Cayman Islands latest CRS enforcement guidelines: How Cayman financial institutions can manage the risk

Cayman Islands latest CRS enforcement guidelines: How Cayman financial institutions can manage the risk

Cayman financial institutions could be fined up to KYD 50,000, with additional penalties for continuing violations, as set out in the Cayman Islands Tax Information Authority's (TIA) latest Common Reporting Standard enforcement guidelines (CRS Enforcement Guidelines) – if they fail to comply with the Tax Information Authority (International Tax Compliance) (Common Reporting Standard) Regulations (Revised) (CRS Regulations) – but Ogier Global's Investor Services support team can help clients manage this risk.

The CRS Regulations, together with the CRS Enforcement Guidelines, outline the circumstances under which Cayman financial institutions (Cayman FIs) could face penalties.

The potential primary penalty is up to KYD 50,000 (approximately US $61,000) for each offence by a Cayman FI, plus continuing penalties of KYD 100 (approximately US $120) for each day that a violation of the CRS Regulations continues.

Currently, the Cayman Islands Department for International Tax Cooperation (DITC) is contacting the Principal Point of Contact (PPoC) of each Cayman FI that has failed to submit a 2021 CRS Filing Declaration to the DITC Portal as of September 2022.

All required (complete and accurate) CRS Returns need to be submitted to the DITC by 31 July (each year); and must set out all information required to be reported for each reportable account maintained by each Cayman FI. Once the CRS Return is submitted, it should be followed by the mandatory submission of a CRS Filing Declaration (also to be made before 31 July, each year). The CRS Filing Declaration marks the final step which each Cayman FI must take, each year, to meet its annual reporting obligations under the CRS Regulations.

The CRS Compliance Form is an additional mandatory form that must be submitted to the DITC annually by Cayman FIs in order to provide certain additional information to the DITC and to help ensure the effective implementation of, and compliance with, reporting and due diligence procedures as required under and in accordance with the CRS Regulations. A completed CRS Compliance Form must be submitted by each Cayman FI to the DITC before 15 September (each year) for the same reporting period as its latest CRS Return, otherwise a penalty may be imposed (in line with the CRS Enforcement Guidelines).  

In view of the recent (August 2022) publication of the latest version of the CRS Enforcement Guidelines and the reporting requirements set out under the CRS Regulations, Ogier Global has developed a comprehensive service package to help your team meet any corresponding obligations.

How can Ogier Global help?

• Register for a Global Intermediary Identifier Number (GIIN) with the Internal Revenue Service (IRS) and submit a notification to/obtain a Financial Institution (FI) Number from the TIA.  
• Provide assistance to address any related request/enquiry from TIA.
• Monitor financial accounts on an ongoing basis for any changes in circumstances that may impact status under the CRS Regulations.
• Perform due diligence procedures as required under and in accordance with Tax Transparency Rules.
• Monitor for any incomplete or inconsistent information and process appropriate remediation of documentation to prevent any inaccurate filings with the TIA/DITC.
• Timely completion of Cayman AEOI reporting and the CRS Compliance Form; and submission of the same to the TIA/DITC in order to prevent any overdue AEOI filings.

If you are interested in our service scope or would like more details regarding the TIA/DITC's requirements, please contact our team at hkregistrar@ogier.com. We look forward to sharing our professional assistance to support the development and growth of your team.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice