Legislation that would require any charitable organization taking in more than $250,000 per year to register with the government will be a “disaster,” local residents were told during a public meeting in East End district Monday night.
“This [bill] is going to make us a laughingstock,” Bodden Town MLA Alva Suckoo said.
The proposal, which began as the Charities Bill in 2010, is now called the Non-Profit Organisations Bill, 2016. The Cayman Islands government has been unsuccessful at least three times in trying to bring the legislation to parliament.
The bill seeks to deal with monitoring nonprofits through audits and regulating those organizations via government registration.
The legislation currently defines a nonprofit as any organization seeking public contributions as its primary purpose for philanthropic activities. The bill does not apply to charitable or voluntary organizations that are already regulated by a government entity, trusts that are registered under the Banks and Trust Companies Law and any other entities that are exempt through an order of Cabinet.
The exemption powers given to Cabinet under the bill, if it is passed during the next Legislative Assembly session, are a major concern for Mr. Suckoo, a former government backbench lawmaker who left the Progressives political party at the end of last year. The assembly is due to begin meeting on Oct. 4.
“[This bill] gives Cabinet the authority to override the regulatory body that’s created within the law,” he said Monday night. “Cabinet can effectively pardon [a] nonprofit entity if they break the law. This law allows Cabinet to become judge and jury. It’s dangerous.”
If a nonprofit is found to violate the audit requirements in the bill, for example, it can be fined under the legislation. However, under one section of the bill, Mr. Suckoo said, appeals can be made to forgo the fine, or lower it, if the entity shows it cannot pay.
“Cabinet has the ability to just … say ‘no, that doesn’t apply to you,’” Mr. Suckoo said. “This is going to make us a laughingstock. This is what happens when you rush legislation through.”
Previous independent evaluations of Cayman by the Caribbean Financial Action Task Force and the World Bank have identified nonprofits as an area of significant vulnerability for issues such as money laundering or terrorist financing.
Cayman is now preparing for a 2017 review by the financial task force and lawmakers have said legislation regulating the financial activities of nonprofits, as well as a number of other local industries, should be in place before that review.
Under the bill, government will maintain a register of nonprofit entities, complete with the name and contact details for the organization, as well as the identities of those who own it. Charities that are regulated under the bill will have to hand over accounts to government detailing contributions they receive, expenses, and other transactions.
Qualified accountants must inspect the books of any charity or nonprofit that has a gross annual income of more than $250,000. Those entities receiving less do not have to be audited, but they can be audited if the government registrar of companies requires it.
“All the exemptions and special privileges for these companies can be done through Cabinet. It doesn’t have to come to the Legislative Assembly,” Mr. Suckoo said, adding that he is disappointed with “the joke that’s being made of our legislative assembly.”