Category Archives: Jurisdictions

The BVI’s AEOI portal is now open for CRS filings. Are you ready?

The BVI International Tax Authority (ITA) announced yesterday that the BVI’s AEOI portal, BVI FARS, is now open for reporting under the OECD’s Common Reporting Standard (known as CRS)[1]. So, what do you have to do and by when?

The ITA has published an updated user guide but, since I know that most people are already glossing over and thinking about clicking on the more interesting email about drinks plans this evening which just flashed up in the right hand corner of their screens, I will try to summarise it as briefly as possible.

We are celebrating a small triumph in the BVI by beating our Cayman friends and rivals this year (in what has to be one of the world’s most boring races) to being ready to receive FATCA[2] filings. BVI funds have been diligently registering on BVI FARS and filing their FATCA reports, which were due by 31 May 2017. If you have missed the deadline, try not to panic and get in touch.

Despite a small delay (okay, I admit, Cayman beat us on this one) BVI FARS is now ready for CRS registration and so it’s now time to take the additional step of extending your registration on BVI FARS to cover reporting and filing under CRS. You can do this by logging into the BVI FARS portal as usual and changing the reporting obligations to include CRS. Actually, this really is pretty last minute and you only have until 30 June to register, yes that’s next Friday!

CRS filings have to be made on BVI FARS by 31 July 2017. A separate filing has to be submitted for each reportable jurisdiction in which the fund has reportable accounts. As with the FATCA process, you can either submit CRS filings using the manual entry using the online web form or by uploading an XML file that complies with the CRS XML Schema v.1.0, published by the OECD.

Any reports required to be made under UKCDOT[3] (the parallel reporting system for UK accounts which came in before CRS and will fall away in 2018) must also be made this year by submitting a CRS filing with the UK as the receiving country. Some accounts which are not yet required to be reported under CRS because they are pre-existing lower value individual accounts[4] and pre-existing entity accounts[5] will need to be reported under UKCDOT because the deadlines for reviewing those accounts under UKCDOT have now passed. The maximum required to be reported under the two regimes should be reported.

Don’t be caught out by the obligation under CRS which also requires investment managers and advisers, licensed in the BVI, to register on BVI FARS. Under FATCA, they weren’t required to do this because they were classified as Non-reporting FFIs.

So what are the key dates in 2017 for BVI funds and AEOI?

30 April 2017 All BVI Reporting Financial Institutions (including all BVI funds) were required to have registered with BVI FARS for FATCA.
31 May 2017 All BVI Reporting Financial Institutions should have made their FATCA reports. We recommend filing a nil return, even if you have no US Reportable Accounts.
30 June 2017 All BVI Reporting Financial Institutions (including funds and investment managers and advisers) must register on BVI FARS for CRS.
31 July 2017 All BVI Reporting Financial Institutions must file a report or a nil return on BVI FARS for CRS.
31 December 2017 All pre-existing lower value individual accounts and pre-existing entity accounts must have been reviewed for CRS.

 What else should BVI funds have done or be doing?

Most funds and their managers have been preparing for AEOI compliance and have been taking steps to ensure that they are complying with their notification, reporting and ongoing requirements but if you are still in the dark you should be:

  • Reviewing the fund’s existing documentation to make sure AEOI obligations are properly disclosed and the fund can get all the self-certification and other documents it needs.
  • Creating and implementing AEOI policies.
  • Reviewing pre-existing accounts. Financial Institutions have been given until 31 December 2017 to review pre-existing entity accounts and pre-existing lower value individual accounts. The review of all pre-existing accounts must have been completed by 31 December 2017 and all reportable accounts must be reported in 2018.
  • Appointing an authorised person as a principal point of contact to liaise with the ITA.

If you need more information or assistance with your filings, or want to discuss any of this in person, just contact one of our blog team and we will be happy to help.

Fiona has also been blogging on what is happening with AEOI in Cayman and you can read her blog here.

 

 

[1] OECD sponsored Multilateral Competent Authority Agreement and certain bilateral agreements or tax treaties regarding the common reporting standard on automatic exchange of information.

[2] US Foreign Account Tax Compliance Act

[3]  The Crown Dependencies and Overseas Territories International Tax Compliance Regulations

[4] Those with a value of less than US$1m.

