The Portfolio of Legal Affairs submits for public consultation the Charities Bill, 2014. The issue of the regulation of charities has been longstanding and there remains an urgent need to ensure that a proper legislative framework is in place which governs charitable activities and complies with the international obligations of the Cayman Islands.

By way of background, in 2010, the then Cabinet had before it for consideration the Final Report of the Law Reform Commission entitled “the Review of the Law Regulating Charitable Organisations in the Cayman Islands”. Included in this Report was a draft Charities Bill, 2010.

The Bill provided for the introduction of legislative provisions relating to the establishment of a charities register into which the names of all charitable organisations would be entered. The intention of the registration process was to, among other things, facilitate accountability for funds and donations received by charitable organisations from the public or Government.

As part of the process in formulating the necessary legislation to deal with the regulation of charities, the Law Reform Commission took into account the Financial Action Task Force (FATF) recommendations which require the establishment and implementation of a comprehensive legislative framework to combat money laundering and terrorist financing activities.

The Commission expressed the view that the proposed legal framework would, among other things, operate to empower the charitable sector and allow charities to function with greater protection, certainty and flexibility while allowing them to continue to feature prominently in the Cayman Islands.

The Charities Bill was listed for debate in the Legislative Assembly in June 2010. However, a subsequent decision was taken by the Government to withdraw the Bill in order to facilitate further public consultation due to continued general stakeholder concerns in relation to the possible impact of the Bill on “goodwill” in the Islands.

The Attorney General’s Chambers has since had several meetings with some stakeholders and accordingly, the Bill has been revised with a view to addressing the concerns raised while preserving its ultimate objective of acceptable and effective regulation of charities.

In this regard, the new provisions reflected in the Charities Bill, 2014-

require that the words “Cayman Islands Registered Charity” or letters “CIRC” appear on the official documents and material of a charitable organisation;

define public benefit to include an identifiable benefit comprised within the scope of charitable purposes which is available to the general public or to a section of the public within the Islands or elsewhere;

require charities to submit annual returns to the Registrar within six months of the end of its financial year;

permit audits to be prepared by a duly qualified accountant who is licensed or competent to provide audit services thereby removing the need to retain a major audit firm to prepare such an audit; and

exempt from the audit requirements a charity which is a company and which is acting in compliance with the accounts and audit requirements of the Companies Law.

As was the case in the earlier 2010 draft Bill, the Charities Bill, 2014 provides for the following-

the appointment and functions of a Registrar of Charities who will, among other things, monitor the conduct of charitable organisations;

a registration process through which a charity is required to register and have its name recorded in a charities register established under the legislation;

the empowerment of the Attorney General to inquire into the operations of a charity and take the appropriate action where the charity may have engaged in misconduct or committed a criminal offence;

regulation of the manner in which fundraising activities are to be conducted by and on behalf of charities; and the requirement that charities employ acceptable accounting standards by maintaining proper books of account and conducting audits.

If this Bill becomes Law, it will not impact those entities which are recognised as “private charities” and for which the Cayman Islands Monetary Authority has regulatory responsibility.

Stakeholders and the general public are invited to provide comments on, or alternatives to, the provisions of the draft legislation.

Submissions should be forwarded no later than 7th July, 2014 to the Attorney General’s Chambers, Portfolio of Legal Affairs, 5th Floor, Government Administration Building, P.O. Box 104, Grand Cayman KY1-9000 or emailed to [email protected]

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