M&A Transactions in Bermuda and the Cayman Islands
June 6, 2014
This article is a guide through the many acronyms associated with regulatory and process requirements associated with M&A in Bermuda and the Caymans. KYC stands for “know your client,” a regulatory objective requiring businesses in these jurisdictions to know who their clients are and what they do. While such laws primarily apply to financial institutions and fiduciaries, they can extend to other parties in certain jurisdictions. Anyone contemplating an M&A transaction in Bermuda or the Cayman Islands should expect to encounter the KYC regime at some point.
Businesses and service providers in Bermuda and the Cayman Islands are subject to stringent anti-money laundering (AML) and anti-terrorist financing (ATF) legislation, both local and international. In March of 2010, FATCA was signed into U.S. law. It primarily imposes a reporting system on U.S. taxpayers holding financial assets outside the United States, requiring them to report those assets to the IRS. But FATCA also requires foreign financial institutions (FFIs) to report directly to the IRS certain information about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest.
The regulatory landscape in Bermuda and the Cayman Islands continues to change in response to global demands for higher levels of anti-money laundering, anti-terrorist financing, tax cooperation, transparency and fund oversight standards. Although these changes have introduced a slew of intimidating-sounding acronyms, with the help of a local advisor there are still opportunities for M&A activity.
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