CIMA 2017 - naic.orgnaic.org/meetings1803/cmte_g_2018_spring_nm_cima.pdf · Member of the Executive...

CIMA 2017 INSURANCE REGULATORY SECTOR INSIGHT

CIMA Insurance Regulatory Sector Insight | 2

Regulatory Framework of the Cayman Islands

“Over the last four decades the Cayman Islands

has matured into one of the world’s largest

international financial centres and the second

largest captive insurance domicile.”

Role of the Cayman Islands Monetary Authority

As the primary financial services regulator, the

mission of the Cayman Islands Monetary Authority

(“the Authority”) is to protect and enhance the

reputation of the Cayman Islands as an International

Financial Centre by fully utilising a team of highly

skilled professionals and current technology, to carry

out appropriate, effective and efficient supervision

and regulation in accordance with relevant

international standards and by maintaining a stable

currency, including the prudent management of the

currency reserve.

The Cayman Islands Monetary Authority has four

principal functions:

Monetary - The issue and redemption of Cayman

Islands currency and the management of currency

reserves.

Regulatory - The regulation and supervision of

financial services, the monitoring of compliance with

money laundering regulations, the issuance of a

regulatory handbook on policies and procedures and

the issuance of rules and statements of principle and

guidance.

Cooperative - The provision of assistance to overseas

regulatory authorities, including the execution of

memoranda of understanding to assist with

consolidated supervision.

Advisory - The provision of advice to the Government

on monetary, regulatory and cooperative matters

Among the Monetary Authority's obligations in

carrying out its functions are the requirements to:

act in the best economic interests of the

Cayman Islands;

promote and maintain a sound financial

system in the Cayman Islands;

use its resources in the most efficient and

economic way;

have regard to generally accepted principles

of good corporate governance;

endeavor to promote and enhance market

confidence, consumer protection and the

reputation of the Cayman Islands as a

financial centre;

reduce the possibility for the use of financial

services business for money laundering or

other crime;

recognise the international character of

financial services/markets and the need to be

competitive for consumers and suppliers

while complying with appropriate and

relevant international standards;


recognise the principle that a burden or

restriction that is imposed should be

proportionate to its expected benefits;

recognise the desirability of facilitating

innovation in financial services business;

be transparent and fair.

Regulatory Framework

The Authority bases its regulatory regime on the core

principles issued by IAIS. These principles are applied

in the context of the risk profile of the particular

licensee such that the regulation is proportionate and

appropriate to the risk of the business undertaken.

The Authority’s regulatory framework for insurance is

primarily represented by the Insurance Law, 2010

which is supported by capital and solvency regulations

and various statements of regulatory policy and

guidance. The Authority has issued specific Rules &

Statements of Guidance to the insurance industry on

areas such as Risk Management, Corporate

Governance, Market Conduct, Outsourcing etc.

In addition, all relevant financial services business in

Cayman must adhere to internationally accepted

standards with respect to anti-money laundering and

combating terrorist financing as specified in the

Proceeds of Crime Law (2017 Revision) and the Anti-

Money Laundering Regulations (2017 Revision).

The Authority’s operational framework addresses key

elements and principles as outlined by the

International Association of Insurance Supervisors

(IAIS) as well as by maintaining active membership

with international standard setters in the insurance

sector in particular:

International Association of Insurance

Supervisors (IAIS) since 1995

Group of International Insurance Centre

Supervisors (GIICS) since 1993

International Organisation of Securities

Commissions (IOSCO) 2009

Caribbean Association of Insurance

Regulators (CAIR) 2009

Key Responsibilities of the Insurance Division in the Regulation & Supervision of the Insurance Industry:

Continually review and understand the

business conducted by all licensees Ensure a consistent and systematic approach

to supervision of licensees that is risk based and proportionate

Detect early signs of potential problems and ensure remedial action is taken

Ensure that all licensees are in compliance with the relevant laws, applicable instruments issued by the Authority and any conditions or enforcement directives issued to the licensee

International Cooperation

The Authority views international cooperation and

collaboration as part of its core function. This

cooperation assists the Authority in safeguarding the

interests of the jurisdiction. The Authority

consistently commits both time and resources to

actively participate in international initiatives with the

IAIS, OECD, GIICS, FATF and IMF.

