Cayman still has work to do to satisfy OECD

| 22/08/2017 | 0 Comments

(CNS Business): Authorities in the Cayman Islands dealing with the offshore sector still have work to do to satisfy the OECD, according to the latest peer review results by the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes. Cayman was rated “largely compliant” as opposed to compliant because of three areas where the review found gaps in the ability of the jurisdiction to deal with information exchange, with the new regime surrounding beneficial ownership not in place long enough for it to be rated. However, the financial services ministry said Cayman remains strong in complying with international standards as it received a compliant rating for seven of the 10 areas examined.

According to the forum, during this second round of reviews, all elements were rated compliant with the exception of three elements. “In respect of requirements for beneficial ownership information to be maintained the Cayman Islands has a solid legal framework which is presided over by the Registrar and the financial regulator. Nevertheless, the Cayman Islands has been issued a recommendation to monitor the newly introduced legal requirements to ensure that beneficial ownership information is available for all entities,” the report concluded.

“In respect of accounting, the lack of a comprehensive system of oversight was identified and a recommendation remains from the first round of reviews in this regard. The Cayman Islands received 161 requests over the review period and was able to exchange all of the requested information with the exception of one case where the information was not maintained in the Cayman Islands,” the assessors noted.

Cayman has been advised to ensure that its enforcement powers are sufficiently exercised so local authorities can access all information in all cases.

“All other elements were found to be compliant and no other issues were identified. Peer input was very positive and is also demonstrative of the Cayman Islands continued efforts and commitment to the standards for the exchange of information on request,” the report summary found.

The OECD body, which is regarded as the most influential tax body in the world because of the rigorous assessment process, revised the terms of reference for this latest assessment, setting a significantly higher standard compared to the previous 2010 terms of reference.

“Cayman tested very well against this more rigorous set of standards, and this clearly demonstrates the high quality of our cooperation with our treaty partners,” said Tara Rivers, who has stepped into Wayne Panton’s shoes as the new financial services minister. “As the number of requests increase, the small but efficient staff in the Tax Information Authority have done a commendable job in maintaining global standards.”

But the report sets out some recommendations for Cayman to ensure that by June next year it can achieve fully compliant ratings for the remaining three areas where it fell short of the top grade.

The stumbling block over compliance regarding the new beneficial ownership regime was that it is essentially too new and remains largely untested so the assessors could not determine how effective it will be. The forum has recommended that the new BO regime is monitored to ensure all of the necessary information is being properly collected and that it remains available to the relevant entities.

Concerns about enforcement and effective oversight of accounting documents were also raised and the review recommends that Cayman implements a more effective system to support the legal requirements that are in place for accounting information on registered entities.   

Finally, the local authorities are being urged to beef up enforcement powers to ensure access to all relevant information. According to the report, in the case where Cayman could not access the information it needed for an exchange request, the relevant reporting authority here went to the director of public prosecutions to pursue the pertinent party but, the report found, the DPP’s office failed to act.

See the full report here

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Category: Finance, Uncategorized

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