Everybody in the room is probably engaged with the CRS to some
extent. We’ve just put some new regulations in place which include the
framework for compliance and penalty measures, some of which have
been more readily received by than others. One of the key things about
the CRS is that there is an effective implementation component built
into it. In other words, we’re going to be assessed on the effectiveness
of our CRS implementation, so we’re building for the future as much
as doing what needs to be done on a bare bones level at this stage.
First exchanges should take place this year and work continues on
making the Cayman Automatic Exchange of Information (AEOI)
portal ready to receive registrations and data. There’ll be further
announcements about that in due course, but the key thing is to put us
in a position to be able to honour our international obligations this year.
The working group is currently working on the next version of the
guidance notes; it’s a rigorous consultation process which is good for
everybody so that we get close to the issues, but we are confident
we can deliver. There are currently100 jurisdictions which have
committed to the CRS; 53, including us, say we will exchange in
2017 and the remainder in 2018.
We expect to exchange with all the 2017 jurisdictions provided they have
the necessary legal instruments in place and there’s work being done at
the OECD as to how that will actually happen. There are approximately
40 jurisdictions with which we are switched on, ready to exchange,
and that includes most European countries, although some have a
few issues to resolve themselves. A number of countries in the 2017
group are non-reciprocal like Cayman; these are the overseas territories
and a couple of other countries that are only giving information and
not receiving, so there will be a few less than the full slate of 2017
countries that we will actually exchange with in September.
In terms of the impact on industry, CRS from a government point
of view is not a competitive issue, everybody’s doing it. We are
watching all our fellow jurisdictions to make sure that they are doing
what we are doing and that implementation is consistent. There will
inevitably be some arbitrage but it is being kept to a minimum by
ongoing monitoring by the Global Forum.
Our intention, once it’s running, is that it should run in the background
and we will be encouraged if there are benefits that come out of
CRS. FATCA for all its problems has been a good trailblazer and
the infrastructure that was put in place for FATCA has given us the
opportunity to build on that for CRS.
This is a massive change to the global system. For the first time,
financial institutions are being data collectors for tax authorities.
It’s not something that one would advertise necessarily but
that’s the reality: the financial services industry is now the main
collector and provider of that information to the tax authorities.
We need to keep working in tandem with industry because it’s
a jurisdictional solution that we’re trying to put in place, not a
government solution.
Allard: On CRS, the fact there are so many countries involved and
so much reporting keeps us as administrators up at night. If you
have 800 funds it’s that times 90 or 100 reports you are sending out
for any one period. That alone is driving how many people I need to
physically do this sort of work and that’s why we need to continue to
have conversations with government about that.
Golding: That’s right, technology can take you only so far. You still
need skilled people behind the technology.
Nicol: One of the issues that we’re looking at very closely is what
kind of people do you need. You cannot, as we discovered in FATCA,
“In the past investors never
came to talk to directors or
service providers, now they
talk to everybody.” Tammy
Jennissen
CAYMAN FUNDS | 2017