Disclosure Requirements – Investment Funds – Cayman Islands

19.03.2019

Disclosure Category: 2

Clearstream Banking S.A. (“CBL”) may be required to disclose the identity and holdings of customers and/or ultimate beneficial owners, upon request, in the case of holding Caymanian investment funds.

Consent

In order to comply with the applicable legislation, customers with holdings in Cayman Islands investment funds or entering into transactions in the Caymanian market must consent and are hereby deemed to consent to the required legal disclosure. Such consent includes the appointment of the requestor (for example, the Fund Manager, Transfer Agent, Regulator) as their attorney-in-fact, under power of attorney, to collect from CBL the required information to be disclosed. Customers who do not grant such authority cannot hold such investment funds or financial instruments in their accounts with CBL.

Background and legal basis

Customers are advised that disclosure requests from fund managers, its agents and/or Regulators in Cayman Islands may result from the following laws and requirements:

  • Money Laundering Regulations (MLR) 2000 – Anti-Money Laundering and Countering the Financing of Terrorism.
  • Know Your Customer (KYC) requirement.

In certain limited circumstances, the fund and registrar may be entitled to request customer or beneficial owner information and holdings.

Sanctions

Failure to comply with such request for information in relation to anti-money laundering requirements or KYC purposes may

  1. be a breach of contract giving right to a cause of action against CBL, if such requests were consented to under the offering and subscription terms and conditions. The fund may force CBL to compulsorily redeem all holdings from the fund for non-disclosure, resulting in consequential losses to CBL customers or investors;
  2. prejudice the regulatory status of the Fund and/or Registrar and they may place CBL (and consequently CBL’s customer) under a watch list with the Cayman Islands Monetary Authority ("CIMA");
  3. not incur direct criminal sanction on CBL, although such matters may be brought to the attention of authorities in CBL's jurisdiction, if reported as suspicious, through the global network of financial intelligence units.

Disclaimer

The information contained in the Disclosure Requirements is based on the legal opinion that was issued to CBL. CBL believes the information to be correct as of the issuance date but disclaims any responsibility as to the accuracy and completeness of the information after that date. In the case of discrepancy between the information provided by CBL and the local laws and regulations, the latter shall prevail. The Disclosure Requirements do not constitute legal advice and customers should seek advice from independent professional counsel.

Customers are responsible for ensuring compliance with the disclosure requirements and agree to indemnify and hold harmless, CBL, for any loss, expense, liability, damage or claims, whether direct or indirect, against or incurred by CBL arising out of or resulting from such non-compliance.