The 2013 report from the Organization for Economic

Cooperation and Development (OECD) highlights the

effect of these efforts:

The Cayman Islands Peer Review Report identified

“…a well-developed legal and regulatory

framework…”


INSURANCE INDUSTRY

DOMESTIC

INSURERS

28

LOCAL

9

EXTERNAL

19

INTERMEDIARIES

77

AGENTS

46

BROKERS

31

INTERNATIONAL

INSURANCE MANAGERS

29

INSURERS

705

CAPTIVES/COMMERCIAL (RE)INSURERS

677

SPV

25

CLASS 'D' REINSURER

3

Market composition

The insurance industry in the Cayman Islands has two

distinct sectors:

Additionally, the Cayman Islands

holds the number one position

worldwide for healthcare captives;

this sector continues to be the

primary class of business for

Cayman Islands based captives,

while the second largest sector provides workers’

compensation coverage. Our captive insurance

industry is composed mainly of companies emanating

from North America, with the next most significant

geographical sources being the Caribbean and Latin

America, collectively.

Structure of the Cayman Islands Insurance

Sector as at 30 September 2017

The majority of the approved external insurance

companies in the domestic market are of Caribbean

origin, while others are based in the USA, Guernsey

and the UK.

The local companies are incorporated in the Cayman

Islands and have their Head Offices there. While some

of these companies are totally owned by local

shareholders, others are owned by a mixture of local

and foreign persons and one is 100% owned by

foreign interests.

The external companies have their Head Offices and

home supervisors in other countries. Of the 19

external companies, 16 were in active business with 3

operating its own branch offices whilst 10

represented by insurance brokers, 1 by an insurance

agency and 1 by an insurance manager.

For the year ended 31 December 2016, the Islands’

domestic insurers reported, based on unaudited

financial statements, aggregate gross and assumed

premiums of CI$473.9 million and CI$73.0 million

respectively.

The vast majority of the international insurance

companies in Cayman are captives of one type or

another. Other insurers are engaged in open market

operations, providing insurance or reinsurance

coverage to non-related entities.

The Cayman captive insurance market is quite varied,

with prominent risk types including healthcare,

workers’ compensation, property and general liability.

More recently, Alternative Financing Vehicles (also

called Special Purpose Vehicles (SPVs)) have been

formed to allow reinsurers access to capital markets

for catastrophe cover.

• the insurance of local risks by locally-incorporated or registered insurers, consisting of 28 companies, of which 9 are local and 19 are approved external insurers. There are 77 intermediaries

Domestic Market

• the insurance of foreign risks by insurers from within the Cayman Islands, consisting of 705 insurers. There are 29 captive management companies

International

Market


Segregated Portfolio Companies (SPCs), also called

Protected Cell Companies, which typically provide

captive products for smaller organisations, are also a

major part of the market; as at 30 September 2017

there were 147 licensed SPCs, which included over

600 segregated portfolios.

Portfolio Insurance Companies (“PIC’s”)

There were 9 PICs registered and operating as at 30

September 2017. PICs are essentially an extended

version of segregated portfolios with its own legal

identity as an incorporated entity with its own board

of directors.

“Cayman has developed particular expertise in

medical insurance, and with healthcare captives

representing approx. 40% of all Cayman

captives, Cayman is the number one domicile for

healthcare captives.”

2015 and 2016 continued to show growth for the

Cayman Islands with 22 and 39 licenses granted

respectively.

Enhanced reinsurance presence

The Cayman Islands has seen a steady increase in the

presence of commercial reinsurance entities in the

jurisdiction over the past few years. This includes

start-up operations as well as companies seeking to

re-domicile to Cayman from other jurisdictions.

Cayman Statistics – International Market

Licensee numbers: As at 30 September 2017, there

were a total of 705 class “B”, “C”, and “D” licensees

(677 Class “B”, 25 Class “C”, and 3 Class “D”). Class

“B” refers to international (re)insurers, Class “C” to

SPVs or fully funded vehicles, and Class “D” to

commercial large-scale open-market reinsurers.

Premiums: Gross written premiums as at 30

September 2017 were US$12.3 billion, having

increased approx. 50% in the last 5 years, from

US$9.6 billion.

Assets: Total assets as at 30 September 2017 were

US$61.6 billion

The fundamentals of the insurance sector remain

sound and the industry in general has been relatively

resilient in a very challenging market environment.

Types: 705 international insurers consisted of 677

captive insurers and commercial (re)insurers of which

147 were structured as segregated portfolio

companies. In addition, the jurisdiction was home to

25 special purpose vehicles and 3 class ‘D’ open-

market commercial reinsurers. The 147 segregated

portfolio companies (“SPC”) included over 600

segregated portfolios (“SP”).


Location: As at 30 September 2017, North America

accounted for 90% of the Cayman market, followed

by Caribbean & Latin America at 3%, Europe at 2%,

and the remaining global market at 5%.