[5] Pre-existing Entity Accounts with a value of less than US$250,000 do not need to be reviewed unless and until the balance exceeds US$250,000.

ARE INSTITUTIONAL US MANAGERS CONTINUING TO PREDOMINANTLY USE CAYMAN STRUCTURES? WHY?

Are institutional US managers continuing to predominantly use Cayman structures? Why?

The short answer is yes, but there are caveats. Many investment fund commentators were all doom and gloom for 2016. Underperformance from some of the institutional fund managers, some institutional investors pulling out of institutional funds, over-regulation in the US, cyber-security and the SEC’s treatment of managers being some of the reasons why and leading to many journalists writing headlines such as “Is this the end of the hedge fund?”

Continue reading

What is the process of setting up a US Fund and Cayman Fund like? How quick/seamless is it?

Setting up a US fund and a Cayman fund is quick, easy and yes, seamless, provided that the manager chooses US and Cayman Counsel who, as part of their core businesses, structure investment funds. These are the folks who, if the manager chooses wisely, will become their trusted advisors for many years to come. If this is the case then US Counsel will work seamlessly with Cayman Counsel.

But before we get to the process, the manager needs to decide how their US Fund will work in conjunction with their offshore fund. In deciding which route to follow, US Counsel will walk the manager through the options.

Continue reading

Why-set-up-a-fund-in-the-US.

Why set up an Offshore Fund at the same time as setting up a US Fund?

This question is asked by start-up and emerging managers all of the time and for good reason. Generally it’s the manager who’s putting down their cash to set-up the Fund, albeit the set-up fees will be amortized at the Fund level when investors come-in. As such the manager needs to be extremely confident (show me a manager who isn’t extremely confident….) that they need a US Fund and the Offshore Fund, rather than one or the other. To make this decision, the manager needs to be focused and strategic with their marketing and to have discussed the pros and cons with their legal counsel. Otherwise the manager could well be wasting their own money. Let’s jump into why a manager should be setting-up a US Fund and the Offshore Fund at the same time.

Continue reading

A Cayman perspective: 2017 trends for the funds industry

2016: what a year for the Americas.  From our offices in Cayman, Sao Paulo, Montevideo and Vancouver, we witnessed a wave of fundamental – at times dramatic and turbulent – change in key markets in the Americas. From impeachment of a sitting president in Brazil, to the election of a centre-right president in Argentina to the ‘glad its over’ election in the US which ushered in centre-right control of two branches of government, 2016 brought fundamental political change across the region. Meanwhile, long-anticipated amnesty programmes in both Argentina and Brazil paved the way for large amounts of assets to be brought back into the formal economy, and away from the increasingly frigid landscapes of undeclared assets. Both programmes succeeded, perhaps even beyond expectation, as investors and common citizens embraced the welcome opportunity to regularise their positions, thus adjusting to a world where transparency and information exchange are the rule. For a jurisdiction like Cayman, this is all potentially good news. Let me explain why.

Continue reading

We bag ourselves a HFM hatrick

I was of course overjoyed with the news that my colleagues in our London office and Hong Kong office had been hugely successful in their respective HFM Awards Ceremonies as HFM is a leading global publication covering the hedge fund industry and these high profile awards (which are judged on the basis of client feedback) are undoubtedly very well regarded in the industry.

But, and I can shamefully admit to this fact only now, another part of me was a touch envious.

The feeling is comparable to the one of sitting on a substitute’s bench and watching your team romp home to a glorious victory without you. Whilst of course externally you smile and whoop with delight, there is another part of you that wishes you could just get a chance to run onto the field and contribute in some way to the success.

Well, our chance to do that very thing came when we found out a few weeks ago that we had been nominated in the US as well and so finally the BVI, Cayman and Vancouver offices had their potential opportunity; could we come on in the 80th minute and bang home the third and final goal? Continue reading

The Age of Uncertainty (a time of opportunity?)

During a recent visit to our London office, I had the privilege of attending AIMA’s Spotlight and Cocktail reception in London, the highlight of which for me was a keynote speech by Robert Peston. For those of you who were not in the UK in 2008 and 2009, Robert was one of the most prevalent economic commentators at the time (and, personally, a bit of a hero of mine).

The theme of Robert’s presentation was uncertainty and the question he asked us all to consider was whether, if 2007 was the age of absolute certainty (albeit, certainty that we were all about to suffer a painful and prolonged recessionary period), 2016 is the age of absolute uncertainty, politically and economically?

