Certainty Brought To The Cayman Islands FATCA Regime

Since before 2010 when the Foreign Account Tax Compliance Act (FATCA) was introduced by the US it is safe to say that advisors have been considering the potential impact of FATCA on their clients. It was not uncommon for a Cayman Islands legal practitioner to have to review the articles of association, subscription agreements and/or offering materials of a fund client to determine how it might best deal with a recalcitrant investor (i.e. an investor that refused to provide any FATCA information that the fund might request to avoid being subject to FATCA withholding tax).

However, FATCA took on a real measure of significance in the Cayman Islands toward the end of 2013 when, on 29 November 2013, the governments of the Cayman Islands and the US entered into a Model 1B (i.e. non-reciprocal) Intergovernmental Agreement (the "US IGA")¹ .