Industries: The 5 biggest industry segments, by

number of captives, were health care (45%), financial

services (25%), construction (8%), tertiary services

(6%) and transportation (6%).

Casualty lines: Regarding casualty lines, as the

primary class of business, medical malpractice liability

was written by 226 captives (32%), followed by

workers compensation with 152 (22%) and property

with 67 (10%). Other major lines include general

liability with 81 captives (12%) and professional

liability with 64 (9%).

90%

3%

2% 5%

Location Stats as at 30 September 2017

North America

Caribbean & LatinAmerica

Europe

Global

5 Biggest Captive Industry Segments

Healthcare

Financial Services

Construction

Tertiary Services

Transportation


International Cooperation and Exchange of Information

CIMA’s IAIS participation

A founding member of the International Association of Insurance

Supervisors (IAIS) and a full member of the IAIS since inception;

Member of the several sub-committees of the IAIS in particular for

the Market Conduct, Supervisory Material Review Task Force,

Reinsurance Task Force, Signatory Working Group etc.;

Member of the insurance fraud sub-committee of the IAIS and also

actively participated in other IAIS sub-committees;

Became a signatory on the new IAIS Multilateral Memorandum of

Understanding (“MMoU”) in July 2011;

Acts as an IAIS MMoU Validator, and formulated the IAIS approval of

the Netherlands and Lithuania;

Member of the Executive Committee from 2011 until 2015; Regional training co-ordinator.

CIMA’s GIICS participation:

Served as Secretary of the Group of International Insurance Centre Supervisors (GIICS) from 1997 to 2006

and has been a full member since inception.

Served as the vice-chair of GIICS and chair of the Education Committee of GIICS.

Other CIMA memberships:

Group of International Finance Centre Supervisors (GIFCS) (previously the Offshore Group of Bank

Supervisors (OGBS)) – CIMA’s Managing Director was appointed as the group’s first Deputy Chairman in

2011.

International Organization of Securities Commissions (IOSCO) – CIMA was admitted as an ordinary member

in June 2009, and is a signatory to the IOSCO MMoU Concerning Consultation and Cooperation and the

Exchange of Information.

Association of Supervisors of Banks of the Americas (ASBA) – CIMA completed a two-year appointment on

the ASBA Board in November 2011.

Caribbean Group of Banking Supervisors (CGBS) - CIMA is a member of CGBS’ Basel II Implementation

Working Group.


Overseas Territories Regulators Group – CIMA held the chairmanship of this group from November 2007 to

February 2009, and was a member of the Working Group on Hedge Fund Regulation which developed a

discussion paper on principles for the regulation of hedge funds that was submitted through GIFCS to IOSCO.

Caribbean Financial Action Task Force (CFATF) –The Cayman Islands was a founding member of the CFATF,

which is an associate member of the Financial Action Task Force (FATF).

Global Forum on Transparency and Exchange of Information for Tax Purposes – Cayman was appointed to

the following committees in September 2009: Steering Committee and Peer Review Committee.

Financial Stability Board (FSB) Regional Consultative Group for the Americas – Cayman was appointed to the

group in 2011. This is one of six regional groups set up to provide input to the FSB on financial stability

issues.

Information exchange: In an effort to enhance mutual cooperation and information exchange in the carrying out of various functions and

duties in accordance with the Monetary Authority Law and other regulatory laws, the Cayman Islands Monetary

Authority has entered into memoranda of understanding and tax information exchange agreements (TIEAs) with

multiple jurisdictions. The list of international cooperative agreements is as follows:

2003 Memorandum of Understanding - Bank of Jamaica

2004 Multilateral Memorandum of Understanding - The Regional Authorities for the Exchange of Information and

Co-operation and Consultation

2005 Memorandum of Understanding - Isle of Man Financial Supervision Commission

2005 Memorandum of Understanding - Bermuda Monetary Authority

2005 Undertaking for Sharing Information- U.S. Securities & Exchange Commission

2006 Memorandum of Understanding - Jersey Financial Services Commission

2006 Memorandum of Understanding - Office of the Superintendent of Financial Institutions Canada

2006 Memorandum of Understanding - Banco Central do Brasil

2006 Undertaking for Sharing Information – U.S. Commodity Futures Trading Commission

2008 Memorandum of Understanding - Superintendencia de Entidades Financieras y Banco Central Argentina

2008 Memorandum of Understanding - Office of Insurance Commissioner of the State of Washington

2009 Multilateral Memorandum of Understanding – IOSCO

2009 Memorandum of Understanding - Securities Commission of Brazil

2009 Memorandum of Understanding - Malta Financial Services Authority

Memorandum of Understanding - National Association of Insurance Commissioners (NAIC)

