On October 19, 2021, the Cayman Department of International Taxation (DITC) posted an Updates Bulletin. In it, they discuss communicating with the DITC, a Compliance Update, and Economic Substance. Of particular note, they provide a CRS Reporting Analysis where they highlight common issues including:
Missed reporting deadlines. A large number of financial institutions who have a CRS reporting obligation did not submit a 2020 CRS Filing, CRS Filing Declaration, or CRS Compliance Form.
Missing information within returns. A large number of 2020 CRS returns did not include the Taxpayer Identification Number (TIN) or functional equivalent or date of birth, where required. The DITC will be in touch with those FIs that did not include this mandatory information. In the meantime, the DITC advises FIs to begin researching why they did not provide these details in their 2020 CRS return. FIs that wish to correct their reports by including the missing TIN and/or date of birth can do so on the DITC Portal.
Undocumented accounts where receiving country is KY or Cayman. A number of organization accounts reported as an undocumented account for 2020. This is not the correct way to report. The CRS only permits accounts to be reported as undocumented in very limited circumstances, which include:
Where there is only a 'hold mail' instruction or 'in-care-of' address, and
A paper search fails to establish indicium, and
The attempt to obtain the self-certification or Documentary Evidence is not successful.
There are no other circumstances where an FI should report an account undocumented. The DITC will be in contact with FIs that submitted any accounts as undocumented. FIs should research this issue as well prior to discussing with the DITC. Those wishing to correct their undocumented account reporting may do so on the DITC Portal.
Separately, the DITC is cross referencing CRS and FATCA notification data against other data sources, such as the Economic Substance Notifications, CIMA licenses and registrations, General Registry nature of business classifications, and the IRS GIIN registration list. As a reminder it is an offence under the Cayman Regulations for Financial Institution to fail to notify the DITC of their correct classification. FIs and their directors or fiduciaries are responsible for complying with these Regulations and may be liable to administrative penalties or other sanctions in the event of noncompliance.
Reporting Cayman FIs must have a look at these instances and note where they may have reported incorrectly, were missing required information, or did not report at all. Further, they should review their entity classifications for consistency across all registries that the Cayman DITC has noted.
Check out the complete October 19, 2021, DITC Cayman Updates Bulletin here: