‘Charity begins at home’ is a well known cry and here in the Cayman Islands we have been lucky that charities exist. Without them our social services, already stretched, would be overwhelmed to the point of extinction. And what would have happened then?

Soon we may find out.

The Non-Profit Organisations Law will be coming into effect next year and the persons behind this legislation will rue the day they introduced it.

Every editorial I have read from the local media here have warned and warned against it but this has gone unheeded.

The reason – the money could be used by terrorist organisations. ‘COULD’. How many of our laws have been put into place because of something that could happen? Very few. Most have been enacted after the event has happened and more than once.

I do not know how many charitable organisations exist here but it must be over hundred, and if you add in the churches……?

A Press Release has been issued by the General Registry, in association with the Ministry of Financial Services, warning they will be staging “its final information session for 2017 on NPOs (non-profit organisations) on Monday, 18 December.”

The release continues:

“Organisations that solicit funds from the public for charitable causes can learn more about the Non-Profit Organisations Law from 6 to 8pm in room 1038 of the Government Administration Building.
“Monday’s discussion will inform charities – such as churches, sports clubs and humanitarian groups – of their responsibilities under the law, and highlight the benefits of registering to be a non-profit organisation.

“Among the latest developments is the publishing of the list of current registered NPOs. More than 15 entities have successfully applied and received NPO certificates.”

‘More than 15’? What is the exact figure. It doesn’t seem very many and what on earth are the “benefits of registering to be a non-profit organisation”?

The only so called ‘benefits’ is that if you don’t register you are breaking the law and you know what that means…

Bernadette Carey, Counsel with local law firm Conyers, Dill & Pearman wrote an article on the subject and other similar law firms have done the same. Carey says this:

A NPO is defined under the Law as including a company or body of persons, whether incorporated or unincorporated, or a trust:
• established primarily for the promotion of charitable, philanthropic, religious, cultural, educational, social or fraternal purposes, or other activities or programmes for the public benefit or a section of the public within Cayman or elsewhere; and
• which solicits contributions from the public or a section of the public within Cayman or elsewhere.

This definition has a very wide scope, and it is obvious that it will capture a very significant number of NPOs throughout Cayman, regardless of their size and regardless of whether they have been established for minor short-term fundraising purposes or with a more wide-reaching and long-term charitable intent. Importantly, the only NPOs that are exempt from coverage under the Law are those which have a government entity as their principal regulator, or are established as a trust where the trusteeship of the trust includes a trust company licensed under the Banks and Trust Companies Law (2013 Revision).

The key part of the Law is Part 2, which provides for the appointment and functions of a “Registrar of Non-Profit Organisations” (“Registrar”), who will oversee the establishment and maintenance of a register of NPOs (“the Register”). The role of the Registrar is generally to receive and process applications by NPOs for registration, and to ensure that all NPOs have appropriate internal controls in place including systems to identify criminal conduct.The Law requires all NPOs covered by it to apply to the Registrar for registration as an NPO: NPOs are prohibited from soliciting or raising contributions from the public within Cayman or elsewhere unless they are so registered. The registration process requires the “controller” of the NPO (which could be, for example, a trustee of a trust, a director of a company, or any other person who has established the NPO) to submit an application to the Registrar in a prescribed form, containing the information specified in the Schedule to the Law. That information includes, among other things, the details of the purposes of the NPO, the identity of the controller, copies of the organisational documents (such as the trust deed or constitution of the NPO) and details of the anticipated source of contributions to the NPO.

“Once registered, the Law compels the controller of an NPO to keep proper financial statements with respect to all sums of money received and expended, all sales and purchases of property, all sums of money raised through fundraising and all non-monetary transactions. If the NPO has a gross annual income in excess of US$250,000 and remits 30% or more of that income overseas, it must also have its financial statements reviewed by a qualified accountant in accordance with international standards. Annual returns, in the form specified in the Regulations, must be filed for all NPOs.

Consistent with the focus on the proper oversight of NPO activities, Part 4 of the Law empowers the Attorney General to institute inquiries into the activities of non-profit organisations, including the value and source or application of money received or disbursed. An inquiry may also be commenced for the purpose of investigating any NPO suspected of having committed an offence under the Terrorism Law (2017 Revision) or the Proceeds of Crime Law (2017 Revision).

There are a number of administrative penalties which will apply to any NPO that convenes the Law. A controller who fails, without reasonable cause, to comply with the provisions for registration or the provisions regarding the preparation of financial statements and annual returns or any other lawful request by the Registrar is liable to incur a range of penalties specified in the Regulations.

As Cayman does not operate a state funded welfare system, voluntary fund raising and the efficient operation of NPOs is of fundamental importance to local society. Also of great importance is the establishment in the jurisdiction of suitable protections against criminal conduct. In practice, the Law will apply to a substantial number of local charities and fund-raising bodies of all sizes, and its implementation will likely increase the administrative burden on such entities and impact the day-to-day operations of smaller local NPOs in particular.”

Where I strongly disagree with the author is her closing sentence:

“However the introduction of these new reporting obligations should be considered a positive development for the jurisdiction on the whole. The intent of the Law, after all, is good, and its
implementation is necessary for Cayman to keep pace with, and its commitments to, the ongoing global initiatives against money laundering and terrorist financing.”

The above is an excerpt only from the article that can be found at: https://www.conyersdill.com/publication-files/2017_06_CAY_New_Legislation_for_Non_Profit_Organisations_in_the_Cayman_Islands.pdf

My question is, where has there been any suggestion let alone a prosecution for “money laundering and terrorist financing” against any of this country’s charitable contributions?

One of our largest charitable organisations, the NCVO, have just lost their CEO of fourteen years, Janice Wilson. Her replacement is going to have an even more difficult job. If the position is still available, I for one, will not be applying for it.

And members of government, don’t say you weren’t warned.

Just how many charities here at home will be able to continue? Watch this space.