Stricter record-keeping rules for Cayman Islands company management licensees

The new rules were published last August with immediate effect for newly established licensees under the Companies Management Act, Banks and Trusts Companies Act, Mutual Funds Act and Insurance Act. They have now taken effect for existing licensees as well, though regulated mutual funds and private funds are exempt.

The guidance from the Cayman Islands Monetary Authority (CIMA) sets its minimum expectations for record-keeping, although without prescribing specific arrangements. The records must be legible, easily accessible and maintained using an appropriate system that addresses categorisation, retention periods and disposal of records. The system and procedures must also comply with the jurisdiction's Data Protection Act. Record-keeping should be reviewed arrangements annually and adjusted where necessary, especially where third parties are involved.

Records must be kept in their original format for a minimum of five years after the transaction date, and longer if they relate to fiduciary relationships with clients. Adequate procedures must be set up for the availability, maintenance, security, privacy and preservation of records. The guidance provides examples of the key records that a licensee is expected to maintain, including financial, corporate, client and due-diligence documents.

Whether paper or electronic, accounting records have to demonstrate the regulated entity's transactions and commitments so that CIMA can monitor its compliance. Electronic records should be of good quality, easily accessible, protected against loss and easily reproducible in hard copy. CIMA cautions against premature destruction of paper-based records when converting to electronic formats.

The records can be held outside the Cayman Islands, provided CIMA has access to them at all reasonable times and 'within a reasonably short timeframe'. They must be kept in English or professionally translated into English, and CIMA must be informed of how records can be accessed once a licensee ceases to carry on business.

Sources

• Ogier

• CIMA (guidance, PDF)

• Collis Crill (June 2023)