Cayman Islands enhances its Statement of Guidance on the Nature, Accessibility and Retention of Records

Its objective is to ensure that persons and entities regulated or registered under Cayman Islands regulatory laws, including company directors registered or licensed under the Directors Registration and Licensing Law, maintain records in a manner that promotes accessibility, clarity and the reduction of risk.

Previous guidance was first issued by CIMA in October 2003 and the new Guidance is based on research conducted by CIMA, feedback received from industry participants and a review of laws/measures issued in various jurisdictions. It is not intended to be prescriptive or exhaustive but rather it sets out CIMA’s “minimum expectations” of a relevant entity’s record keeping arrangements.

The Guidance will be of obvious benefit and reassurance to international clients of the Cayman Islands given the recent havoc wrought by storms elsewhere in the Caribbean. Clarity and certainty of robust information systems, data retention, controls and back up, further strengthen the Cayman Islands position as a leading international financial centre. In addition, the Guidance will help the Cayman Islands further demonstrate its commitment to ensuring proper maintenance of records, noting that discussions surrounding beneficial ownership information have been a high priority to international organisations such as the Organisation for Economic Cooperation and Development and the Financial Action Task Force.

Highlights include:

• Relevant entities should maintain records in their original format for at least five years after a transaction date, with “original format” including electronic copies of paper-based records. This pre-existing requirement is the minimum time period for which records must be kept. For example, where a fiduciary relationship has been formed with clients it may be necessary to keep records for longer periods of time. In the case of trusts for example, the requirement to keep records may last for the life-time of the trust or for further periods thereafter.
• Electronic records must be easily accessible and CIMA expects that most records should be provided within one to three business days from the time that they are requested by CIMA, whether stored within the Cayman Islands or in another jurisdiction.
• CIMA requires that a relevant entity record information likely to be required by CIMA in such a way as to enable a particular transaction to be identified at any time and traced through the accounting systems of the relevant entity, in particular in such manner as to enable early identification of balances and of the particular items which make up those balances.

Examples of records which CIMA expects a relevant entity to keep include:

• (detailed) corporate accounting records
• organisational records
• employee and other administrative records
• risk management policies
• corporate records such as incorporation documents, shareholders’ and directors’ meeting minutes and board resolutions
• client records such as client communication and complaints records
• service provider records such as copies of contracts and agreements
• customer due diligence records
• annual returns filed with CIMA

CIMA requires that the record-keeping be sufficient to enable it to monitor compliance with regulatory and anti-money laundering and anti-terrorism financing obligations. Relevant entities must also maintain adequate procedures for the availability, maintenance, security, privacy and preservation of records belonging to the relevant entity, clients or others so that they are reasonably safeguarded against loss, unauthorised access, alteration or destruction. This includes records retained electronically or by any other medium.

Where records are maintained outside the Cayman Islands through outsourcing, storage, or other arrangements, the relevant entity remains ultimately responsible for record keeping requirements and accessibility to records by CIMA.

Appleby’s regulatory team in the Cayman Islands specialises in complex financial services regulatory work for banks, insurers, trust companies, mutual fund administrators, company managers, corporate services providers, insurance managers and other financial services institutions regulated in the Cayman Islands. The dedicated team provides advice to local and international businesses on the management of the legal, commercial and reputational risks often associated with regulatory and legislative issues. Our regulatory specialists cover the full range of financial services matters. We also routinely advise regulated financial institutions on the regulatory implications and reporting requirements in relation to mergers, acquisitions and reorganisations, as well as interpretation and application of statements of principle and guidance issued by CIMA. Our unique blend of experience and unique insight ensures that the advice we provide is highly commercial and practical encompassing the full range of offshore regulatory issues and problems that arise for our financial service providers, regulators and governments