2009 Tax Information Exchange Agreements -France, New Zealand, Netherlands, Ireland, U.K.

2009 Tax Information Exchange Agreements - Nordic countries (Denmark, Faroe Islands, Finland, Greenland,

Iceland, Norway and Sweden)

2010 Chair of the Caribbean Financial Action Task Force (CFATF)

2010 Memorandum of Understanding - Florida State Insurance Commissioner

2010 Tax Information Exchange Agreements -Mexico, Canada, Germany, Portugal, Aruba

2010 Tax Information Exchange Agreements -Australia, Netherlands Antilles


2010 Cooperation agreement with the four main federal banking regulators in the U.S.A.: Board of Governors of

the Federal Reserve System, the Office of the Comptroller of the Currency (OCC), the Federal Deposit

Insurance Corporation (FDIC) and the Office of Thrift Supervision (OTS)

2011 Tax Information Exchange Agreements -Argentina, China, South Africa, India, Japan

2011 Multilateral Memorandum of Understanding - IAIS

2011 Memorandum of Understanding - Dubai Financial Services Authority

2011 Memorandum of Understanding - Turks and Caicos Financial Services Commission

2012 Tax Information Exchange Agreements -Czech Republic, Qatar, Italy

2012 Memorandum of Understanding - US Securities and Exchange Commission

2013 Tax Information Exchange Agreement –Brazil, Malta, Poland, U.S.A. (replaces 2001 TIEA)

2014 Tax Information Exchange Agreement –Belgium, Seychelles

2015 Memorandum of Understanding - Guernsey Financial Services Commission

2015 Memorandum of Understanding – Labuan Financial Services Authority

2016 Memorandum of Understanding – The Abu Dhabi Global Market Financial Services Regulatory Authority

Qualification of Representatives CIMA has the full support of the Management Committee and Board of Directors. In conjunction with the wealth of

experience to be offered by our designated representative, CIMA’s resources include:

MRS. CINDY SCOTLAND – Managing Director of CIMA, has represented the jurisdiction

extensively on regulatory matters to organisations including the Offshore Group of Banking

Supervisors, the International Organisation of Securities Commissions, the International

Monetary Fund and the FATF, Caribbean Financial Action Task Force, as well as on a regulator-

to-regulator basis.

Mrs. Scotland holds a number of board and committee posts. She is chairman of the Cayman Islands Guidance Notes Committee, a member of the Cayman Islands Stock Exchange Authority board, and the Anti-Money Laundering Steering Committee of the Private Sector Consultative Committee.

MR. LANGSTON SIBBLIES, QC – Deputy Managing Director/General Counsel of CIMA, is an IAIS Validator and a lawyer with over 30 years' experience practising in a number of Caribbean jurisdictions and in Ontario, Canada, in both the private and public sectors. In the public sector, he served as Crown Counsel (Cayman Islands), Senior Crown Counsel (British Virgin Islands), Legislative Policy Counsel (Ontario), and Director of Public Prosecutions (Grenada). In the private sector, he has worked as a law editor with a leading Canadian tax and business law publisher, and practised as a private lawyer in Jamaica and in Toronto, Ontario.

Mr. Sibblies has represented the Cayman Islands and the Authority in various meetings with regional and international bodies such as the OECD, the FATF, the CFATF, the IMF and IOSCO, and delivered relevant papers relating to the regulation of the financial industry in the Cayman Islands at several local and international forums.


MRS. ANNA MCLEAN – Deputy Managing Director – Supervision, a former banking supervisor with 23 years of financial services experience, resumed her career with the Cayman Islands Monetary Authority (CIMA) on 1 September 2014, as Deputy Managing Director – Supervision, having previously held the position of Head of Banking at CIMA. Mrs. McLean joined the Banking Supervision Department of the Cayman Islands Government as an analyst in 1990, and through successive promotions worked her way up to the post of Head of Banking at CIMA in 2000. She received extensive training in banking supervision and regulation, including a one-year secondment to the Bank of England. She also participated in courses at the Bank for International Settlements, the Board of Governors of the U.S. Federal

Reserve System, and various other regional Central Banks, in addition to regularly representing the Cayman Islands at international supervisory forums. After heading the Banking Supervision Division of CIMA for five years, Mrs. McLean left the Authority in 2005, to take up the post of Chief Compliance Officer with CIBC FirstCaribbean International Bank. The Deputy Managing Director - Supervision has oversight of the Authority’s regulatory divisions – Banking Supervision, Insurance, Investments and Securities, and Fiduciary Services. An MBA graduate from the University of the West Indies, Mrs. McLean also holds a Bachelor’s of Science Degree in Business Management from Florida State University.

