairman of the 

Cayman Islands’ Chapter of the 

Alternative Investment Management 

Association (AIMA), past president of the 

Cayman Islands Society of Professional 

Accountants (CISPA) and the first 

chairman of its Licensing Committee. 

Henry Smith 

Henry Smith is Global Managing Partner 

of Maples and Calder worldwide. He 

has extensive experience in all aspects of 

offshore finance transactions, focusing 

on private equity funds, hedge funds 

and structured finance transactions. Mr. 

Smith is also a director and global council 

member of AIMA. He joined Maples and 

Calder in 1994, and was elected as a 

partner in 1999. He previously worked 

for a major international law firm in 

London, New York and Tokyo. Mr. Smith 

is named as a leading private funds 

lawyer in The International Who’s Who 

of Private Funds Lawyers, the PLC Which 

Lawyer? Yearbook, the Chambers Global 

and The Legal 500. 

Stuart Sybersma 

Stuart Sybersma is Deloitte’s Office 

Managing Partner and has over 25 

years’ experience in public accounting, 

the last 18 of which have been based in 

the Cayman Islands where he has been 

a partner since 2000. He specialises 

in insolvency, forensic accounting and 

dispute consulting. He is a Canadianqualified 

Chartered Accountant, as 

well as a Chartered Insolvency and 

Restructuring Professional and Certified 

Fraud Examiner. He is a member of 

CISPA and founding board member of 

the Cayman Islands chapter of AIMA. 

In addition to his local responsibilities, 

Mr. Sybersma is the lead partner for 

William Walmsley 

William Walmsley is a Partner of 

Rawlinson & Hunter and has responsibility 

for the firm’s trust and corporate services 

department. He has over 25 years of 

experience and specialises in private client 

services including international trust 

structures, private trust companies and 

purpose trusts. 

William is a director of The R&H Trust 

Co. Ltd. and The Harbour Trust Co. 

Ltd., duly licensed Cayman Islands trust 

companies owned by Rawlinson & Hunter 

in the Cayman Islands. He advises on the 

establishment and ongoing administration 

of Cayman Islands trusts and companies 

including acting as a director of a 

number of private trust companies, 

other regulated entities and other client 

companies. 

He is a Fellow of the Institute of 

Chartered Accountants in Ireland, a 

member of the Society of Trust and Estate 

Practitioners (STEP), Vice Chairman of 

the Cayman Islands branch of STEP and a 

member of the Cayman Islands Society of 

Professional Accountants.



CAYMAN ISLANDS 

FINANCIAL 

SERVICES 

INDUSTRY 

ASSOCIATIONS 

Alternative Investment Management 

Association (AIMA) 

AIMA Cayman works in conjunction with the 

global body by providing input on the many 

issues facing hedge funds and their service 

providers from an offshore perspective through 

consultation; hosting forums; developing 

new industry initiatives and white papers; and 

consolidating local industry opinion. In Cayman, 

the association organises educational and 

networking events for the benefit of members 

and fundraising activities that give back to our 

community. AIMA Cayman is committed to 

working with stakeholders to proactively create 

a stronger hedge fund industry. 

Chairman: Alan Milgate, Director, Rawlinson 

& Hunter 

cayman.aima.org 

Cayman Islands Bankers Association (CIBA) 

CIBA was formed in 1979 and is one of the 

islands’ oldest associations. Our membership 

comprises the majority of registered Cayman 

Islands banks and trust companies and is open 

to all relevant licensed institutions. Currently, 

our Association comprises 61 ordinary members 

(institutions maintaining their own staffed 

offices in the islands) and over 103 associate 

members (institutions registered in Cayman with 

no physical residence and managed by class A 

banks). Associate Membership (non-voting) is 

also available to businesses that provide ancillary 

services to our ordinary membership. 

President: Mark I. McIntyre, Managing Director 

& Country Head, Cayman Islands & British Virgin 

Islands for CIBC FirstCaribbean International 

Bank (Cayman) Limited 

cibankers.org 

Cayman Islands Company Management 

Association (CICMA) 

CICMA was formed as a non-profit 

association in 1996. The association encourages 

strict adherence to all laws and regulations 

prescribed for company managers, and 

promotes and maintains a high standard of 

ethics, conduct, skill and efficiency among its 

members. It also encourages the exchange 

among members of information on all matters 

affecting the profession. 

President: Paul Harris, Chairman, International 

Management Services Ltd. 

cicma.net 

The Cayman Islands Compliance 

Association (CICA) 

CICA has been in existence since October 

2000 as a non-profit organisation, representing 

compliance officers, money laundering reporting 

officers and risk managers of financial service 

providers that are subject to the Cayman Islands 

anti-money laundering and regulatory regimes. 

