As of Aug. 1, businesses that operate as charities can be categorized as nonprofit organizations, which will allow them to avoid substantial fees.
The new Non-Profit Organisation Law, 2016, is part of Cayman’s preparations for the December 2017 evaluation of its regime countering money laundering and terrorist financing.
The law will provide several benefits to the community, said Financial Services Minister Tara Rivers. “It will give the public access to information on all nonprofit organizations; help them to easily identify entities registered as NPOs; and facilitate law enforcement investigations and enforcement where necessary.”
The Financial Action Task Force, a standard-setting intergovernmental body, recommends that countries know the nonprofits that operate in their jurisdiction and monitor the largest organizations to prevent money laundering and terrorism financing.
To satisfy this requirement, the establishment of an NPO register is central to the new law. Organizations must register if they meet the definition of a nonprofit under the Nonprofit Organisations Law. This includes charities and nonprofits that are registered as limited companies and currently fall under section 80 of the Companies Law (2016 Revision). Once registered, a section 80 company will no longer be subject to the conditions imposed by Cabinet under section 80 registration, such as registration costs and approval of change costs.
Businesses that are not currently designated under section 80 can qualify for the NPO register if they meet the new law’s criteria.
Under the law, a nonprofit organization can be a company, trust or a body of persons that is established primarily for the promotion of charitable, philanthropic, religious, cultural, educational, social or fraternal objectives, or other activities or programs for the public benefit both in Cayman and abroad, if it solicits financial contributions from the public.
Compared with the section 80 process, NPO registrations will be much faster, within a maximum of 30 days. Changes can be filed by notice to the designated registrar, rather than by the current Cabinet approval process required for section 80 companies.
The Financial Services Ministry said the local NPO legislation will come into force well before the December evaluation of Cayman’s anti-money laundering and counter-financing of terrorism regime by the Caribbean Financial Action Task Force (CFATF).
Cayman is a member of the CFATF, a regional body committed to implementing the FATF recommendations.