Foreign Account Tax Compliance Act
Cayman Islands Update
The Cayman Islands Department of International Tax Cooperation (“DITC”) has further extended the due dates for submitting Foreign Account Tax Compliance Act (“FATCA”) notifications and reports to the Cayman Islands Tax Information Exchange Authority (“TIA”). As per the latest news and updates issued by the DITC, notifications are due by Thursday, May 21st; and returns may be reported by Friday, June 12th. The latest due dates are an extension to the dates referenced in the DITC Industry Advisory released on April 27, 2015.
Financial institutions with reporting obligation are required to make notifications to the TIA on an annual basis using the online form available on the Cayman Islands Automatic Exchange of Information Portal (“AEOI Portal”). Financial institutions with reportable accounts will also use the AEOI Portal to fulfill their reporting obligations.
The DITC has stated that it will take a soft approach to enforcement in the first year of FATCA compliance as financial institutions familiarize themselves with the new requirements and filing systems.
National Futures Association
Commodity Pool Operators
Pursuant to Commodity Futures Trading Commission (“CFTC”) Regulations, commodity pool operators (“CPOs”) are required to distribute an annual report to pool participants within ninety (90) days after the pool’s fiscal year end and to submit the report through the National Futures Association’s (“NFA”) EasyFile system. The annual report must be prepared by an independent public accountant. The due date for CPOs, that successfully filed and was granted an extension by the NFA, to submit the annual reports is on or before June 29, 2015. CPOs operating a pool that qualifies as a fund of funds and for which the NFA previously granted a CFTC 4.22(f) extension, were automatically granted an extension for the 2014 annual reports. The fund of funds annual report is to be submitted on or before June 29, 2015.
CFTC Regulations require CPOs to follow filing/reporting deadlines and failing to meet those deadlines may result in disciplinary actions. To avoid potential disciplinary actions and to comply with regulatory requirements, CPOs must abide by prescribed due dates.
Securities and Exchange Commission
The Division of Investment Management (“Division”) of the Securities and Exchange Commission (“SEC”) released Guidance Update No. 2015-02, which focused on cybersecurity. The issue of cybersecurity is an important topic for registered investment companies and registered investment advisers. The Guidance Update highlighted the need for the Division to address this issue as a result of the increase in cyber attacks on financial institutions as well as the rapidly changing nature of the threats. The Guidance Update outlines three (3) measures that registered investment companies and investment advisers should take into consideration when addressing cybersecurity:
i. Conduct a periodic assessment of: (1) the nature, sensitivity and location of information that the firm collects, processes and/or stores, and the technology systems it uses; (2) internal and external cybersecurity threats to and vulnerabilities of the firm’s information and technology systems; (3) security controls and processes currently in place; (4) the impact should the information or technology systems become compromised; and (5) the effectiveness of the governance structure for the management of cybersecurity risk. An effective assessment would assist in identifying potential cybersecurity threats and vulnerabilities so as to better prioritize and mitigate risk.
ii. Create a strategy that is designed to prevent, detect and respond to cybersecurity threats.
iii. Implement the strategy through written policies and procedures and training that provide guidance to officers and employees concerning applicable threats and measures to prevent, detect and respond to such threats, and that monitor compliance with cybersecurity policies and procedures.
Financial Institutions should review the entire Guidance Update and use as a reference when establishing policies and procedures to address cybersecurity.
For further information about any of the topics covered, please feel free to contact the Ruddy Law Office, PLLC (www.ruddylaw.com) or 202-797-0762.