December 3, 2018 2:45 pm
Banking Requirements for Charities
General Registry and the Ministry of Financial Services have met with local banks to address concerns surrounding banking requirements for charitable organisations, specifically in relation to the opening of bank accounts by non-profit organisations (NPOs).
Meetings were held between Government officials and retail bank representatives in the Cayman Islands leading up to and following the commencement of the Non-Profit Organisations Law, 2017, as well as prior to the passage of two pieces of legislation that clarified Cayman’s NPO regime at the second meeting of the Legislative Assembly for 2018/2019 in November.
‘The public has expressed to the General Registry, specifically the Registrar of NPOs, along with the wider Ministry, issues experienced by NPOs with regard to opening bank accounts at local banks and maintaining general banking relationships’, General Registry’s Head of Compliance Paul Inniss said.
‘Our meetings with the banks showed us that local financial institutions needed clarity around their anti-money laundering/countering of terrorist financing methods with regards to NPOs. We hope the banks can now tweak their measures to better facilitate NPO business,’ he said.
The feedback from these meetings helped formulate the Companies (Amendment) Law, 2018 which allows the Registrar General to process and approve applications under Section 80 of the Companies Law (2018 Revision), in place of Cabinet. The result will be a more efficient process, with a shorter turnaround time for applications, by eliminating the need for Cabinet approval.
In addition, the NPO (Amendment) Law, 2018 was created to provide clarity on the organisations in scope of the law; provide the Registrar of NPOs with the power to periodically assess Cayman’s NPO sector in order to identify any potential jurisdictional vulnerabilities to terrorist financing activities; clarify what information, maintained by the Registrar of NPOs, is publicly available; and allow NPOs to obtain official copies of their organisation’s documents, which are held by the Registrar of NPOs.
These pieces of legislation supplement the legal framework created by the Non-Profit Organisations Law, 2017. The law formed part of the local preparations for last December’s Caribbean Financial Action Task Force (CFATF) assessment of the Cayman Islands regime to counter money laundering and terrorist financing. While charities in this jurisdiction are generally considered low-risk, the CFATF evaluation necessitated a local NPO registration process to gather empirical evidence on NPOs operating in the Cayman Islands to prove their risk is indeed minimal.
Since the passage of the NPO law last August, over 400 churches, sports clubs, philanthropic organisations and community groups have registered with Government.
‘With such a significant portion of Cayman’s community being affected, it is important the banks continue to review their on boarding and account maintenance process, considering the specific risk posed by each NPO’, Mr Inniss said.
‘The banks should note that following an informal and positive review of charities in the Cayman Islands, the Registrar of NPOs will be undertaking a formal assessment of the NPO sector, which will ultimately lead to issuance of industry guidance on the NPO sector in the jurisdiction’, he said.
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