MR. RUWAN JAYASEKERA – Mr. Jayasekera was promoted to the position of Head of Insurance Division on 14 July 2016. Mr. Jayasekera first joined CIMA in April 2007 as a Senior Analyst in the Insurance Supervision Division and was later appointed to Chief Analyst. After working in this capacity for a few years, he returned to Sri Lanka in 2011, taking up the position of Assistant General Manager – Business Operations at Allianz Insurance Lanka Ltd. He then returned to CIMA as a Chief Analyst in the Insurance Supervision Division in January 2013 and was promoted to Deputy Head in September 2014. Mr. Jayasekera was appointed Acting Head of Insurance Supervision Division of CIMA effective 14 April 2016 managing the day-to-day operations of the Division, both on an on-site and off-

site basis by providing guidance, assistance to and supervision of the team of Analysts, to achieve the legislative requirements and the goals and objectives of the Division and CIMA. Mr. Jayasekera started his career in the insurance industry soon after graduating from the University of Colombo, Sri Lanka, in 1998. Mr. Jayasekera has over 18 years of regulatory and insurance experience and is well known to the insurance industry. He started his career in the industry soon after graduating from the University of Colombo, Sri Lanka, in 1998 in which he holds a Master’s degree in Business Administration and a Bachelor’s degree in Statistics. He is also a Chartered Insurer and holds Associate designation from the Chartered Insurance Institute, United Kingdom.

MR. RAZAAK BUSARI – Mr. Razaak Busari joined the Cayman Islands Monetary Authority (CIMA) in the capacity of Deputy Head, Insurance Supervision Division on 22 June 2015. He possess over 15 years of financial services experience, most of which has been as a Regulator (both Supervision and Authorisation). He also spent some time at one of the leading banks in the United Kingdom (UK).

Mr. Busari served as an Associate Director at the Qatar Financial Centre Regulatory Authority from 2006 to 2014, regulating/supervising a portfolio of financial institutions from both a


conduct-of- business and prudential viewpoint. He was also a Governor on the Board of Doha College.

Prior to that, he was a Senior Associate with the Financial Services Authority of the United Kingdom from 1999 to 2006, supervising financial services institutions.

He has a Post-Graduate Diploma in Islamic Banking and Insurance from the Institute of Islamic Banking & Insurance (IIBI), United Kingdom, and is an Associate Fellow of the IIBI. Mr. Busari also holds a Level 7 Diploma in Strategic Management and Leadership from the Chartered Management Institute, UK (CMI). He is also a Fellow of the CMI (FCMI). In addition, he is a Certified Anti-Money Laundering Specialist (CAMS), and earned the International Compliance Association’s International Diploma in Compliance. He also has professional qualifications in financial planning and mortgage advice.

He was educated at the University of North London, UK, where he was awarded a Bachelor of Laws (Hon) degree in 1997, and at the University of Ibadan, Nigeria, where he earned a Bachelor of Arts (Hon) degree in English in 1988. Mr. Busari also holds a Master of Business Administration degree from the University of Leicester, UK. He is the author of "Moving with the Times: A Case for Enhanced Regulation of Islamic Banks", published in 'Opportunities in Islamic Finance - Unconventional Answers to the Credit Crisis’ by CPI Financial Books in September 2011.

MS. SUZANNE SADLIER - Ms. Suzanne Sadlier was appointed as Deputy Head of the

Insurance Supervision Division of the Cayman Islands Monetary Authority as of 1 June 2017.

This confirmation was subsequent to her role as the Authority’s Reinsurance Specialist, a

post which she held for two years.

Ms. Sadlier brings over 10 years of knowledge and experience of the insurance industry

having worked in Ireland in a variety of positions within areas such as claims, underwriting

and regulation.

In her capacity as a Reinsurance Specialist, she was responsible for managing complex

license applications and providing technical advice to the Insurance Supervision Division regarding the day-to-day

supervisory operations. She also provided recommendations in relation to (re)insurance laws and regulations. In

addition, Ms. Sadlier led a number of technical projects such as the design and implementation of CIMA’s internal

capital model framework.

She also serves as an active member of the International Association of Insurance Supervisors (IAIS) Reinsurance

Task Force on behalf of the Authority.

Ms. Sadlier holds a Bachelor of Arts Degree in International Insurance from the University of Limerick, Ireland, and is

a Chartered Insurer (ACII) as awarded by the Chartered Insurance Institute, UK in 2013. She is also an AIR Certified

Catastrophe Modeler (CCM) as awarded by the AIR Institute, Boston in 2014.

