Conyers Coverage – Cayman Islands – Issue 5

Conyers
Contact

Conyers

A very warm welcome to our fifth issue of Conyers Coverage. This issue is a roundup of recent legal and regulatory measures affecting the insurance industry. Among a number of items, Rob has prepared an update on Cayman’s legislative regime for Virtual Asset Service Providers. Sarah, a very welcome new team member whom we profile this issue, provides an important reminder that licensees need to be mindful of the application of Cayman’s regulatory regimes to their operations and shares details on how we can assist. Michael addresses key items to consider in insurance financing transactions and one of our insurance disputes lawyers, Róisín Liddy-Murphy, gives an overview of the considerations (re)insurers need to take before insuring ‘morally hazardous’ businesses such as those involved in the production and supply of cannabis.

We hope that you find these updates helpful.

Finally, a big congratulations to the winners of our first annual Conyers Classic Volleyball Tournament! More details and pics below.

Enjoy the read!

Why Insurers Should Address Regulatory Requirements at Launch

Economic Substance, FATCA, CRS, AML, Beneficial Ownership, Country by Country Reporting – one thing is clear to everyone in the industry, the Cayman Islands regulatory landscape is growing increasingly complex.

To add to the complexity, the legislation, regulations and guidance under these regimes are being updated on a very frequent basis. The AML regulations alone were amended three times in 2020.

In order to understand the obligations that a company will have under these regimes, and to ensure compliance from day one, it’s important to consider the company’s regulatory classifications at the outset.

We have been assisting insurance clients with this by providing a memorandum which sets out a short summary on each of the regimes, and the application of each to the company. We then recommend including this memorandum in the board pack for the first substantive board meeting, to ensure the directors have properly considered the regimes and the company’s classifications under each. These classifications should then be addressed in the board minutes.

For the vast majority of Class B(iii) insurers, we are now routinely assisting with providing regulatory memorandums at launch stage, to help them navigate their obligations and classifications under each of the regimes.

The Lawfulness of Insuring ‘Morally Hazardous’ Business in the Cayman Islands

The Cayman Islands has long been a hub for captive and reinsurance entities. These entities often write or reinsure traditional property and casualty risks emanating from various underlying businesses. Insurance is international and cross-border with the globalisation of insurance products and markets evolving at a rapid pace. As these products and markets evolve so does the diversity of the types of business seeking to avail themselves of captive and reinsurance structures. However, difficulties can arise when an underlying business is engaged in activities that are unlawful in the Cayman Islands such as the production and supply of cannabis. In these situations, insurers and their managers need to satisfy themselves as to whether any Cayman Islands law is contravened by the captive writing traditional risks or a reinsurance entity providing reinsurance for an underlying business that is engaged in the production and supply of cannabis in a jurisdiction outside the Cayman Islands. This article discusses some the key statutory provisions that would need to be considered.

Read more »

Financing Transactions for Cayman Regulated Insurers

As a leading jurisdiction for the domicile of captive insurance companies and, more recently, reinsurance companies, the laws of the Cayman Islands have a central role and require careful consideration when such insurance vehicles seek to approve and execute the various commercial arrangements which they require.

One commonly seen transaction is the establishment of a credit facility or letter of credit arrangement between the insurance vehicle and a financial institution or lender (either based in the Cayman Islands or in North America) (a “Financing Arrangement”). Such Financing Arrangements assist insurance vehicles in a variety of ways and smooth issues that may otherwise cause wrinkles in their cross-border business models.

This article aims to give a short overview of how such transactions are documented and what issues commonly arise in executing these deals.

Read more »

Insurance Bulletin Spring 2021

We hope you find this combined Cayman Islands and Bermuda review of recent developments in the jurisdictions insightful and informative.

Read more »

An Update on Cayman’s Legislative Regime for Virtual Asset Service Providers

Last year Conyers lawyers Nick Pattman and Rob Humphries penned an article giving an overview of Cayman’s new Virtual Asset (Service Providers) Act, 2020 (the “VASP Act”) prior to the commencement of the legislation last year. The VASP Act provides a framework for the regulation and oversight of virtual asset service providers in a rapidly evolving digital asset market place.

The VASP Act was partially brought into force on 31 October 2020 and amended by the Virtual Asset Service Providers (Amendment) Act, 2020 as of 15 January 2021. Subsequently, the Virtual Asset (Service Providers) (Savings and Transitional) Regulations, 2021 have been brought into effect which provide for certain transitional provisions and introduce a phased implementation of the requirements for licensing or registration of virtual asset service providers under the VASP Act.

The regulatory framework is now being implemented in two phases. Phase one focuses on anti-money laundering (“AML”) and countering the financing of terrorism (“CFT”) compliance, supervision and enforcement, and other key areas of risk. Under phase one, entities engaged in or wishing to engage in virtual asset services must be registered with the Authority under the VASP Act. Entities wishing to engage in virtual asset services, already subject to the Cayman Islands Monetary Authority’s supervision under another regulatory law, must notify (in the case of licensees) or register with (in the case of registrants) the Authority under the VASP Act. Those who were already conducting such business should have given notice or registered with the Authority on or before the cut-off date for doing so on 31 January 2021. Phase two refers to the licensing and virtual asset issuance approval process that will begin when the appropriate clauses and aspects of the VASP ACT come into full force and effect in due course.

Phase one (registration or notification) targets three groups:

  • Entities wishing to perform virtual asset services for the first time (“New Market Entrants”);
  • Entities providing virtual asset services prior to the commencement of the VASP Law (“Pre-Existing Service Providers”); and
  • Existing Authority licensees that provide or propose to provide virtual asset services (“Other Authorized Entities”).

Registration or notification can be done through the VASP Application Form on the Authority’s REEFS online platform. As part of the registration or notification process, entities are also required to complete an AML/CFT form which is also available on REEFS.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Conyers | Attorney Advertising

Written by:

Conyers
Contact
more
less

Conyers on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.