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Cayman Funds 2016

Cayman has an excellent record of compliance. The process of engagement has been excellent. There have been several studies into these matters including by individuals looking to establish shelf companies and they have always proved that Cayman is 100 percent compliant. Onshore centres were much worse. There was a documentary recently where journalists posed trying to invest the money of a corrupt African politician. Fifteen out of 16 lawyers in New York were willing to help. There is this feeling that the problems exist offshore when, in fact, there is now an inversion of this and some onshore centres have minimum standards of compliance. We need to start demanding respect. Scott: We recognise that on things such as cost and some general regulation, there will always be some arbitration between jurisdictions. But there should be certain global standards on things such as money laundering and terrorism fi nancing that are universal and adopted on a global scale. What is the latest on the EU Alternative Investment Fund Managers Directive? Bahadur: We have been heavily involved in this for the past nine months. We have drafted regulations and we are now waiting on the European Securities and Markets Authority’s (ESMA’s) recommendations on those. Cayman will be in the second round of reviews to establish if we get a passport. Panton: The question of whether we get a passport is partly a political one. It is a two-stage process. There is a political decision to be made as well as a technical one based on the regulations. Smith: CIMA is also engaged with ESMA and we are responding to the questions relating to the assessment. An ongoing review of the existing framework is being undertaken to identify any gaps necessary to ensure compliance. Milgate: This is where the likes of the Alternative Investment Management Association (AIMA) have been very helpful in helping us understand the information, looking at Cayman’s position and how to navigate the process. Through bodies such as AIMA, Cayman is much bigger and with a greater outreach. We get that global perspective. Short: This is a great example of government and the private sector coming together, working on this globally and getting what we need as a jurisdiction, so that when ESMA does fi nalise its review we will be best positioned to be granted passporting. Milgate: There is this political element to it and that is going to create some uncertainty until the passport is granted. But we are coming from a position of strength and they would need compelling reasons not to grant it. Panton: We are now fi nalising regulations and from a technical perspective we anticipate no issues. There is also a timeline in that ESMA has been told to sort this out by June this year. So we hope for a positive decision by then. There is a political element but it is hard to believe it will not be granted. Linford: I am pleased with our engagement on AIFMD but I do worry that the political element within the EU will try to avoid giving recognition to CIMA’s role as a regulator of our largely non-public fund regime and try to overlay their retail framework when assessing CIMA. We are dealing in non-public funds and you can’t assess this against UCITs. We need to cooperate and seek common ground with the EU but also stand fi rm and not allow any inappropriate requirements to be imposed on our fund regime. While progress has been made, the lingering uncertainty has meant that some managers have chosen not to market in the EU until it is sorted. This impacts EU investors. “The initial fl ood of master and feeder fund registrations, post the change in the legislation, has now slowed.” Heather Smith CAYMAN FUNDS | 2016 17 “Because we have a dedicated government ministry, we are well placed to meet these challenges.” Jude Scott


Cayman Funds 2016
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