With changes in Cayman Islands legislation related to private funds, regulation may be a catalyst for outsourcing certain functions previously maintained in-house.

There are various types of services that financial institutions and fund managers look to outsource depending on their size, budget, in-house capabilities, and purpose.

It has been two years since the Cayman Islands Monetary Authority (CIMA) introduced its Rule on Corporate Governance for Regulated Entities (the "Corporate Governance Rule"), and a year and a half since it came into force.

The Cayman Islands Monetary Authority ("CIMA") has recently released a draft Statement of Guidance: Outsourcing All Regulated Entities (Excluding Regulated Mutual Funds) ("SOG") and Consultation Paper ("Paper").

Private equity managers are under pressure.

Regulated entities impacted by this SOG are expected to utilise it to evaluate the risks associated with all existing and proposed outsourcing arrangements.

The Cayman Islands Monetary Authority identified in its Thematic Review on Outsourcing that outsourcing agreements and accountability were the primary weaknesses across the reviewed entities...