The government’s latest attempt to regulate public charitable organizations in the Cayman Islands has been sent back for further consultation following a review by Cabinet members.
Premier Alden McLaughlin did not say last week whether his administration would eventually support the latest draft of the Charities Bill 2014 as set out by the Law Reform Commission. He said Thursday that he expects the secondary revisions to the bill to come back to Cabinet for approval later this year.
The latest effort to establish a legislative framework for charitable organizations in the Cayman Islands seeks to account for donations those groups receive, ensuring they are not used to assist or as a front for money laundering or terrorist financing.
A previous bill proposed in 2010 fell apart prior to reaching the Legislative Assembly after a number of local charities, churches and investment funds indicated the legislation could mark an end to charitable giving in the Cayman Islands.
The 2014 version of the bill does not apply to private charities, which are already regulated by the Cayman Islands Monetary Authority.
If the bill is eventually passed by legislators, public charities will have to file annual returns with a charities registrar established by the legislation within six months of the end of their respective financial years. Charities would be required to employ acceptable accounting standards, maintain proper records and conduct audits.
However, charities that are registered companies under the Cayman Islands Companies Law would be exempt from the bill’s audit requirements, since those are already required in the Companies Law.
The bill also requires charities to maintain the names and contact information of all donors. In cases where this information is not readily available, the fundraising method used must be detailed.
The proposed legislation grants the attorney general the authority to inquire into the operations of a charity and take action when the organization may have been engaged in misconduct or committed a criminal offense.
The bill further regulates how fundraising activities have to be carried out. Specifically, fundraising efforts should not unreasonably intrude on privacy, place undue pressure or make unreasonably persistent approaches to potential donors. In their attempts to raise funds, organizations are further prohibited from making false or misleading representations about the extent and urgency of funding needs, the use of funds or the activities, achievements or finances of a charity or company.
Local charities have expressed concerns that they may not be able to afford the additional expense required to keep records for many years and have annual external audits.
The attorney general’s office has met with these organizations several times since 2010, resulting in revisions to the bill “while preserving its ultimate objective of acceptable and effective regulation of charities.”
The Charities Bill 2014 retains the provision for the appointment and functions of a registrar of charities in charge of monitoring the conduct of charitable organizations. It establishes a charities register and a process through which charities are required to register.
Charities are defined by the bill as a person conducting activities for charitable purposes for public benefit. Public benefit is defined as any benefit that falls within the scope of one of the charitable purposes listed in the bill and that is available to the general public or to a section of the public in the Cayman Islands or elsewhere.