The IGAs and the FATCA Regulations apply to all Cayman Islands Financial Institutions (“CFIs”), regardless of whether they hold any Financial Accounts for Specified Persons.
Some action will be required of all CFIs that maintain Financial Accounts. The extent of that action will depend on a number of factors including whether account holders are Specified Persons and the value and nature of the Financial Account.
FATCA can also have an impact on entities which are not Financial Institutions. Any nonUS entity under the US IGA and non-UK entity under the UK IGA that is not a FI will be considered a Non-Financial Foreign Entity (“NFFE”) under US or UK FATCA. There are two categories of NFFE (i) an Active NFFE3 or (ii) a Passive NFFE. A NFFE, whether Passive or Active, has no obligations itself under the IGAs and FATCA Regulations but may have to confirm its status and provide details of Controlling Persons4 to another Financial Institution if requested to do so by the Financial Institution. A CFI may also have reporting obligations in respect of Financial Accounts it maintains for a Passive NFFE with Controlling Persons who are Specified Persons.
The FATCA Regulations and Guidance Notes assist Cayman Islands entities in determining their status as a Financial Institution or NFFE including whether it would be an Active or Passive NFFE.