On March 31, 2022, the Cayman Tax Information Authority (TIA) published the Enforcement Guidelines in respect of the Common Reporting Standard (CRS) and Economic Substance (ES), which set forth the principles and processes for the TIA to enforce action under their respective frameworks. Of note are the ‘Description of Offences’ and applicable penalties for both an organization and individual offender. These include, but are not limited to (see pages 6 through 8 of https://www.ditc.ky/wp-content/uploads/CRS-Enforcement-Guidelines.pdf):
Failure to establish and maintain written policies and procedures to comply with Part 2 of the CRS Regulations. $7,500 for r.22(1)(a) entities and certain individuals and $3,000 for r.22(1)(b) individuals.
Failure to implement and comply with written policies and procedures. $7,500 for r.22(1)(a) entities and certain individuals and $3,000 for r.22(1)(b) individuals.
Failure to establish and maintain written policies and procedures to enable the identification of the jurisdiction of tax residency of Account Holders or Controlling Persons. $7,500 for r.22(1)(a) entities and certain individuals and $3,000 for r.22(1)(b) individuals.
Failure to register on the DITC Portal by the notification deadline. $37,000 for r.22(1)(a) entities and certain individuals and $15,000 for r.22(1)(b) individuals.
Failure to submit a CRS return (penalty per reportable account). $5,000 for r.22(1)(a) entities and certain individuals and $2,000 for r.22(1)(b) individuals.
Failure to submit a nil return or provide any further information (e.g CRS Filing Declaration and CRS Compliance Form). $10,000 for r.22(1)(a) entities and certain individuals and $4,000 for r.22(1)(b) individuals.
FI relies on self-certification that it knows or has reason to believe is inaccurate and makes a return based on this self-certification. $20,000 for r.22(1)(a) entities and certain individuals and $8,000 for r.22(1)(b) individuals.
The Enforcement Guidelines provide other important details such as:
Limitation Period (Part 2 section 8, page 9)
Process for Contesting a Proposed Penalty (Part 5)
Appeals Process (Part 7)
Notice Templates (Part 9)
We are likely to see more guidelines from other CRS and automatic exchange of information (AEoI) jurisdictions in the coming months. Financial Institutions should begin reviewing their AEoI processes for any noncompliance and stand ready for these potential reviews and penalties.
Check out the announcement here:
And the Enforcement Guidelines: CRS, here:
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