For more information about CIMA please visit our website: www.cima.ky

lil CIMA FACTS^ OVERVIEW OF THE CAYMAN ISLANDS MONEJARY AUTHORITY

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OVERVIEW OF THE CAYMAN ISLANDS MONETARY AUTHORITY

HISTORY

Under the Monetary Authority Law, the Cayman Islands Monetary Authority began operations on 1 January 1997.

The Authority was created from the merger of the Financial Services Supervision Department of the Cayman Islands Government and the Cayman Islands Currency Board. The former responsibilities, duties and activities of these two bodies now fall to CIMA.

The Authority became operationally independent in March 2003.

PRINCIPAL FUNCTIONS

Monetary - The issue and redemption of Cayman Islands currency and the management of currency reserves

Regulatory - The regulation and super vision of financial services, the monitoring of compliance with money laundering regulations, the issuance of a regulatory handbook on policies and procedures and the issuance of rules and statements of principle and guidance.

Cooperative - The provision of assistance to overseas regulatory authorities, including the execution of memoranda of understanding to assist with consolidated supervision.

Advisory - The provision of advice to the Government on monetary, regulatory and cooperative matters.

^ j-

- ^

MISSION

To protect and enhance the reputation of the Cayman Islands as an International Financial Centre by fully utilising a team of highly skilled professionals and current technology, to carry out appropriate, effective and efficient supervision and regulation in accordance with relevant international standards and by maintaining a stable currency, including the prudent management of the currency reserve.

VISION

Committed to continually enhancing the Cayman Islands Monetary Authority's position as a financial services regulator of EXCELLENCE, consistent with the jurisdiction's standing as a leading International Financial Centre.

BOARD OF DIRECTORSCabinet-appointed, non-executive members serve fixed, but renewable, three-year terms.

Managing DirectorMrs. Cindy Scotland

ChairmanMr. Grant Stein

DirectorMrs. Patricia Estwick

DirectorMr. Adrian (Gus) Pope

/iiDirector

Ms. Judith WatlerDirector

Mr. Garth MacDonaldOverseas Director

Professor William Gilmore.

OPERATIONAL STRUCTURE - MANAGEMENT

Managing DirectorMrs. Cindy Scotland

Deputy Managing Director/ General Counsel

Mr. Langston Sibblies, QC

1/Deputy Managing

Director - Operations - Supervision

Mr^. Patrick Bodden

Deputy Managing Supervision

Mrs. Anna McLean

CIMA September 2017

REGULATORY DIVISIONS

f

Head, BankingMrs. Gloria Glidden

Head,Fiduciary ServicesMr. Rohan Bromfield

Head,InsuranceMr. Ruwan Jayasekera

Head,Investments and

SecuritiesMs. Heather Smith

NON-REGULATORY DIVISIONS

■ fV

Head, Currency Deputy Managing Director Head, Compliance Head, PolicyMs. Deborah Ebanks /General Counsel Mrs. Audrey Roe and Development

Mr. Langston Sibblies, QC Ms. Justine Plenkiewicz

OPERATIONAL SUPPORT DIVISIONS

Head, Human Resources Head, Information Chief Financial Officer,Mrs. Deborah Musson Systems Finance

Mr. Charles Thompson Ms. Gilda Moxam-Murray

MANAGING DIRECTOR'S OFFICE

ft

Special Assistant to the Public Relations Managing Director Executive

Mr. Mitchell Scott Ms. Yvette Cacho

CIMA September 2017

FUNDAMENTALS OF CIMA REGULATION & SUPERVISIONFramework:The Monetary Authority Law, the regulatory laws and the rules and guidance notes issued by CIMA, provide the framework for CIMA's regulatory and supervisory activities. CIMA takes a combined rules-based and risk-based approach to regulation and supervision of financial services.

Licensing:CIMA processes licence/registration applications, does due diligence on all persons applying to act as directors, shareholders, managers, officers and controllers of licensed entities, and makes decisions on the issue or nonissue of licences and approvals.

Supervision:Is comprised of off and on-site monitoring of entities.

Off-site: includes analysis of documentation required to be submitted (e.g. audited financial statements), supplemented by prudential meetings with licensees/registrants.

On-site: involves local and overseas general and limited-scope inspection visits.

Enforcement:CIMA investigates breaches of the regulations and takes enforcement action where necessary. Enforcement actions available to CIMA:• suspension or revocation of a licence/ cancellation of fund

registration;• requiring the substitution of an officer, shareholder or

controller; appointment of a controller or an advisor;• applying to the Grand Court for the winding up or dissolution of

an entity; and• recommending prosecution of the entity by the Attorney

General of the Cayman Islands.

