Lawmakers passed two bills amending the laws governing the registration and reporting requirements for nonprofit organizations on Tuesday.

The proposed legislation will amend both the Non-Profit Organisations Law and the Companies Law to clarify the organizations that fall under the law, those that are exempt from the provisions, and the activities that require registration.

Both the Non-Profit Organisations Amendment Bill 2018 and the Companies Amendment Bill 2018 “seek to streamline the NPO regime by removing duplicitous filings and reducing fees,” said Tara Rivers, minister for financial services.

The new rules will also bring the registration of companies under Section 80 of the Companies Law, and their designation as not-for-profit under the power of the General Registry rather than the Cabinet.

Under current rules, Cabinet has the ability to approve applications under Section 80, as well as any subsequent changes to the companies. However, this process has been criticized as slow and expensive.

The Non-Profit Organisations Law, passed last year, required the General Registry to obtain the necessary personnel and electronic resources to process applications and identify and understand the risks of nonprofits, especially with regard to money laundering and terrorist financing.

Minister Rivers said the General Registry “is now suitably equipped to process the applications of companies or associations applying for designation under Section 80.”

In addition, proposed legal changes will allow ordinary companies registered under the Companies Law to apply to the registrar general for recognition under section 80.

“This is of great importance as it allows nonprofit organizations that have been established as [ordinary] companies to easily convert to companies under section 80 and therefore enjoy the benefits of that section of the Companies Law,” Ms. Rivers said.

These advantages include limited liability. Non-profit organizations that prefer a legal structure with limited liability would in practice first register as a company under section 80 of the Companies Law and then subsequently register under the Non-Profit Organisations Law to be able to raise funds from the public.

Section 80 also allows privately funded organizations to be recognized as not for profit and still enjoy limited liability. Privately funded organizations do not need to register under the Non-Profit Organisations Law, if they are not soliciting funds from the public.

The Companies Law Amendment Bill reduces the fee for designation under section 80 from $1,000 to $300, and it reduces the fees for a change for Section 80 companies from $500 to $25.

Other changes are designed to avoid duplicitous reporting and filing by nonprofits under the various laws.

The Non-Profit Organisations Law was one of the key pieces of legislation passed before Cayman anti-money laundering framework was assessed by the Caribbean Financial Action Task Force last year. It provided for the registration and monitoring of nonprofit organizations because of their risk of being abused for money laundering and terrorist financing.

The minister confirmed that more than 400 organizations have registered under the law and that the “NPO framework received positive feedback from the CFATF assessment team during their visit.”

In response to an issue raised by the evaluation, government is proposing a legislative change that will give the registrar the power to periodically assess the nonprofit sector to identify jurisdictional vulnerabilities to terrorist financing activities.

Other proposed amendments to the law, Ms. Rivers said, will enact many of the changes proposed by stakeholders following the implementation of the law, “which will bring greater clarity and improve the operation of the Non-Profit Organisations Law and the underlying regulations.”

Any previously exempted organizations that now fall under the law as a result of the changes will have six months to register and the registration fees are waived.

At the same time, the bill limits the information maintained by the registrar that is publicly available but contains mechanisms through which the registrar can share information with law enforcement agencies and competent authorities in appropriate circumstances.