President: Sandra Edun-Watler, Head of 

Compliance (Caribbean), Walkers 

cica.ky 

Cayman Islands Directors Association 

(CIDA) 

The purpose of CIDA is to promote and 

safeguard the interests of directors of Cayman 

Islands-registered companies and to define 

a code of conduct and best practice for 

its members which will ensure corporate 

governance of the highest standard, thereby 

further strengthening the integrity of the 

Cayman Islands financial-services sector. CIDA 

is organised and run exclusively by individuals 

who hold office as directors of one or more 

Cayman Islands-registered companies. 

President: Cassandra Powell, Director, 

The Harbour Trust Co Ltd 

cida.ky 

Cayman Islands Fund Administrators 

Association (CIFAA) 

CIFAA was established in January 1995, and 

is represented by a membership of companies 

providing fund administrator services to many of 

the over 8,000 funds domiciled in the Cayman 

Islands. The association was established primarily 

to provide a channel of communication between 

the fund administration industry in Cayman 

and the Cayman authorities (government and 

regulator) as well as a forum to discuss issues 

relating to the Fund administration industry in 


Chairman: Dan Allard, Executive Director, UBS 

Fund Services (Cayman) Ltd. 

cifaa.org.ky


CAYMAN ISLANDS FINANCIAL SERVICES INDUSTRY ASSOCIATIONS 

Cayman Islands Insurance Association 

(CIIA) 

CIIA was formed in 2004 to bring together the 

various associations representing the insurance 

industry in the Cayman Islands. The association’s 

purpose was to create a single body to respond 

to and advise the public on insurance issues 

and to have a single voice in discussions with 

the Cayman Islands Monetary Authority, which 

regulates the insurance industry. 

President: Derry Graham, General Manager, 

British Caymanian Insurance Company 

ciia.ky 

Cayman Islands Law Society 

The Cayman Islands Law Society (“Law Society”) 

is the professional association that represents 

the entire private sector legal profession of 

the Cayman Islands. Membership is open to 

persons who are admitted as Cayman Islands 

attorneys-at-law. The Law Society currently 

has over 400 members. 

The main role of the Law Society is to represent 

the interests of the profession, its members 

and member firms and to make representation 

on matters of concern to them. Additionally, 

it provides advice to the Cayman Islands 

government and Monetary Authority on 

legislation and other matters that may affect 


President: Alasdair Robertson, Partner, Maples 

caymanlawsociety.org 

Cayman Islands Society of 

Professional Accountants (CISPA) 

CISPA is a not-for-profit organisation that 

regulates and promotes the accounting 

profession in the Cayman Islands. 

Chief Executive Officer: Sheree Ebanks 

cispa.ky 

Caymanian Bar Association (CBA) 

CBA was established in the Cayman Islands 

in 1988 as a non-profit company limited by 

guarantee after senior Caymanian attorneys 

perceived the need for an organisation to 

address issues of particular relevance to 

Caymanian attorneys and effectively to 

represent the views of Caymanian attorneys 

who were, and are, a minority in the profession 

in the Cayman Islands. To that end, all 

Caymanians (as defined in the Immigration 

Law (2013 Revision) of the Cayman Islands) 

who are admitted to practise as an attorney 

in the Cayman Islands and possess a current 

practising certificate are eligible to be members 

of the CBA. 

President: Abraham Thoppil (President/ 

Council), Partner, Maples and Calder 

caymanbar.org.ky 

CFA Society | Cayman Islands 

The CFA Society Cayman Islands is the local 

chapter of the CFA Institute, a global, non-profit 

member organisation of financial analysts, 

portfolio managers and other investment 

professionals. It promotes ethical and 

professional standards within the investment 

industry, encourages professional development 

through the CFA Program – a qualification 

that has become recognised as the leading 

investment designation in the world and 

facilitates the open exchange of information 

and opinions. 

President: Monique Frederick 

cfasociety.org/caymanislands 

Hedge Fund Association (HFA) 

The HFA is an international non-profit 

industry trade and non-partisan lobbying 

organisation devoted to advancing transparency, 

development and trust in alternative 

investments, and is made up of hedge funds, 

funds of hedge funds, family offices, highnet-worth 

individuals, financial advisors and 


Insurance Managers of Cayman (IMAC) 

IMAC is a non-profit organisation run for 

and by Cayman’s captive-insurance industry, 

including insurance managers, Cayman 

captive-insurance companies and service 

providers. The association is the unified 

representative of the captive industry, acting as 

a liaison with the Cayman Islands government, 

the Cayman Islands Monetary Authority and 

the private sector to ensure its members’ 

interests are represented. 

