Apex Regulatory Update – June 2015

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FATCA – Upcoming Compliance Deadlines

In recent months, the IRS has opened its information reporting portal and non-U.S. jurisdictions heavily affected by FATCA (e.g., Cayman Islands and British Virgin Islands) have issued official guidance to implement FATCA compliance for financial institutions in their respective jurisdictions.

The following list outlines upcoming FATCA compliance deadlines in 2015:

*Deadlines for Cayman and BVI Financial Institutions

May 29, 2015: Cayman Islands Local Registration Deadline

Each Reporting Cayman Islands Financial Institution must register electronically with, and provide certain information to, the Cayman Islands Department for International Tax Cooperation (the “DITC”).

June 26, 2015: Cayman Islands 2014 FATCA Reporting Deadline

Each Reporting Cayman Islands Financial Institution must file a 2014 information return with the DITC.

Before June 30, 2015: BVI Local Registration Deadline

Each Reporting BVI Financial Institution that is required to file a 2014 FATCA report must register with the BVI Financial Account Reporting System, and such registration must be approved by the BVI International Tax Authority, before such Reporting BVI Financial Institution can submit its 2014 report (which must be done by June 30, 2015, see below).

July 31, 2015: BVI 2014 FATCA Reporting Deadline

*Deadlines for Reporting Financial Institutions in Model 1 Jurisdictions (other than Cayman/BVI)

May 31/June 30, 2015: 2014 FATCA Reporting Deadline

Generally Reporting Financial Institutions in other Model 1 jurisdictions must file any required 2014 FATCA reports with the relevant Tax Authorities by one of these dates.

July/August 2015: 2014 FATCA Reporting Deadline  

Financial Institutions in Australia and Mauritius must file any required 2014 FATCA reports by 31 July 2015 and Bahamian Financial Institutions must file by 17 August 2015.

Cyber Security

As our economy becomes increasingly digital, so does cyber crime. Cyber attackers are using sophisticated means to achieve one of a number of very old objectives; theft, subversion, sabotage or espionage. There is also a risk that an attacker could launch a denial of service attack to prevent organisations like Apex from doing business, slow down the ability to complete trades or to take out important connections to other parties such as market data feed providers, prime brokers and fund administrators.

The threat of cyberattacks is growing rapidly within the hedge fund community. The big change is that hedge funds are now coming under direct attacks, it is no longer just the banks and wire houses being targeted.

While there is no one-size fits all approach to cybersecurity, The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) recently released their findings and industry practices following the examinations they conducted under a Cybersecurity examination sweep in 2014.

https://www.finra.org/file/report-cybersecurity-practices

http://www.sec.gov/investment/im-guidance-2015-02.pdf

Financial Services firms that accept that cyber attacks have become an inevitable part of today’s business landscape and who put the right level of protection in place will secure the future of their business.

Growing demand for Islamic Finance

The Islamic finance industry is attracting increasing global attention from investors. The size of the industry reached $2.1 trillion of Shari’ah (Islamic ethical framework) compliant assets in 2014, compared to just over $1 trillion in 2011, and is projected to exceed $2.5 trillion in 2015.

This remarkable growth is attributable to various factors, such as strong growth in the Gulf Cooperation Council countries and emerging markets in Asia, as well as an expansion into new markets in Europe, Australia, Brazil and China, amongst others.

Shari’ah-compliant financing and investment products are open to all, Islamic or non-Islamic investors. In addition to the steady growth, investors are attracted to Islamic finance products for various reasons such as: diversification, ethical investments and asset-based investments.

Fourth Anti-Money Laundering Directive and Wire Transfer Regulation

The Council of the EU announced that it adopted the draft Fourth Anti-Money Laundering Directive and the draft Wire Transfer Regulation at first reading on 20 April 2015.

The main elements of the proposals are:

  • Application of a risk-based approach: using evidence-based decision making, to better target risks and the provision of guidance by the European supervisory authorities.
  • Tighter rules on customer due diligence: obliged entities such as banks are required to take enhanced measures where the risks are greater, and can take simplified measures where risks are demonstrated to be smaller.
  • Beneficial ownership: specific provisions are included concerning the beneficial ownership of companies. Information on beneficial ownership will be stored in a central register, accessible to competent authorities, financial intelligence units and, as part of customer due diligence.
  • Traceability of fund transfers: the ability to track fund transfers can be very useful in the prevention, detection and investigation of money laundering and terrorist financing.
  • Member states will have two years to transpose the Fourth Anti-Money Laundering Directive into national law. The Wire Transfer Regulation will be directly applicable.

If you have any questions on the above information please do not hesitate to get in touch.

Kind Regards,

Kate Forde

Compliance Officer

[email protected]

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