The Central Bank (Individual Accountability Framework) Bill 2022 (the “IAF Bill“) was published on 28 July 2022 by the Department of Finance, following the publication of the General Scheme of the IAF Bill (“General Scheme”) in July 2021. Once enacted, which might be as soon as Q4 2022, the IAF Bill will introduce significant changes to the regulation and supervision of regulated financial service providers (“RSFP”) and persons performing controlled functions (“CF”) and pre-approval controlled functions (“PCF“), through, inter alia, the introduction of the Senior Executive Accountability Regime (“SEAR”), business and conduct standards, and an enhanced fitness and probity (“F&P“) regime.

In our latest advisory, the Walkers' IAF team comprising members of our Regulatory, Funds and Employments groups, provides an overview of the Bill including timing and key actions for in-scope regulated financial services providers and holding companies. 

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Under Order 24, rule 1 of the Grand Court Rules (“GCR”), a party is required to give discovery of “documents which are or have been in his possession, custody or power”.

Given the importance of “power” to determine - and potentially significantly to expand - the scope of a party’s discovery obligations, it is perhaps surprising that there has, until recently, been a dearth of Cayman Islands case law regarding this aspect of GCR O.24, r.1. Practitioners will no doubt therefore welcome the elucidation of the test for establishing “power” now provided in two separate (unreported) decisions of the Grand Court, in (1) Abdulhameed Dhia Jafar v Abraaj Holdings and others (19 July 2022; Cause Nos: FSD 150, 158 and 203 of 2020); and (2) In the Matter of Investar General Partner Limited and others (27 July 2022; Cause Nos: FSD 146, 147, 148 and 196 of 2018).

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While the Procedures largely codify CIMA’s longstanding practices, they also introduce some significant simplifications:

• For funds undertaking an ordinary-course solvent wind-down, the former ‘two-step’ de-registration process (typically involving a period of ‘Licence under Termination’ followed by final de-registration submissions) has been removed. These funds will simply notify CIMA when they commence their wind-down, stay registered until the final payments to investors (often the release of an audit-related holdback) have been made, and make a final submission once they have completed their final liquidation audit and have completely redeemed all investors.
  
  
• For funds that are required to commence a formal winding up upon the expiration of their term, or whose constitutive documents contain similar liquidation triggers, the former ‘two-step’ de-registration process triggered by a liquidation (involving a period of ‘Licence under Liquidation' followed by full de-registration) has also been removed. These funds will follow the same process as outlined above: an initial notification to CIMA at the commencement of the wind-down and liquidation of the fund, followed by a final submission following the completion of the process. Separate provisions apply where a third-party liquidator is appointed.
  
  
• While funds remain registered, they continue to be subject to all of the obligations of registered funds, including with respect to submission to CIMA of annual audits, Fund Annual Returns, and annual fees. As the Licence Under Termination and Licence Under Liquidation routes are no longer available, annual fees will not be subject to the prior 50% and 100% discounts, and funds will need to accrue accordingly. While in limited circumstances waivers from certain filing requirements may be available, we do not expect these to be a routine part of most funds’ de-registration submissions.

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In a notice on 19 August 2022 (the "Notice"), the Cayman Islands Monetary Authority (“CIMA”) advised financial service providers that it will soon be conducting one of its periodic anti-money laundering surveys. CIMA has created a new single form, the AML Survey. This new form will combine the AML Inherent Risk, the AML Risk Controls and the Cash Flow Return forms. CIMA regulated entities in the sectors listed below should note the survey issue and due date applicable to their sector.

The AML Survey and related guidance notes will be available in advance of the below upcoming survey dates. For further details, please refer to the Notice.

 
CIMA issues the AML Survey to assist it in the exercise of its functions, including the collection of data in relation to prevention of money laundering, terrorist financing, proliferation financing and sanctions data in order to conduct sectoral risk assessments and other related research for the Cayman Islands.