CIFAA


CIFAA DEFENDS CAYMAN FUNDS


SUPPORTING THE INDUSTRY: HOW


The Cayman Islands Fund Administrators Association is one of the leading voices of the Cayman funds industry. Darren Stainrod explains.


The Cayman Islands Fund Administrators Association (CIFAA) is a


forum for administrators with a physical presence on the Island to meet, network, discuss global and local industry issues, promote the industry, provide training programmes locally, and liaise with the Cayman Islands Monetary Authority (CIMA) and the Cayman government on draft regulations and legislation.


There is also a social element: various events are held during the


year, including an annual golf tournament (which a local law firm had the cheek to win last year). In 2011, CIFAA took an evolutionary step forward by becoming an incorporated legal entity, helping it to crawl out of the morass of unincorporated anonymity and into the forest of regulation that has sprung up around the globe.


From Europe, the Alternative Investment Fund Managers Directive


(AIFMD) continues to take shape as European nations work on enacting the required legislation by the July 2013 deadline. From a Cayman perspective, the jurisdiction continues to strengthen its regulatory framework and has signed tax information agreements with most of the world’s developed nations, as well as a memorandum of understanding with the US Securities and Exchange Commission (SEC), as it continues to position itself to be accepted as a third country if, and when, AIFMD is extended to third countries in 2015.


In the meantime, the tsunami of re-domicilings from Cayman to


more AIFMD-relevant jurisdictions that was anticipated by some observers remains, at most, a small trickle. Undertakings for Collective Investment in Transferable Securities (UCITs) have grown in popularity following the global financial crisis, but not noticeably at the expense


of the hedge fund industry, which is enjoying a record high tide at the time of writing. Cayman itself continues to capture the lion’s share of the market and remains the jurisdiction of choice in the industry.


While CIFAA watches these developments in Europe with interest,


it is monitoring developments from the US more actively. The Volcker rule has affected our bank members as they begin to shut down their proprietary trading desks. This has seen some talent flow into the hedge fund space and spawn new funds, but barriers to entry and the difficulty of raising capital for new managers in an industry undergoing noticeable consolidation has lured most of this talent to the comfort of the larger and more established hedge funds.


Dodd-Frank, and the new SEC requirements for the registration of


investment managers and advisors of private funds, have affected some CIFAA members which have been busy developing solutions to assist their newly registered clients with completing Form PF (private fund).


By far the most significant of the recent global developments to the


CIFAA membership has been the US Foreign Account Tax Compliance Act (FATCA). No doubt other nations will follow suit, with the EU Savings Directive possibly morphing into something similar (we already have Switzerland agreeing to compensatory tax payments and withholding arrangements with the UK and Germany). Although the FATCA deadlines have been extended, the rules have been softened and the Internal Revenue Service has assured us that it is not a witch hunt, the affect on administrators is challenging nonetheless.


Not only do thousands of existing investors need to be categorised and assessed, data-scrubbed and searched for indications of US


CAYMAN FUNDS | 2012 29


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