Chairman: Kieran O’Mahony, Senior Vice 

President & Client Services Leader, Marsh 

Captive Solutions Marsh Management Services 

Cayman Ltd. 

imac.ky 

Society of Trust and Estate Practitioners 

Cayman Islands (STEP) 

STEP is the leading worldwide professional body 

for practitioners in the fields of trusts, estates 

and related issues. The society helps to improve 

public understanding of the issues families face 

in this area and promotes education and high 

professional standards among its members. 

Branch Chairman: Nigel Porteous, Partner, 

Maples and Calder 

step.org 

Restructuring and Insolvency Specialists 

Association (RISA) 

Established in 2012, RISA, the Cayman chapter 

of INSOL International has swiftly grown to 

over 200 members. Focused on delivering 

educational and networking events, RISA’s 

mandate is to investigate and share best 

practices amongst industry practitioners in the 

fields of insolvency, restructuring and litigation. 

Chairman: Hugh Dickson, Partner, Grant 

Thornton 

risa.ky 

Cayman Chapter Co-Directors: Christina 

Bodden, Partner, Maples and Calder and 

Colin Nicholson, Partner, KPMG 

thehfa.org


CAYMAN FINANCE MEMBER FIRMS 

Aon Risk Solutions (Cayman) Ltd. 

aon.com/caymanislands 

1 345 945 1266 

Appleby (Cayman) Ltd. 

applebyglobal.com 

1 345 949 4900 

BDO 

bdo.ky 

1 345 943 8800 

Butterfield Bank (Cayman) Limited 

ky.butterfieldgroup.com 

1 345 949 7055 

Cayman Management Ltd. 

caymanmanagement.com 

1 345 949 4018 

Cayman National 

caymannational.com 

1 345 949 4655 

Collas Crill & CARD 

collascrill.com 

1 345 949 4544 

Codan Trust Company (Cayman) Limited 

conyersdill.com/pages/codan 

1 345 949 1040 

Conyers Dill & Pearman (Cayman) Limited 

conyersdill.com 

1 345 945 3901 

Reversed out 

Deloitte 

deloitte.com/ky 

B/W 

1 345 949 7500 

CMYK Dillon Eustace 

dilloneustace.ie 

1 345 949 0022 

RGB 

DMS Offshore Investment Services 

dmsoffshore.com 

1 345 949 2777



EY 

ey.com/ky 

1 345 949 8444 

Fidelity Bank (Cayman) Limited 

fidelitygroup.com 

1 345 949 7822 

Greenlight Reinsurance, Ltd. 

greenlightre.ky 

1 345 943 4573 

Harney Westwood & Riegels 

harneys.com 

1 345 949 8599 

Highwater 

highwater.ky 

1 345 640 2279 

HF Fund Services 

hffunds.com 

1 345 949 9900 

IMS 

International Management Services Ltd. 

fundirectors.com 

1 345 949 4244 

KPMG 

kpmg.com/ky 

1 345 949 4800 

Maples and Calder 

maplesandcalder.com 

1 345 949 8066 

Morval Bank & Trust Cayman Ltd. 

morval.ch/en/morval-bank-trust-cayman-ltd 

1 345 949 9808 

Mourant Ozannes 

mourantozannes.com 

1 345 949 4123 

Ogier 

ogier.com 

1 345 949 9876



PwC Cayman 

pwc.com/ky 

1 345 949 7000 

Queensgate Bank & Trust Company Ltd. 

queensgate.com.ky 

1 345 945 2187 

Rawlinson & Hunter 

rawlinson-hunter.com 

1 345 949 7576 

Summit Management Limited 

sml.ky 

1 345 945 7676 

Walkers 

walkersglobal.com 

1 345 949 0100 

Wilmington Trust (Cayman), Ltd. 

wilmingtontrust.com 

1 345 946 4091 

19 Degrees North Fund Services Ltd. 

19northfs.com 

1 345 749 1919 

Audit services provided pro bono by 

Associate Members 

PKF (Cayman) Ltd. 

pkfcayman.com 

1 345 945 5889 

BravaComm 

bravacomm.com 

1 345 928 6161 

SteppingStones Recruitment 

steppingstonescayman.com 

1 345 946 7837 

IFINA (Cayman) Ltd. 

ifina.com 

+44 (0) 1926 815 815 

Silver Wheaton 

silverwheaton.com 

1 345 945 3584


OTHER USEFUL RESOURCES 

Cayman Islands Chamber of Commerce 

The Cayman Islands Chamber of Commerce is 

the country’s largest not-for-profit organisation 

established to support, promote and protect 

the interests of its more than 700 member 

businesses across all industry sectors. Visit the 

Chamber’s business directory for up-to-date 

information on airlines, hotels, condominiums, 

restaurants, attractions, tours, real estate, 

investment opportunities and financial 

services in Grand Cayman, Cayman Brac and 

Little Cayman. 

