The Cayman Islands Trusts Law has been amended for the second time in 2019, with the introduction of a statutory obligation on trustees to maintain and keep up-to-date certain trust records. In particular, trustees are now obliged to keep records about trust parties (settlors, beneficiaries, protectors, etc) as well as any other person exercising ultimate effective control of a trust. Trustees now also have a statutory obligation to maintain trust accounts. These obligations are imposed on trustees of all Cayman Islands trusts, irrespective of the location of the trustee.
The Trusts (Amendment) (No. 2) Law (Amendment Law) has also empowered the Cabinet to make regulations to give effect to the purposes of the Trusts Law. The Cabinet has since published the Trusts (Transparency) Regulations (Regulations), prescribing the precise information that trustees are required to keep and specifying that a trustee must maintain records of such information for a period of 5 years after the trustee ceases to be the trustee of the relevant trust. The Regulations also confirm that a trustee who fails to comply with these requirements without reasonable excuse commits an offence that attracts a fine of CI$5,000.
The Amendment Law has also empowered Cayman Islands’ authorities charged with combatting money laundering and terrorism financing to direct that a trustee or other person exercising ultimate effective control over a trust provide information about the trust to the authority if the authority has reasonable grounds to believe that the trustee or controlling person is acting in contravention of certain financial crime prevention laws enacted in the Cayman Islands, including the Proceeds of Crime Law. The Regulations confirm that a trustee is expected to maintain records in such a manner that will enable the trustee to comply with such a direction within 48 hours. A person who knowingly fails to comply with a direction to provide information commits an offence that attracts a fine of up to CI$100,000.
For information about the amendments made to the Trusts Law earlier this year, see our blog post from May 2019.
The Private Trust Companies Regulations have also been amended for the second time this year, expanding the record keeping obligations of a private trust company to include an obligation to keep records of the name and address of settlors and protectors, and enforcers of STAR Trusts.