Prudential Standards:CIMA develops and issues rules, statements of guidance, and statements of principle to provide directives and guidance to regulated entities regarding their conduct of business. Various prudential measures are in effect for each of the CIMA-regulated sectors and a number of others apply across all sectors. These are in line with relevant international standards. (See pg. 4: "International Standards Observed")

Monitoring AMF/CTL compliance:This is carried out in accordance with the Money Laundering Regulations issued under the Proceeds of Crime Law, and the Terrorism Law.

CIMA, jointly with members of government and the private sector, drafted the Guidance Notes on the Prevention and Detection of Money Laundering and Terrorist Financing in the Cayman Islands (the GN). This gives general and sector-specific guidance to financial services providers and aims to provide transparency and consistency in the interpretation and application of the Money Laundering Regulations. CIMA chairs the GN Committee.

Relationship with Private Sector

The Monetary Authority Law requires CIMA to undertake formal consultation with the private sector before issuing or amending rules or guidance on the conduct of licensees and on money laundering regulation.

In addition, the Authority often consults with industry on recommendations it forwards to the Cabinet, or is developing, pursuant to its function of advising the Government on monetary, regulatory and cooperative matters.

Channels for consultation include joint CIMA-industry- government working groups formed periodically to review and make recommendations on the laws governing financial services, by sector. Changes to the mutual funds, insurance and banking and trust legislation, rules and guidance in recent years have come about through these working groups.

CIMA September 2017

INTERNATIONAL COOPERATION

Agreements:CIMA negotiates memoranda of understanding, and undertakings, which provide the framework for exchange of information and cooperation between CIMA and overseas regulatory authorities (ORAs).

• 54 bilateral agreements are in effect with authorities in the Caribbean, Asia, Europe, Middle East, the UK, USA and Canada

• 6 multilateral agreements exist with the following:- Group of International Financial Centre Supervisors (GIFCS)- International Association of Insurance Supervisors (IAIS)- US Banking regulators (Federal Reserve System Board of Governors, Office of the Comptroller of

the Currency, Federal Deposit Insurance Corporation, and Office of Thrift Supervision)- International Organization of Securities Commissions (IOSCO)- Caribbean regulators (Central Bank of Barbados, Central Bank of Bahamas, Central Bank of Belize, Central

Bank of Trinidad and Tobago, BVI FSC)- European Securities and Markets Authority (ESMA)

Provision of Assistance:• CIMA receives and processes routine and non-routine requests for assistance from ORAs.• Requests processed from January 2000 through December 2015 = 2,146

Membership of/Representation on Regulatory & Standard-Setting Bodies:• Group of International Financial Centre Supervisors (GIFCS)(formerly the Offshore Group of Banking

Supervisors (OGBS)) - Deputy Chairman• Caribbean Group of Banking Supervisors (CGBS)• Association of Supervisors of Banks of the Americas (ASBA) - completed 2-year board appointment in

November 2011International Association of Insurance Supervisors (IAIS) - Executive Committee Member Group of International Insurance Centre Supervisors (GIICS) - Represents GIICS on IAIS International Organization of Securities Commissions (IOSCO)CIMA officials also represent the Cayman Islands as part of the Global Forum on Tax Transparency and Exchange of Information's (Global Forum) Steering Committee and Peer Review Committee

• CIMA officials are members of the CI Government's Tax Information Exchange Agreement (TIEA) Negotiating Team

• CIMA's Managing Director represents the Cayman Islands on the Financial Stability Board's Regional Consultative Group for the Americas

International Standards Observed:• Financial Action Task Force (FATF) 40 Recommendations on Money Laundering, Terrorist Financing &

Proliferation• Basel Core Principles for Effective Banking Supervision• Trust and Company Service Providers Working Group Statement of Best Practice (GIFCS)• Core Principles of Insurance Regulation (IAIS)• Objectives and Principles of Securities Regulation (IOSCO)

CIMA September 2017

NUMBER OF ENTITIES LICENSED/REGISTERED BY CIMA& CURRENCY IN CIRCULATION

BANKING & TRUST 30 SEPTEMBER 2017 FIDUCIARY SERVICES 30 SEPTEMBER 2017

Banks 155 Trust Companies 149

Category A 11 Unrestricted Trusts 59

Category B 144 Restricted Trusts 61

Nominee Trust 25 Nominee Trusts 29

Controlled Subsidiaries 7 Registered Private Trust Companies 128

Money Service Providers 5 Registered Controlled Subsidiaries of Trust Companies

42

Building Societies, Cooperative Societies, Development Banks 5 Companies Management 116

