Cayman Funds and the Seven Deadly Myths of FATCA

It is quite a human trait to live in a state of suspended disbelief – when the news is just too bad to absorb, or when the consequences of an action are too much to contemplate.

Response to the Foreign Account Tax Compliance Act (FATCA), it seems, is one of suspended disbelief by some in the Cayman funds industry. Many opinions have been expressed – yet few facts presented – despite the explicit details being freely available in the FATCA regulations and the Cayman Islands Model 1 Intergovernmental Agreement with the U.S. (IGA). There are even those eagerly promoting half-truths and fanciful thinking about the legislation and peddling them to the unsuspecting.

As the rest of the world marches inexorably towards the implementation of FATCA on July 1 this year, these widely circulated myths are interfering with the timely preparation that Cayman Reporting Financial Institutions (CRFIs) should be making on their own behalf, for the benefit of their investors, to avoid the severe penalties for non-compliance that FATCA dictates.

To read more about what DMS refers to as the ‘Seven Deadly Myths’ and how those who subscribe to them could find themselves facing potentially crippling circumstances after 1 July, download the report here.