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Cayman Funds 2016

FATCA is becoming older news now—the bigger story is the automatic exchange of information for tax purposes. We also have UK FATCA, which is a different creature from US FATCA, but which will also be phased out by 2017 in favour of the Common Reporting Standard (CRS). That will leave us with two major streams of automatic reporting: US FATCA and CRS. I think CRS is a game-changer. It is based on FATCA model 1 so Cayman will not find compliance difficult but the scope of CRS is huge, with some 97 jurisdictions committed to implementing it by 2018, at the latest. The teething pains we experienced with US FATCA are behind us but we will have some challenges with CRS. Partnerships with industry are more important than ever because industry is the primary collector of the data we need. We already have a big interface between government and industry but we will see that reviewed again when the information needs to be reported to other countries. There could be more technical teething troubles then. Linford: Do you expect any conflicts between different jurisdictional laws Duncan? While Cayman has handled all this initial reporting very well, I am worried about the ability to respond in a timely manner once other beneficiary countries of the aggregate information request specific information. I mention this in the context of information held by fund administrators based in competitor jurisdictions. How will you deal with this potential conflict, and do you have gateways to obtain information directly from other authorities? Nicol: I agree that the idea of the automatic exchange of information is not the end of the story. It is just one mode of the exchange of information for tax purposes. We have been seeing more specific requests and the view is that it will increase and also get into more general financial accounting information. The issue of the availability of information is a difficult one. We, along with all other countries, are peer-reviewed by the likes of the OECD 16 CAYMAN FUNDS | 2016 against international standards on the exchange of information. We are assessed on whether we have that information available and whether others can access it. There have been 150 peer reviews in the past five years and the inability of one jurisdiction to get information from another has led to criticisms of other countries. Linford: I just hope any review is critical of other countries where Cayman does not receive reciprocal cooperation and not us. It is unfair to criticise a jurisdiction because the country requesting information cannot rely on another country to provide it. It also adds yet more costs if the solution is to mandate that each country holds all the information, rather than rely upon the cooperation of the country where the fund administrator is based. Nicol: The problem of getting information should get easier with time as countries with issues will change their laws. Linford: We should introduce our own Cayman blacklist of countries that do not cooperate with us. Michelle Bahadur: We have seen an increasing convergence between tax standards; also, better communications are helping to produce a more level playing field. If we are not getting information from certain jurisdictions we can highlight them. Milgate: FATCA should be such a positive story for us. No-one else has moved as quickly as we have and so comprehensively in our compliance. I am sure we will deal with CRS in the same way. We are FATCA leaders, with 28,000 companies complying. That means we can demonstrate the value to our clients; prove that we treat their information carefully and add value while applying the highest global standards. Linford: We have done well with FATCA and CRS but I do worry about the pressure on Duncan and his team as the specific requests will now start to increase. Scott: We did take ownership and a leading position on many of these things. But it is also important to recognise that our role is to help people get the right information and support what the government has to do in every way. Because we have a dedicated government ministry, we are well placed to meet these challenges and support government by ensuring the resources and technology are in place. There is a convergence of global standards and the Cayman government has been at the centre of that in sitting on various global committees. It means we can compete with anyone. These are very exciting times. Linford: We will need to rely on Cayman Finance more as it will be very difficult for our government to always criticise other governments when there is not a level playing field. Gorter: Marketing this message is also important. Given the phenomenal cost of compliance and our willingness to do that, we should be getting credit for that. It is far easier to open a bank account in the US or UK than it is here. We are bending over backwards to comply yet being criticised for not complying. We need to get the message across that we are complying at great cost and get credit for those efforts. I too am encouraged by what Cayman Finance is doing as well as Tony Travers CEO of the Cayman Stock Exchange. Scott: It is a role we embrace. The approach we have taken is very collaborative with government. Usually we are working behind closed doors but we stand ready and there may be times when the private sector needs a stronger message delivered to ensure its message is heard. Panton: Rest assured that we have not been investing heavily in ensuring compliance with the demands of international organisations for nothing. We are coming to the point now where we demand respect for the approach we have taken. “We have so many individuals from a diverse range of backgrounds who could make great candidates for the Board Apprentice programme.” Jeffrey Short


Cayman Funds 2016
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