Cayman Islands Implements E-Reporting For Licenced Funds

by Amanda Banks, Tax-News.com, London

06 April 2007

The Cayman Islands Monetary Authority (CIMA), the country's financial services regulator, has announced the implementation of an electronic reporting system for all funds licensed, registered and administered in the jurisdiction.

Following successful industry testing, CIMA released on its website the electronic Fund Annual Return (FAR) form and has opened the internet portal through which funds' local auditors will submit the required returns. Related guidance notes have also been released.

The submission of these returns is a requirement for all funds regulated under Cayman's Mutual Funds Law.

The Cayman Islands has had a regulatory regime for funds since 1993 when it enacted its Mutual Funds Law. This regime provides regulatory oversight for various types of investment products, requiring funds to submit key information for regulatory review on an annual basis, and provides oversight of related fund services activities such as auditing and administration.

CIMA has been developing the electronic reporting initiative for funds for several months, with assistance from its retained business advisor Ernst & Young and with input and feedback from the funds industry, including overseas service providers to Cayman funds. The Authority expects the initiative to facilitate more efficient collection and processing of returns from the over 8,300 funds it now oversees. It will also allow better aggregate industry statistics to be provided.

"The implementation of this E-reporting system marks a new era for Cayman's funds industry," commented CIMA's Managing Director, Cindy Scotland. "Not only will we be able to more efficiently handle the audited accounts that are submitted but we will also be able to provide statistics on Cayman-regulated funds that we were not able to in the past, including summary financial and regulatory data."

Scotland pointed out that accurate information of this kind has been difficult to ascertain within the funds industry on a global basis. "Because the Cayman Islands is the domicile for a majority of the world's offshore hedge funds, we believe CIMA's E-reporting system will be able to improve the reliability and quality of aggregate fund industry statistics globally," she said.

The FAR (which is the same form that was referred to as the Key Data Elements form during the project's development) and each fund's audited accounts are to be submitted to CIMA through the fund's local auditors within six months of the fund's financial year-end, beginning with those funds that have a year-end date on or after 27 December 2006.

The FAR collects basic data about the fund, its structure and operations, and summary financial data as contained in the fund's audited accounts. CIMA contracted the UK-based software company DecisionSoft Limited, a leading supplier of XBRL tools and systems, to implement the data validation and processing engine on which the FAR and auditor portal run. (XBRL - Extensible Business Reporting Language - is the emerging electronic standard for reporting business and financial data.)

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