Canada: With Recent Regulatory Developments, Canadian Business Interest In Cayman Will Grow
Canada is home to some of the largest multinational corporations in the world, a bustling pension fund and private equity industry, and growing numbers of alternative investment, real estate, and insurance shops. With dynamic industry and growth in the region, Canadian business leaders are leveraging Cayman as a financial centre to help achieve ambitious business objectives. From setting up holding companies, investment fund structures, operating companies, private equity vehicles, and more, Canadian businesses are seeing further value in Cayman’s increasingly sophisticated platform.
Increased exposure to Cayman benefits for Canadian companies, family offices, and high net worth individuals is spreading across the Northern jurisdiction. Though Canadians make up a third of the foreign workforce in Cayman, the benefits of Cayman remain relatively unknown within a variety of business circles. “It’s important to educate the market and various participants about the advantages and value add of the Cayman Islands, especially our partners in Canada,” says Alex Brainis, director of Business Development in Intertrust Canada and expert in funds services, compliance and AML.
In recent years, updates to global reporting regulations, including The Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) have reinforced Cayman’s status as a domicile of choice. New AML/MLRO appointment requirements and required risk-based independent audit functions are aligning with Canada’s regulatory scope and scrutiny. Additionally, Cayman has recently introduced an economic substance law that will require an increased level of transparency and consistency in business structures operating in Cayman. These developments are closely aligned with the high standards also in place in other major global financial centres.
“We have a significant increase and focus on regulation here. Transparency in reporting and compliance is important. Now, the high standards of Canadian funds and businesses are aligning with Cayman more than ever,” says Brainis. Further, “there’s more commercial opportunity and flexibility. It’s boosting Cayman’s recognition and prominence in Canada.” This has also provided significant opportunities for quality service providers in Cayman to offer more robust corporate and investment funds services. For instance, Intertrust has expanded its offering in Cayman to include CRS/FATCA reporting and AML/MLRO services.
“Tax advisors and other specialists are much more inclined to position Cayman in front of their clients as a refined, well-regulated and commercial environment. As such, it is now much more attractive to consider Cayman as a preferred domicile for Canadian business,” adds Brainis.