Regulatory Update: EU removes Cayman Islands from non-cooperative countries list and FCA extends relief for 10% notifications

EU removes the Cayman Islands from its list of non-cooperative countries for tax purposes

On 6 October 2020, the Council of the EU announced that that it had removed the Cayman Islands from its list of non-cooperative jurisdictions for tax purposes. Oman was also removed, while Anguilla and Barbados were added.

Cayman Islands was removed from the EU list after it adopted new reforms to its framework on Collective Investment Funds in September 2020. This means that the Cayman Islands will no longer be subject to non-tax defensive measures, administrative tax defensive measures and legislative tax defensive measures.

Following this update, twelve jurisdictions remain on the list of non-cooperative jurisdictions: American Samoa, Anguilla, Barbados, Fiji, Guam, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, the US Virgin Islands and Vanuatu.

FCA extends relief for 10% depreciation notifications

On 30 September 2020, the FCA announced that it was extending its measure to not take enforcement action against firms that do not provide 10% depreciation reports to investors, with some amendments. The extension lasts for 6 months, from 1 October 2020 to 30 March 2021.

The FCA will not take enforcement action against firms for breach of its 10% depreciation notification obligations, provided that the firm has:

• issued at least one notification in the current reporting period, indicating to retail clients that their portfolio or position has decreased in value by at least 10%
• informed these clients that they may not receive similar notifications should their portfolio or position values further decrease by 10% in the current reporting period
• referred these clients to non-personalised communications, perhaps made available on public channels, that outline general updates on market conditions (these could contextualise potential drops in portfolio or position value to help consumers meet their objectives, rather than making impulse decisions about their investments) and
• reminded clients how to check their portfolio value, and how to get in touch with the firm.

Firms must continue to have due regard to the interests of their customers and treat them fairly (Principle 6) and pay due regard to the information needs of their clients and communicate with customers in a way which is clear, fair and not misleading (Principle 7). The FCA will continue to respond appropriately if it has concerns that potential misconduct may have caused significant harm to consumers, including possibly opening an investigation.

The FCA is also amending its extension of the previous flexibility regarding professional investors. For services offered to professional investors, the FCA will not take action for breach of the 10% depreciation notification obligation provided that firms have allowed professional clients to opt-in to receiving notification.

Compliance and Laven

At Laven, our consultants are on hand to help identify the actions your firm needs to take to ensure you are compliant with new regulations and aware of all the risks outlined in this report. Whether this is through assisting with new policies and procedures that need to be put in place or providing online/in-person training for staff to make them fully aware of the regulatory burden.

Laven has also built Laven Tech, a unique Regulatory Technology (RegTech) solution that leverages advanced technology combined with our vast subject matter expertise. Our RegTech solution is designed to assist fund managers, service providers and investors to meet today’s growing demands.

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