Corporate Services Providers 26

INVESTMENTS & SECURITIES 30 SEPTEMBER 2017 INSURANCE 30 SEPTEMBER 2017

Mutual Funds 10,630 Insurance Companies 733

Registered 7,374 Class A 28

Administered 337 Class B 677

Licensed 85 Class C 25

Master Funds 2,834 Class D 3

Mutual Fund Administrators 100 Insurance Managers 29

Full 79 Insurance Brokers 31

Restricted 20 Insurance Agents 46

Exempted 1

Securities Investment Business34

CURRENCY IN CIRCULATION 30 SEPTEMBER 2017Law (SIBL) Licensees Total Currency CI$111.4m

Excluded Persons Under SIBL 2,754 Notes CI$99.7m

Coins CI$11.6m

CI$1.00 = US$1.20; m = million

CIMA September 2017

FSB RATING

Cayman earned a "sufficiently strong adherence" rating by the FSB.

GLOBAL FORUM RATING

Compliant ratings for tax transparency and cooperation by Global Forum.

IMF REPORT

IMF Notes Substantial Progress in supervision and regulation.

AML/CFT RATING

High External Rating of AML/CFT Regime.

KEY FACTSThe Cayman Islands' adherence to global regulatory and supervisory standards on international cooperation and information exchange has been evaluated and found "sufficiently strong" - the highest assessment possible - by the Financial Stability Board, in 2011.

In 2011, the Global Forum on Transparency and Exchange of Information for Tax Purposes (the Global Forum) rated Cayman as compliant with all nine essential elements of international tax transparency and exchange of information standards set by the Global Forum for its Phase 1 assessments. The essential elements deal with: availability of, access to and exchange of information.

The International Monetary Fund (IMF), in its report of its 2009 update assessment of supervision and regulation of the Cayman Islands' financial industry, noted the jurisdiction's "substantial progress" in implementing the recommendations of the 2003 assessment. Enhancements noted included:

• changes to legislation, rules and guidance to meet international standards;

• increases in CIMA's independence, resources and efficiency, and

• increased transparency of the funds sector arising from the implementation of CIMA's electronic reporting system.

See: External Assessments

Assessing compliance with the Financial Action Task Force's 40+9 AML/ CFT Recommendations, the Caribbean Financial Action Task Force (CFATF) rated the Cayman Islands' as 'compliant' with 14 of the recommendations, 'largely compliant' with 24, and 'partially compliant' with 10.

The report, issued November 2007, followed the third CFATF assessment of Cayman's regulatory and legal regimes for combating money laundering and the financing of terrorism, carried out in June 2007. The CFATF reported this jurisdiction as having a "strong compliance culture". This result compares favourably with the assessments of the 16 third-round evaluations conducted of FATF member countries, where there was an average of 26 compliant and largely compliant ratings.

See: External Assessments

The Cayman Islands was the chairman of the Caribbean Financial Action Task Force during the period November 2010 to November 2011.

CIMA September 2017

KEY FACTSWith 733 insurance companies under licence (30 September 2017), Cayman remains the second largest offshore captive domicile in the world, (based on licence numbers) and the largest for number of health care captives.

A new Insurance Law was passed in September 2010, creating, for the first time, a category of licence for reinsurers, setting the stage for the Cayman Islands to advance as a reinsurance domicile.

INSURANCE INDUSTRY STATUS

Second largest captive domicile; largest domicile for health care captives

The majority of all funds worldwide having the characteristics of a hedge fund are CIMA-authorised.

INVESTMENTS AND SECURITIES

Cayman Islands-regulated funds reported total net assets at US$3.575 trillion for the financial year 2015. CIMA's Investments Statistical Digest 2015 provides additional data.

On 22 December 2011, the Government passed the Mutual Funds (Amendment) Law, 2011 for the registration of master funds that are incorporated or established in the Cayman Islands and have feeder funds regulated by CIMA. The legislation extends CIMA's regulatory oversight of the funds industry.

Further details are available on CIMA's website: www.cima.ky

Domicile for majority of hedge funds.

Total net assets US$3.575 trillion as at the 2015 financial year.

Master Funds now subject to regulation.

CIMA September 2017

http://www.cima.ky

CIMA 2017 - naic.orgnaic.org/meetings1803/cmte_g_2018_spring_nm_cima.pdf · Member of the Executive...

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Transcript of CIMA 2017 - naic.orgnaic.org/meetings1803/cmte_g_2018_spring_nm_cima.pdf · Member of the Executive...