The Cayman Islands government has introduced a bill that provides for the retention of a trust’s accounts and records for a minimum period of five years from the date on which they are prepared.
The bill that aims to amend the Trusts Law (2009 revision) has been gazetted by the government on 4 February, 2011.
If adopted, the Trusts Law would see the insertion of a section 27A, which provides that a trustee has to keep accurate accounts and records, including underlying documentation, of the trusteeship. The accounts and records have to be retained for at least five years from their date of creation. If a trustee knowingly or willingly contravenes these requirements, the Bill prescribes a penalty of $5,000.
The Bill follows the findings of a 2010 OECD Peer Review Report that analysed the legal framework for tax information exchange in the Cayman Islands. The report identified a generally “well developed legal and regulatory framework” in the Cayman Islands but noted that the OECD requirement that reliable accounting records are kept for all relevant entities was currently not in place in the Cayman Islands.
There is no requirement for the more than 90,000 companies registered in the Cayman Islands to maintain accounting record for a minimum five years, the report stated, nor were there consistent obligations on partnerships and trusts to retain relevant accounting records. Where there are obligations to keep records, no penalties exist in some cases to enforce the requirement, the report added.
The proposed Bill intends to rectify this.