On July 31, 2024, major changes to the Cayman Islands beneficial ownership reporting regime (BORR) came into effect. These are the most significant changes made since 2017 when the BORR was enacted to comply with international standards to combat money laundering, tax evasion, and terrorist financing. The Ministry of Finance Services and Commerce confirmed the enforcement of the new requirements will go into effect on January 1, 2025.
What is Changing
The Beneficial Ownership Transparency Act, 2023 (BOTA) expands the scope of the BORR to include Cayman Islands companies, limited liability companies, limited liability partnerships, foundation companies, and exempted limited partnerships.
Previously exempt entities that now fall in scope must identify their registrable beneficial owners (RBOs) and provide details to their CIMA-licensed corporate service provider or administrator unless an alternative route to compliance is available. A licensed service provider is required to maintain a beneficial ownership register for each in-scope entity and submit it to the Cayman General Registry.
In addition, the definition of a beneficial owner has been updated to include persons that meet the following conditions”
- An individual who directly or indirectly owns or controls 25% or more of the shares, voting rights, or partnership interests in the entity.
- An individual who has control over the management of the entity.
- An individual who is identified as exercising control of the entity as a senior managing official when no person exerts ownership or control.
- The BOTA removes exemptions previously made to mutual funds, private funds, general partners, carry vehicles, debt issuance vehicles, special purpose vehicles, blockers, trading subsidiaries, and entities registered under the Securities Investment Business Act.
Alternative Routes to Compliance
Private Funds or Mutual Funds registered with CIMA under the Private Funds or Mutual Funds Act may appoint and disclose a Contact Person at their CIMA licensed service provider rather than providing their RBOs. To take advantage of this alternative route, Private Funds and Mutual Funds are to provide their licensed service provider with written confirmation of the category in which they fall and the required information for that category.
Next Steps
Suntera Fund Services suggests getting in touch with your Cayman Islands legal counsel to assess readiness and compliance with the regulation set to go into effect on January 1, 2025. The Ministry of Financial Services & Commerce has also issued Guidance Notes on Complying with the Beneficial Ownership Obligations in the Cayman Islands, available here: Beneficial-Ownership-Transparency-General-Guidance-Final.pdf (ciregistry.ky)
We also invite you to reach out to Korie Drummond if you have questions.