FATCA – A Practical Guide For Investment Funds In The Cayman Islands

The US-Cayman Islands Model 1 Inter-Governmental Agreement (IGA) was signed and published on 29 November 2013. Whilst we are still awaiting the publication of the terms of the Cayman Islands domestic legislation that will implement the IGA (which we expect to be forthcoming in early in 2014), we wanted to take the opportunity to summarise our understanding of the requirements and responsibilities of Cayman Islands investment funds (Funds) under the IGA and how Appleby can assist with the Fund's obligations.

Under the IGA, a Fund is classified as a Foreign Financial Institution (FFI), there are three broad categories under which the Fund's obligations under the IGA will fall – (i) registration with the IRS, (ii) due diligence to facilitate the identification of US reportable accounts and (iii) reporting to the Cayman Islands Tax Authority on US reportable accounts. Under the IGA, a Fund is classified as a Foreign Financial Institution (FFI).