The Cayman Islands: Tax Information Authority releases enforcement guidelines on CRS compliance

It also outlined the process by which financial institutions would be notified of penalties, and the notice and appeals process by which they may contest penalty imposition.

Notable CRS offenses and their respective penalties

The potential primary penalty imposed on each financial may be up to KYD 50,000 (USD 60,000) plus continuing penalties of KYD 100 (USD 120) for each day that a violation continues, The CRS enforcement guideline state separate amounts for each offense.

• Failure to establish and maintain written policies and procedures under the CRS carries a penalty of KYD 7,500
• Failure to implement and comply with written policies and procedures carries a penalty of KYD 7,500
• Failure to establish and maintain written policies and procedures to enable the identification of the jurisdiction of tax residency of Account
• Holders or Controlling Persons carries a penalty of KYD 7,500
• Failure to establish and maintain written policies and procedures that apply the due diligence procedures set out in the CRS carries a penalty of KYD 7,500
• Failure to register on the DITC portal by the notification deadline of 30 April carries a penalty of KYD 37,500
• Failure to provide an update via the DITC portal to inform the tax authority of changes to reporting obligations, entity classification, or authorized users carries a penalty of KYD 10,000
• Failure to submit a CRS return carries a penalty of KYD 5,000 (penalty per reportable account)
• Failure to submit a nil return or provide any further information (e.g., CRS filing declaration and CRS compliance form) carries a penalty of KYD 10,000
• Financial institution relies on self-certification that it knows or has reason to believe is inaccurate and makes a return based on this self-certification carries a penalty of KYD 20,000

How can Waystone help?

It is imperative that financial institutions ensure that all their records, policies and procedures and any documentary evidence are readily available for the tax authorities. In addition, all financial institutions should review their procedures, policies and controls to mitigate the risk of penalties.

In order to ensure you are able to comply with regulations, Waystone’s team of compliance professionals can provide a detailed gap analysis of your current status with regard to the tax authority requirements, including suggestions for remediation. Contact us today to learn more about our AEOI compliance services.