caymanchamber.ky 

Cayman Islands Economic and 

Statistics Office (ESO) 

The Economics and Statistics Office (ESO) 

produces the Cayman Islands’ official 

national economic reports and socioeconomics 

statistics which are released to 

the public through www.eso.ky. Among the 

statistics are the National Accounts (Gross 

Domestic Product), Balance of Payments, 

Consumer Price Index, Labour Force Surveys, 

Household Budget Survey and the Population 

and Housing Census. 

eso.ky 

Cayman Islands Ministry of 

Financial Services 

The Ministry of Financial Services creates 

an environment in which financial services 

can flourish, to the benefit of all stakeholders. 

Its departments include the Department 

for Financial Services Policy and Legislation; 

Department for International Tax Cooperation; 

and General Registry. The Ministry also oversees 

six government authorities: the Cayman Islands 

Monetary Authority, Cayman Islands Stock 

Exchange, Maritime Authority of the Cayman 

Islands, Cayman Islands Development Bank, the 

Auditors Oversight Authority and the Special 

Economic Zone Authority. 

caymanfinance.gov.ky 


(CIMA) 

CIMA began operations on 1 January 1997. It 

was established as a body corporate under the 

Monetary Authority Law, which was brought 

into force on that date. CIMA protects and 

enhances the reputation of the Cayman Islands 

as an international financial centre by fully 

utilising a team of highly skilled professionals 

and current technology, to carry out 

appropriate, effective and efficient supervision 

and regulation in accordance with relevant 

international standards and by maintaining 

a stable currency, including the prudent 

management of the currency reserve. 

cimoney.com.ky 

Cayman Islands Stock Exchange (CSX) 

CSX is a stock exchange based in Grand 

Cayman, Cayman Islands. It started operations 

in July 1997, and is fully owned by the Cayman 

Islands government. The CSX was recognized 

by the London Stock Exchange as an approved 

organisation in July 1999. The CSX was 

originally set up to provide a listing facility for 

the specialist products of the Cayman Islands – 

mutual funds and specialist debt securities. The 

CSX’s capabilities now extend to sophisticated 

vehicles and structures including the listing 

of derivative warrants, depositary receipts, 

Eurobonds, preferred shares and international 

equity. 

csx.com.ky 

Department of Commerce and Investments 

The Department of Commerce and Investment 

is the central point for the coordination of 

resources and information for investors, 

entrepreneurs and developers seeking 

business opportunities in the Cayman Islands. 

Our vision is to contribute to Cayman’s 

economic development by encouraging 

investment and entrepreneurial ventures that 

generate income, employment, innovation, 

linkages and domestic competitiveness. 

The department's mission is “to lead in 

promoting and facilitating appropriate longterm 

foreign and local investment in the 

Cayman Islands.” 

investcayman.gov.ky


LIST OF ADVERTISERS 

Butterfield 9 

Cayman Finance 22 & 77 

Cayman Islands Bankers Association 69 

Cayman Islands Ministry of Financial Services 15 

Cayman Management 14 

Century 21 77 

CIBC FirstCaribbean 5 

Civil Aviation Authority of the Cayman Islands 69 

DART 26/27 

Deloitte 7 

EY 11 

Harneys 52 

Health City Cayman Islands 69 

Insurance Managers Association of Cayman 77 

International Management Services 33 

KPMG 63 

Maples 33 

PwC 

Back cover 

Rawlinson & Hunter 63 

Solomon Harris 63 

Walkers 

Inside front cover

www.pwc.com/ky 

Peace of mind: 

A name you know 

A team you can trust 

Accountable - 

A team with an established presence in 

the Cayman Islands for over 45 years 

Focused - 

Trained and highly experienced in Financial Services 

Connected - 

Globally in 157 countries to the 195,000 

people across our network 

PwC is a leading provider of quality assurance, tax and 

advisory services to the Financial Services Industry. We 

have a dedicated practice that is part of our global network 

of specialists. We use our knowledge to help our clients to 

not just implement new standards and requirements, but to 

prepare for the future. 

Whatever your challenge is, we can help you find the peace of 

mind you are looking for. 

Talk to us... 

Graeme Sunley, 

Assurance Leader 

Graeme.Sunley@ky.pwc.com 

Tel + (345) 914 8642 

Frazer Lindsay, 

Territory Senior Partner 

Frazer.Lindsay@ky.pwc.com 

Tel + (345) 914 8606 

© 2015 PricewaterhouseCoopers , a Cayman Islands partnership. All rights reserved. PwC refers to the Cayman Islands 

member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see 

www.pwc.com/structure for further details.

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