Each of the Cayman International Reinsurance Companies Association (CIRCA), Maples Group, Alternative Investment Managers Association (AIMA), Insurance Managers Association Cayman (IMAC), and the Cayman Islands Monetary Authority (CIMA) provided feedback. Industry representatives focussed their responses on:

• Definitions: One of the primary concerns raised was the need for clarity on various terms, particularly "intermediary" and "client." Stakeholders sought guidance on the scope and interpretation of these terms within the context of the proposed regulations. In response, the Cayman Islands government acknowledged the necessity of providing clear definitions and committed to issuing guidelines alongside regulations to address these concerns.
• Data protection: Industry stakeholders wanted clarity on whether clients should be notified about the disclosure of personal data to the Tax Information Authority (TIA). Additionally, there were queries about how data protection concerns would be addressed in the guidelines. The Cayman Islands government clarified that reporting intermediaries are not required to notify clients, and data disclosure complies with data protection laws.
• CRS avoidance arrangements: The MDR objective is for regulated intermediary entities to report on avoidance arrangements and opaque offshore structures of their underlying clients. Industry stakeholders noted that there were ambiguities on how to determine if an arrangement is designed to circumvent the CRS regulations. The Cayman Islands government stated that CRS avoidance arrangements should be objectively assessed and provided the following examples of arrangements that might be considered to be structured solely for the purpose of avoiding the CRS requirements:
  • A transaction that is highly structured in such a way that the avoidance of CRS reporting is the logical explanation for that structure;
  • A transaction that is otherwise uncommercial, but for the benefit of avoiding CRS reporting;
  • Ownership structures which result in beneficial owners holding assets just below the threshold of reporting (eg beneficial owners holding 24 per cent of an interest where local rules apply a 25 per cent threshold); or
  • The refusal by a financial account holder to provide an explanation for a transaction or structure in circumstances in which that has been requested.

Next steps involve aligning the Regulations with OECD model rules to ensure consistency across jurisdictions and reduce reporting burdens for businesses.

The consultation response note can be found here.

OECD model rules are available here.