“We can’t rest on our
laurels but I think the
root of the interest is
the economic substance
Despite the global pressures, we have remained steady in the
course we’ve taken, we’ve tried to analyse each action so certainly
there’s a plethora of changes and a whole raft of new requirements
coming online every day. But when we take the decision, it’s because
we’ve considered that’s the best decision to take.
We’re not going to fine everyone just to say we’ve taken in
$10 million worth of fines in the first two years of implementing the
regime or just to show that we are robust. We think we’re robust now.
The ability to fine is simply another tool we have available to us, but
it does not discount the other tools that we’ve always had available.
Pierre: If there was any doubt in terms of the robustness of our
regime, and I’m not suggesting that there should be, the recent
changes are probably a clear indication that the regulators are serious.
Smith: A lot of the changes came from our national risk assessment—
the ones we made to the anti-money laundering (AML) rules. But not
every country undertook a national risk assessment. We did our own,
which is better than somebody external coming in and saying ‘these
are the things you must do’. We have an ongoing assessment of our
own industry from a regulatory and policymaking perspective so that
we can anticipate change.
Bahadur: The government’s position is that we will be compliant
in international standards. We will always consult with all our
stakeholders so that we get their input into our regulatory framework.
The economic substance legislation is an area where there is
extensive consultation. I’ve never been involved in a piece of
regime. We know we want to do it, obviously—being compliant is not
optional, so the sooner we can be in compliance the better.
Subiotto: With great enforcement comes a duty to provide greater
clarity. It would be very useful for CIMA to consider a ‘no action’ letter
approach where industry will then have clarity as to the areas where
CIMA will, and will not, take action.
Smith: We have issued letters of that nature, so maybe you haven’t
got one. In certain instances we have reached a place where we’ve
reviewed and assessed the situation, we’ve determined that an
enforcement action at this point is not necessarily the step we are
going to take but we’re making it perfectly clear what the issue was,
and that it is something we expect to be addressed.
Kendell Pierre: In terms of the cultural shift you’re trying to achieve
it’s obviously a great approach in terms of getting the industry to be
on the same page.
From a regulatory perspective my observation is that a robust
regulatory environment would definitely help to debunk some of
the myths that are out there and positively impact our international
profile, especially within our industry.
However, we do need to be careful that we don’t shoot ourselves
in the foot in order to demonstrate that we’re policing the industry.
Smith: That’s exactly the point to CIMA’s approach because certainly
there is pressure now ‘to show us that you’re more robust’.
We’ve seen a lot of regulators show that through increasing the
levels and amount of fines, but I don’t believe that CIMA is prepared
to take that approach, we don’t see it as necessary.
“It’s going to be very hard
to get over the finish line
but it will be a massive step
forward.” Jonathan Roney
30 CAYMAN FUNDS | 2019