Cayman Islands adoption of CARF and CRS 2.0 means key changes for reporting FIs

Background:

The global tax compliance landscape is undergoing rapid transformation, driven by international initiatives to enhance transparency, combat tax evasion and address emerging risks associated with digital assets. In line with these efforts, jurisdictions such as the Cayman Islands are implementing significant regulatory changes that expand reporting obligations and introduce stricter compliance frameworks.

On Nov. 27, 2025, the Cayman Islands enacted two landmark regulations:

-        Tax Information Authority (International Tax Compliance) (Common Reporting Standard) (Amendment) Regulations, 2025 (LG45, S1).

-        Tax Information Authority (International Tax Compliance) (Crypto-Asset Reporting Framework) Regulations, 2025 (LG45, S2).

Both take effect Jan. 1, 2026, and represent a significant shift in Cayman’s approach to tax transparency. The developments underscore a clear trend: jurisdictions are tightening compliance requirements and expanding information exchange frameworks to include digital assets. FIs and RCASPs should act now to prepare, as failure to comply can lead to significant financial and reputational risk.

Key changes under CRS

PPOC local residency requirement

The Cayman Islands’ CRS amendments, effective Jan. 1, 2026, require all FIs to appoint a PPOC who is a resident of the Cayman Islands. FIs registered prior to Jan. 1, 2026, are afforded a transition period under the amended CRS regulations that allows these FIs until Jan. 31, 2027, to comply with the updated regulations. New FIs commencing activities after Jan. 1, 2026, must register by Jan. 31 of the year following their FI status.

Updates to the CRS registration deadlines

The amended CRS regulations update the registration timeline for entities that become FIs in the previous calendar year, moving the deadline from the current deadline of April 30 to Jan. 31 of the following year. For entities that attain FI status during 2025, a transitional period allows them to register by April 30, 2026. The new Jan. 31 deadline will apply to entities that become FIs in 2026. Additionally, any changes to the details provided in the initial registration must be reported by submitting a change form within 30 days.

Updated CRS reporting due dates

Historically, Cayman Islands FIs submitted CRS returns for the year to the Department for International Tax Cooperation (DITC) by July 31 of the following year (2025 CRS reports are due by July 31, 2026), with CRS compliance forms due by Sept. 15 annually. Under the amended regulations, both CRS reports and CRS compliance reports are now due by June 30 of the following year, accelerating and consolidating the reporting timelines significantly. These changes apply starting with the 2026 reporting year, so 2026 Cayman Islands CRS Reports and CRS compliance forms will be due June 30, 2027.

Note that the updated due date only applies to CRS at the moment and not to Cayman Islands Foreign Account Tax Compliance Act (FATCA) reports where the due date remains July 31. However, further alignment is anticipated, and we are monitoring these developments closely. Our team is actively tracking regulatory updates, engaging with the DITC for clarification, and preparing guidance to help taxpayers adapt their compliance processes.

Cayman’s adoption of CARF

The Cayman Islands has taken a significant step toward global tax transparency with the introduction of the TIA (International Tax Compliance) (Crypto-Asset Reporting Framework) Regulations in 2025. These regulations, effective Jan. 1, 2026, adopt the OECD’s CARF standards into Cayman law, establishing a robust framework for the automatic exchange of tax information related to crypto-asset transactions.

Who does it apply to?

The new rules apply to Cayman RCASPs that have a substantial nexus to Cayman, such as being a resident, an incorporated entity, a managed fund or operating a local Cayman branch. RCASPs are broadly defined to include any business facilitating exchange transactions for customers, whether as a counterparty, intermediary or platform operator. This expansive definition captures a wide range of cryptocurrency organizations, requiring them to comply with the new regulations. RSM US’ specialists have the expertise and tools to determine whether a company falls within scope and to guide taxpayers through every compliance obligation.

What exactly is required?

Under the CARF regulations, RCASPs face three key compliance obligations:

Are there any exceptions and exclusions?

The regulations provide clear definitions for key terms to ensure comprehensive coverage under CARF. To elaborate on a few here, ‘crypto-assets’ are broadly defined under CARF as digital representations of value that rely on cryptography and distributed ledger technology, including tokens and coins, but excluding Central Bank Digital Currency and Specified Electronic Money Products (EMPs). EMPs refer to digital representations of a single fiat currency issued upon receipt of funds for the purpose of making payment transactions. ‘Relevant transactions’ include exchanges between crypto-assets and fiat currencies, transfers between wallets and other activities that facilitate movement or conversion of crypto-assets. ‘Reportable users’ encompass individuals and entities that maintain accounts with RCASPs and are subject to rigorous due diligence and identification requirements. The regulations provide extensive guidance on both reportable users and excluded persons, enabling RCASPs to accurately delineate the scope of their reporting obligations.

The TIA is empowered to monitor compliance, request records and impose penalties for non-compliance, including substantial fines and daily continuing penalties. Penalties are severe—up to CI$50,000 for corporate entities and individuals involved in management, with additional provisions under the Criminal Procedure Code for prosecution. Directors, managers, partners, trustees and other decision-makers of RCASPs may also be held personally liable for offences unless they can demonstrate reasonable diligence.

How can RSM help?

Navigating these regulatory changes requires a proactive and strategic approach. At RSM, we combine deep technical expertise with practical solutions to help taxpayers stay ahead of evolving compliance requirements. Our support includes:

Our goal is to simplify complexity and deliver confidence. By partnering with RSM, you gain access to a team that understands the nuances of global tax transparency initiatives and provides practical, taxpayer-focused strategies to ensure compliance. For more insights and resources, visit our website.