Continue reading

Why use an Outsource CFO?

In this guest post, my friend Scott Rosenthal discusses the role of an Outsource CFO and the reasons why fund managers might like to engage one. Do feel free to get in contact with Scott or myself if you would like to discuss any of this further.

There is a growing segment of the hedge fund and private equity fund service provider population called the Outsource CFO. Outsourcing has become very popular in recent years, in regards to back office, middle office, compliance (including outsourcing the investment advisers CCO), trading, and most other areas that a hedge fund needs to operate. What could be considered the final frontier of the service provider population is the Outsource CFO. The Outsource CFO model assists the start-up or smaller fund manager, who may not have the budget or the need for a full time CFO. So, instead of hiring someone who may not have the appropriate experience in order just meet the budgetary restrictions, fund managers can now opt to hire an Outsource CFO.

So why use an Outsource CFO?

Continue reading

Preparing for the demands of institutional investment in an era of transparency

As an emerging manager who has set up a BVI incubator fund with the backing of friends and family, the two to three-year incubation period is time to prove your credentials and build a solid track record with the ultimate aim of attracting sophisticated and institutional investors. However, there is so much more to do during that period than prove that your investment strategy stands up to scrutiny.

In an age of increasing transparency, it is vital that you use the incubation period to start preparing for a time when you will need to meet institutional-style demands in terms of your operations. It is still early days – and you may still fall below AUM thresholds for complying with extraterritorial regulation – but there is a level of infrastructure and reporting that sophisticated and institutional investors will expect before they are going to invest. Continue reading

We won!

It was a packed room at The Lawyer Awards last week – all 1250 of us anxiously hoping our firm would be crowned winner – and with few categories so fiercely contested as Offshore Law Firm of the Year, we were definitely on the edge of our seat.

The Lawyer kept us entertained while we waited, though. With hours of comedy from Dara Ó Briain, a rocking band and a beautiful River Thames fireworks display, it was a glittering celebration of a year of hard work and success across the legal industry – and judging from the crowd still packed on the dancefloor at 2am, a night that many didn’t want to end.

Continue reading

UK Votes to Leave the EU – what does Brexit mean for Offshore Funds?

So, the pound’s tanked, world stock markets are in turmoil, Scotland and Northern Ireland are considering whether to leave the United Kingdom so they can stay within the EU and the Prime Minister has announced his resignation. Last week’s vote to Leave the EU has certainly had a profound (and depressingly predictable for those of us who voted Remain) impact on the UK economy and politics already, with a long period of uncertainty yet to come. The financial services industry in the UK is likely to be significantly affected by Brexit, with various international investment banks having now announced that they’re reviewing their operations here, given the uncertainty over whether they will still be able to passport their financial services and products across Europe from London.

But what impact will Brexit have on Cayman and BVI offshore funds and how they’re marketed into Europe?

 

Continue reading

Countdown to the referendum – what could Brexit mean for offshore funds?

Here in the UK the debate is intensifying around the EU referendum on 23 June on whether the UK should remain in or leave the EU. With not long to go to the vote, for obvious reasons a lot of the discussion about the impact of any “Leave” vote has been on the UK economy and UK citizens. Many onshore UK law firms have set out in detail the exit mechanism that would be involved following a vote to Leave and their thoughts on how it could affect the legislative landscape in the UK for financial institutions and investment managers. If the UK votes to remain in the EU, we can expect going back to business as usual in most areas, although quite how the Conservative party will re-unite itself after all the recent mud slinging remains to be seen. However, a Leave vote and subsequent Brexit from the EU could also have a much broader effect around the world, in ways that haven’t necessarily grabbed the headlines so far.

So what impact might any Brexit have on Cayman and BVI offshore funds and how they’re marketed into Europe?

Continue reading

What do I need to do to register my Section 4(3) Fund with CIMA?

Black pen draws a checkmark in the list. 3d image. Isolated white background.

If you’ve decided that a section 4(3) Cayman fund is the best structure for your fund (see our earlier blog for an Introduction to Cayman Fund Products), you’ll need to register it with the Cayman Islands Monetary Authority (CIMA) before you launch. The process is well established and fairly straightforward, involving your Cayman lawyers filing the following with CIMA via their online registration system.

Continue reading